Meituan scales down fresh produce business Ella Supermarket

The company is closing three out of seven stores in China.

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Meituan scales down fresh produce business Ella Supermarket

Meituan has closed three Ella Supermarket locations in Jiangsu province, nearly halving its number of locations, as reported by Chinese e-commerce news outlet and 36Kr affiliate Retail Boss Insider.

Similar to Alibaba’s Hema, Ella Supermarket is a superstore that offers 6,000 products—over half of which are imported—featuring online ordering, as well as 30-minute delivery within three kilometers.

The brand debuted in May 2018 in Beijing as a pilot initiative to sell fresh produce to consumers. Two months later, it expanded into Jiangsu with two 4,000-square-meter stores in Wuxi, followed by three more in Changzhou in October.

Ella’s three stores in Changzhou have ceased operation today. According to Ella’s website, it has four remaining locations in China, including two in Beijing and those in Wuxi.

In a statement to Technode, Meituan said the closures were due to mismanagement but fresh produce remains a primary strategic focus over the long term. The company had originally planned to open 20 Ella Supermarket locations across China in 2018.

It isn’t the only one struggling to prosper in China’s fresh produce sector.

In 2018, with the exception of Alibaba’s Hema, many of the sector’s major players—including Yonghui Super Stores, JD.com’s 7Fresh, and Suning’s SuFresh—also failed to reach their targets for new store openings.

Last month, SF Express closed its SF Best Brand stores in several major Chinese cities, while Super Species, which is backed by grocery giant Yonghui (and, by extension, Tencent) recorded losses of over RMB 1 billion (USD 150 million) from 2017 to 2018.

Meituan is in the process of optimizing its businesses—such as bike-sharing platform Mobike—as it looks to evolve beyond a costly growth-first strategy towards a more sustainable model.

The company’s net losses soared to RMB 8.5 billion (USD 1.26 billion) in 2018, up nearly 200% from the year before.

Meanwhile, the company is upsizing its fresh fruit and vegetable vendor business, having opened a new location in Shanghai this week, following an expansion in Beijing last month.

36Kr is the parent company of KrASIA.