But things started to go downhill last year. Despite the hype and money, these companies struggled to make a profit as the blockages eased and people simply bought back in person. What’s worse, they were caught up in China’s new fight against antitrust behavior. The Chinese government was quick to impose fines and pen editorials that questioned the value of the industry.
As a result, promising startups and large technology companies decided to downsize their expansion plans, implement mass layoffs, or go bankrupt. DiDi and Ele.me, two successful technology companies that are betting on online groceries as a new engine of growth, decided to close these services. At least two other online grocery companies have closed their businesses in the last year.
The latest blockchains are giving the industry a second chance. With other Chinese cities such as Beijing and Hangzhou also facing impending blockades, millions of people are once again downloading and trusting these apps on a daily basis. In fact, the Dingdong app topped the list of free apps in the App Store in China in early April.
The daily battle
While the wealthiest Shanghai residents can receive unique free grocery packages from their employers or local governments, most people, like Song, needed to find a way to buy their own groceries. Some residents formed neighborhood groups through messaging apps, picking up orders from everyone, and buying in bulk directly from nearby farms or food factories.
But Song soon realized that buying groceries with all his neighbors meant he couldn’t make his own decisions. He lives in an older residential neighborhood where more than three-quarters of people are elderly or families with children. Although her neighbors make family orders for things like five pounds of pork, these purchases would lead her to consume it forever.
The only other option for her, then, is grocery apps. He frantically refreshes Dingdong, Hema and Meituan Maicai every day to get a space.
But with the blockage disrupting the supply chain of many products, including groceries, even placing an order in these applications requires luck and dedication. Like Black Friday shoppers waiting to open their store doors, Shanghai residents are approaching the apps at the appointed time to try to buy as much as they can before stocks run out in seconds. It can be stressful and frustrating.
Li, a Shanghai consultant who only uses her last name because she wants to remain anonymous, also got up early every morning for a week to try her luck with half a dozen different apps. But during confinement, he failed to get an order, while his mother, who lived under the same roof, got three. There was a time when Li put hundreds of RMB groceries in the shopping cart, but when she reached the payment stage, the only thing left in stock was a bag of candy.