Nice Tuan, a Chinese grocery app, has received $750 million in investments from among others; Alibaba Group Holding Ltd (NYSE: BABA), Anatole Investment, Jeneration Capital, D.E. Shaw, and DST. Also recognized as Beijing Shi Hui Tuan LTD, Nice Tuan was founded in 2018 to venture into the lucrative Chinese community grocery sector.
Booming grocery industry
The Chinese grocery delivery sector is vast, with some of the biggest tech companies like Meituan, Tencent Holdings Ltd, and JD.Com Inc (NASDAQ: JD) showing interest. The once-struggling industry has also seen a big improvement since the outbreak of the Covid19 pandemic with more home-bound consumers.
This recent business growth has seen startups like Nice Tuan seek investment from bigger companies to gain more market share. The industry is expected to grow to over $190 billion by the year 2025.
Increasing market share
Funds raised from the just-concluded series D round of investment led by Alibaba and DST for Nice Tuan has raised will be used to acquire more fresh produce and give the startup a head start against its competitors.
As it stands, Nice Tuan is available in over 1500 cities with daily deliveries upwards of 15 million. With this new round of financing, coupled with 7 previous rounds that totaled over $550 million, Nice Tuan will most likely shake up the market.
Other industry players
The Chinese grocery market is expected to have a Compound annual growth rate of 5.5% up to 2023. This means that it will retain its position as the leading grocery market in Asia and overtake the U.S. as the world’s biggest grocery consumer.
With the ongoing pandemic and changing market trends, traditional grocery trade will continue to be out phased by technology. Ali baba is therefore not the only tech company investing in this sector with Tongcheng Life, a group buying app receiving funding from Toshiba Corp and streaming service JOYY Inc (NASDAQ: YY). MissFresh, a fresh produce online platform, is also financed by Alibaba.
Jin Tao, equity managing director at Cynus, says that he believes that Nice Tuan will emerge as the market leader with good management and strong financing.