A Chinese Instacart clone raises $100 million
May 5, 2015 02:19 PM
Dmall, a startup grocery shopping service, has raised $100 million in an initial funding round led by IDG Capital Partners, a venture capital firm that focuses on Chinese companies.
Dmall offers a service similar to that of Instacart and Google Express in the United States: A consumer places an order with Dmall online, a Dmall employee buys the items from a supermarket and delivers them to the consumer,
Dmall is testing its service in Beijing through a mobile-optimized site, m.DMall.com and a mobile app, according to founder Liu Jiangfeng, a former e-commerce executive at Chinese smartphone maker Huawei.
“After a consumer places the order on Dmall, we will get the products from supermarkets and deliver them in one or two hours,” Liu says. “Our business mainly focuses on consumer transactions and last-mile delivery. The operating costs are low because we do not keep inventory in warehouses.”
In order to promote its service, Dmall sells products at 5% below the supermarket price. For orders above 59 yuan ($9.50), delivery is free, Liu says. Instacart typically charges $3.99 to deliver an order within two hours.
Liu recognizes the competition is fierce. “There are about 4,000 grocery e-commerce companies in China, and only 5% of them are profitable so far,” Liu says. “But the market potential is big. Annual transaction volume could reach 3 trillion yuan ($482 billion) in China.”
Liu says Dmall plans to expand into other large cities this year. The company plans to hire 1,000 workers to deliver orders in each city.
IDG Capital Partners is an active investor in Chinese Internet e-commerce companies. Among the companies it has funded are apparel e-retailer Vancl.com, No. 12 in the Internet Retailer China 500, and online food retailer Womai.com, No. 21.