(CapitalWatch, Nov. 3, New York) Grocery delivery service Missfresh (Nasdaq: MF) announced that sales from its in-house fresh food brand Xiang An Xin soared 250% year-over-year in the third quarter.
Missfresh said the surge in sales of Xiang An Xin products was a result of the company's continued investment in its supply chain, bolstered by the trend of in-house goods becoming a growth driver for retail companies.
Xiang An Xin was launched in 2016, two years after Missfresh was founded, and provides consumers "value-for-money" and safe fresh food. Since its launch, the brand's range has grown to over 200 products including meat, produce, eggs, and baked goods. Missfresh said it created the brand to ensure the consistency and quality of its products and achieve higher gross profit margins.
Recently, in-house brands are trending among both consumers and businesses. According to a report from private brand development company Daymon International, the in-house brand market has grown by 22.7% in 2021, a significant jump from previous years. The report also said that 60% of households with an annual income of more than 9,000 yuan have purchased in-house brands and food and beverage products are driving the overall growth of these brands.
According to Missfresh, industry insiders believe in-house brands came to the forefront of the e-commerce market because with these brands companies are able to increase their gross profit margins of individual products and stabilize the quantity and quality of supply. In-house brands also lead to the constant development of new products which diversifies options for shoppers.
On top of Missfresh's success with Xiang An Xin, the company is also working to create more in-house brands including the "Food Wonderland Workshop," a range of preserved fruit snacks, and a line of daily necessities "Made by Missfresh" that will include products like disposable face marks, cling wrap, and wet tissues.
Missfresh is the second largest grocery delivery service in China, and it has solidified its position as a leader and innovator in China's neighborhood retail market by pioneering the Distributed Mini Warehouse (DMW) model to provide both fresh foods and fast-moving consumer goods (FMCGs) on demand.
The company also partners with local businesses to bring them online and improve the efficiency of stores. With a heavy focus on technological development, the company utilizes AI in production and analyzing consumer preferences to adapt to demand. Missfresh said that through its focus on technological innovation, users can order quality fresh products through their mobile app or program embedded into third-party social platforms to be delivered in 37 minutes on average.
Missfresh went public on June 25 this year, and according to its IPO prospectus, the company saw around 128% year-over-year gross profit growth in 2020 and a total net revenue of over 6.1 trillion yuan ($935 million).
In the second quarter of 2021, Missfresh recorded 35% increase in GMV growth. In the third quarter, Missfresh expects to generate revenues in the range of 2 billion yuan to 2.1 billion yuan, representing year-over-year growth of up to 45%. Gross margin is expected to improve between 250 basis points and 350 basis points on a quarter-over-quarter basis.
Over the past five days, shares in Missfresh gained 16% on Q3 improvement. Intraday Wednesday, MF stock was trading at $4.13 per share.
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