Dingdong IPO: What to know about Dingdong

Chinese grocery app Dingdong has seen a rise fuelled by ample funding and strong lockdown demand. Here’s everything you should know about the business following its US IPO.

China

When was the Dingdong IPO?

Dingdong Maicai's US IPO occurred on June 29 2021, with the stock debuting at $23.50 per share, meaning a valuation around $6.6 billion on the day.

Check out more IPOs for 2021.

What does Dingdong do?

Dingdong Maicai is a Shanghai-based groceries app, enabling its customers to order on-demand fresh goods via a network of ‘front warehouses’. These premises are strategically located close to residential areas to enable the company to provide a 30-minute delivery guarantee. Its service currently covers major Chinese cities such as Shanghai, Beijing, Shenzhen, and Hangzhou.

The company was founded in 2017 by serial entrepreneur Liang Changlin and attracted venture capital funding from the likes of Sequoia China and Qiming Ventures, with other stakes owned by Tiger Global Management, Gaorong Capital, Fortune Capital and more. Dingdong moved quickly to triple the number of its distribution centres to 345 in seven months.

By February 2020, Dingdong reportedly processed around 300,000 orders daily during the coronavirus outbreak in Shanghai, and the year’s revenue figures totalled some $1.7 billion. As of January 2021, it had opened groups in nearly 30 cities across the country, with about 1,000 warehouses, and counts around 6.9 million customers as its monthly userbase.

The company’s closest rivals in the space include Alibaba-backed Hema, Meituan Maicai, Tencent-backed Missfresh, and JD Daojia. Internationally, US-based Instacart is operating a similar model.

How does Dingdong make money?

Dingdong makes money through the sale of groceries through the app. Currently, this figure is not sufficient to turn a profit, leading some commentators to question the efficacy of the ‘distributed mini warehouse’ or DMV model, a term used to encapsulate the blending of storage and distribution employed by Dingdong and its rivals.

What is Dingdong's business strategy?

Dingdong’s approach makes full use of big data, employing proprietary data models to enable the company to predict future orders and customer habits.

The company’s business strategy, following a potential IPO, will likely be to increase market penetration in the regions it currently services as well as expand into new territories. The company has indicated that a proportion of the funds will be put towards upstream procurement capabilities, with further investment in its retail cloud business, including R&D.

After it raised $700 million in April 2021, Dingdong set out to improve its supply chains, with a large portion of prior spending going towards advertising and front warehouse capacity.

Is Dingdong profitable?

Dingdong is not profitable as yet, and the company’s sector is a notoriously tough environment to grow margins. For example, the order fulfilment outlay for Dingdong, encompassing delivery partner fees, packaging, and miscellaneous logistics costs, reportedly amounted to around two times net revenue per order for 2020. There may be concerns among would-be investors that order volume growth may not be sufficient to increase profitability any time soon, and so controlling burn rate for companies using the front warehouse model is a talking point.

For comparison, US grocery delivery operator Instacart was reportedly losing $25 million a month several years into the company’s journey. 

Who owns Dingdong?

DiDi’s ownership is split between a variety of shareholders, including Changlin at around 30% and a range of financiers as mentioned above, with Internet Fund V Pte. Ltd. owning a 5.7% stake and General Atlantic Singapore DD Pte. Ltd and SVF II Cortex Subco (DE) LLC owning 5.6% of the company.

According to Crunchbase, 22 investors have a stake in the company, with the most recent raises led by SoftBank Investment Advisers in May 2021 and DST Global in April 2021. Funding has been achieved over seven rounds so far, to the tune of $1.3 billion.

Key personnel at Dingdong

DiDi has a number of key personnel that have helped progress the company to its expected IPO valuation. Here are some of them.

Position

Name

Founder and CEO

Liang Changlin

CTO

Xu Jiang

CSO

Joy Yu


How to trade top stocks

  • Open an account with us, or log in if you’re already a customer
  • Search for the company you want to trade in our award-winning platform
  • Choose your position and size, and your stop and limit levels
  • Place the trade.

More from Equities

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.