By SHE Xiaochen
With investors and customers still reeling from the collapse of Missfresh, a similar grocery delivery app has turned a profit for the first time, albeit an insignificant fraction (0.3 percent) of revenue. Dingdong Maicai said it made a profit (non-GAAP, excluding stock-based compensation expenses) of 20.6 million yuan (US$3 million) from a revenue of 6.63 billion yuan.
Dingdong Maicai was a government supplier during the Shanghai lockdown. Revenue from the Yangtze River Delta region, its home base and biggest market, increased 48 percent in Q2.
Dingdong Maicai cut costs in Q2. Operations in a few cities have been shut down since May. Fulfillment expenses decreased 9 percent despite the user and revenue growth. Marketing and administrative expenses were cut by 66 percent and 50 percent respectively. The biggest cost increase – 24 percent – was from R&D, which includes product development, algorithm improvement and agricultural research. Overall operating expenses remained flat.
The gross margin was 32 percent last quarter, 17 percentage points higher than last year’s. Dingdong's own brands now they account for 18 percent of all products sold.
The collapse of Missfresh once raised questions about the viability of the front-end warehouse model, Dingdong’s CEO LIANG Changlin said there were no plans to make significant changes.
The company has 5.2 billion yuan of cash (including cash equivalent) on hand and expects to break even on a monthly basis from December.
