But last year things started to slow down. Despite the hype and money, these companies fought for profits because lockdowns were easy and people returned to shop privately. To make matters worse, they were caught up in China’s new fight against mistrust. The Chinese government was quick to impose fines and pen editorials questioning the value of the industry.
As a result, once promising startups and large technology companies have decided to close their expansion plans, implement mass filings or go bankrupt. DiDi and Ele.me, two successful technology companies that bet on online grocery as the driver of their new growth, have decided to discontinue those services. At least two more online grocery startups closed their businesses last year.
The latest lockdown is giving the industry a second chance. Other Chinese cities such as Beijing and Hangzhou are facing impending lockdown, with millions of people downloading these apps again and relying on them every day. In fact, Dingdong’s app rose to third place in the free app charts of the App Store in China in early April.
While lucky Shanghai residents can get one-time free grocery packages from their employer or local government, most people like Song have to find a way to buy their own groceries. Some residents form neighborhoods through messaging apps, collect everyone’s orders, and make bulk purchases directly from nearby farms or food factories.
But Song soon realized that buying groceries with all her neighbors meant she couldn’t make her own choices. He lives in an old residential neighborhood where more than three-quarters of the people are adults or families with children. While her neighbors are ordering family sizes for things like five pounds of pork, this kind of shopping will take her to enjoy forever.
The only other option for him is grocery apps. To get a slot he frantically refreshes Dingdong, Hema and Maituan Mikai every day.
But the lockdown has disrupted the supply chain of many products, including groceries, and even requires luck and dedication to place orders on those apps. As shoppers on Black Friday wait for store doors to open, Shanghai residents jump on apps at certain times to try to buy as much as possible before the stock runs out in seconds. It can be stressful and frustrating.
Lee, a consultant in Shanghai who only uses his title because he wants to remain anonymous, also gets up every morning for a week to test his luck with half a dozen different apps. But during the lockdown, he did not secure a successful order, while his mother, living under the same roof, was able to get three. There was a time when Lee kept hundreds of RMB worth of groceries in his shopping cart — yet when he reached the stage of payment, the only thing in stock was a bag of candy.