One-hour grocery delivery service, Beequick, announced completion of a Series C financing round totaling 70 million USD on Wednesday, vaulting its valuation to around 300 million USD, Tencent Tech reports.
Hillhouse Capital, Eastern Bell Venture, Tiantu Capital and Sequoia Capital all participated in the round. The news came as a morale booster at a time when most Chinese startups are in the red and faced with an imminent cash crunch following months of Chinese stock market turmoil.
Launched on May 15, 2014, Beequick was initially aimed at serving residents of Beijing who wanted fresh produce and daily necessities delivered to their door within a guaranteed hour.
It at first grew patiently and steadily under the wing of ride-hailing app Didi Chuxing, taking advantage of Didi’s rising popularity by offering in-app coupons to Didi’s constantly increasing number of users. It did not have a standalone app until October 2014.
Beequick has expanded to a dozen major Chinese cities and boasts more than 100,000 orders per day and five million registered users. Products sought after on Beequick include spicy crawfish, Haagen-Dazs ice cream, maxi pads and condoms.
Founder Zhang Ying worked at IBM in the United States for ten years before returning to China in 2009. He said his business thrives on the guarantee of freshness and speed. “Why so? Because this is the way it should be when we live so close together,” Zhang said at a conference in January.
In order to cut costs, Beequick has opted for a lighter model. It does not have warehouses, distribution hubs or delivery staff, and instead works directly with mom-and-pop corner shops sprinkled across the city. The shop owner in closest proximity to the user’s location is responsible for completing the last mile of delivery, mobilizing idle community resources to a maximum degree.
Beequick prefers mom-and-pop shops over convenience store chains. “Chain stores have so many interested parties to consider. Business talk with them from top to bottom is a lengthy process. On the contrary, mom-and-pop shops are much more flexible and are willing to do things chains are reluctant to do,” Zhang told iceo.com in an interview.
But the downside of Beequick’s management is that there are too many variables at stake, it is reported. One challenge, for example, is to provide training to individually owned corner shops and ensure high-quality and standardized services.
Beequick’s rival Daojia (literally “To Your Home”), owned by e-commerce giant JD.com, is a force to be reckoned with in that it enjoys the readily available logistics and supply chain resources amassed by JD. An asset-heavy company, Daojia currently has more than 50,000 part-time couriers and saw expansion to 13 cities within five months from launch. JD’s recent investment in supermarket chain Yonghui will give another advantage to Daojia.
Perhaps what worries Beequick the most is, in order to show how serious JD is about grocery deliveries, JD founder, Liu Qiangdong, drove a motor scooter himself in May and knocked on doors of Daojia users to deliver their orders. This is a rare event for the JD.com boss. Last time he pulled a stunt like this, it was 2011.
Liu Qiangdong in May, 2015. Photo courtesy of On.cc.