By SHE Xiaochen

Dingdong Maicai is calling a halt to its retail business in Southwest China’s Sichuan Province and Chongqing from May 29, but will continue working with local suppliers, the online grocery company said Monday.

Dingdong Maicai entered Sichuan’s capital Chengdu in November 2020. While the lockdowns were a blow to most businesses, they?served Dingdong well as people who were trapped at home needed groceries.?In May 2021, Dingdong marched into Chongqing.

Dingdong Maicai is doing well in the Yangtze River Delta in East China. In December 2021, it turned a profit in Shanghai, but elsewhere, it is facing competition from Hema Fresh and Meituan Maicai.

Fresh grocery is a business model struggling to find profit, due to?mainly the high cost of warehouse rental. The cost to keep products fresh can be another heavy pressure. Missfresh, the company that came up with the front warehouse concept, went bust last year.

Between scale and profit, Dingdong Maicai chose the latter. It shut down businesses in several less profitable cities last year. In Q1, the company recorded a net loss of 52.4 million yuan, a much better result compared with the 477.4 million yuan loss last year.

But whether the contraction will actually help Dingdong remains to be seen. In Q1, its revenue from both membership subscriptions and retail declined year on year, raising concerns about its inadequacy of innovation in a much-homogenized business.