Rumors regarding a potential sale of PUPU Supermarket have persisted for nearly two months, yet a definitive transaction has not materialized. However, an internal adjustment currently underway at the company is signaling unusual developments.
Information obtained indicates that PUPU Supermarket recently issued a notice requiring all regional procurement personnel to be centralized at the company's headquarters and relocate to Fuzhou for work. When questioned about whether this move is connected to the acquisition rumors, an internal source did not deny the possibility.
Within the fresh produce e-commerce sector, procurement constitutes a major cost component. "Even optimizing costs by just 1% can make a significant contribution to net profit," an industry insider commented.
The company is also continuously working to reduce its fulfillment cost ratio. A station supervisor in Southern China revealed that out of approximately 100 delivery riders at their site, only one is a full-time employee. The entire station, comprising 150-160 individuals including sorters, restockers, team leaders, supervisors, and the store manager, has fewer than 10 staff directly employed by PUPU Supermarket. "A few years ago, they still hired full-time staff, but after full-time employees left, they were not replaced. Part-time workers who want to become full-time can only wait for a slow promotion to a supervisor role," the source added.
This centralization of procurement and shift towards a casualized workforce underscore the razor-thin profit margins in the fresh produce e-commerce industry. In the instant delivery warehouse sector, the collapse of former industry leader Missfresh and the subsequent acquisition of Dingdong (Cayman) Limited by Meituan, which has long struggled with profitability, serve as cautionary tales.
As the industry consolidates and major players intensify their competition, the survival space for independent platforms like PUPU Supermarket is being severely compressed. A sale may no longer be a matter of choice but of necessity.
Centralization of Regional Procurement
The prelude to PUPU Supermarket's potential acquisition drama began in late May. Market reports at the time suggested that Alibaba, JD.com, and Meituan were deeply involved in a bidding war for the company, with valuations reportedly ranging from $2 billion to $5 billion. Specific details even circulated, including claims that Alibaba had dispatched an audit team for due diligence and that Meituan was continuously raising its offer.
By June, Alibaba was seen as the most likely acquirer, partly to address its weaknesses in the Southern China market. Foreign media reported that Alibaba planned to bid $1.5 billion for PUPU Supermarket, a price said to be more than double an earlier offer from Suning, potentially triggering a new round of bidding.
This rumored price tag, nearly double the approximately $717 million Meituan paid for Dingdong (Cayman) Limited, caused a stir in the industry. To date, only JD.com has publicly denied the rumors, stating it has no plans to acquire PUPU Supermarket and has not been in contact. Meituan, Alibaba, and PUPU Supermarket have remained silent.
While a deal has not been finalized, internal changes are already in motion. An internal source confirmed the recent notice regarding the procurement team's centralization to the Fuzhou headquarters. The source did not deny a link to the acquisition talks. A PUPU Supermarket supplier verified the change: "Procurement has now all been brought under the Fuzhou headquarters. We now only liaise with headquarters procurement."
Fresh produce e-commerce is a high-cost, low-margin business where procurement is a core function critical to profitability. The 2025 financial report for Dingdong (Cayman) Limited showed revenue of RMB 24.36 billion, a 5.6% year-on-year increase, but GAAP net profit fell 23.9% to RMB 232 million. Pressure on the cost side was a primary reason for the profit squeeze, with cost of goods sold rising 7% to RMB 17.25 billion.
Against the backdrop of acquisition rumors, every internal adjustment at PUPU Supermarket is not merely an operational optimization but a strategic choice concerning its survival and future direction. For potential buyers, a company with a more optimized cost structure and higher profit margins is clearly more attractive. Completing internal streamlining before a transaction also presents a more integrated acquisition target with a consolidated supply chain.
A PUPU Supermarket supplier admitted, "Profit margins are squeezed to the limit by PUPU. Procurement often asks us to run promotions, and we bear the costs. After deducting various contract fees, penalties, and promotional expenses, the profit margin is far below 10%. Suppliers don't make big money with PUPU, but sales volume is relatively stable, allowing for small profits from high turnover."
An industry analyst noted that centralizing procurement management could enhance PUPU's bargaining power and eliminate regional grey-market premiums. "Under the current cost structure, even a 1% optimization in procurement can contribute significantly to net profit."
Predominantly Casualized Workforce
Beyond the cost of goods sold, fulfillment cost is another major expense for fresh produce e-commerce platforms, though its proportion has decreased to around 20% as the industry has developed.
For the instant delivery warehouse model, brokerage research estimates that within the average cost per order, delivery expenses account for nearly half, with warehouse rent, picking, packaging, and loss allocation making up the remainder.
This means that whichever platform can lower its fulfillment costs stands a better chance of survival in this challenging industry.
In recent years, PUPU Supermarket's station staffing model has shifted decisively towards part-time work. A Southern China station supervisor stated that their site has about 100 delivery riders, with only one being full-time. The entire station of 150-160 people has fewer than 10 "insiders" directly contracted with PUPU Supermarket.
According to the supervisor, part-time riders sign service contracts; the platform is not required to pay social insurance or a base salary, only settling payment per delivery. "The company still hired full-time staff a few years ago, but after they left, no new full-time hires were made. If a part-timer wants to become full-time, they can only slowly rise to a supervisor level. It's the same at all stations."
The supervisor noted high staff turnover: "There are new people coming and old people leaving every day." An individual who applied for a part-time rider position said, "The HR person seemed very eager to hire, asking me at 11 PM if I was available for an interview the next morning." At one Southern China PUPU Supermarket station, a banner was seen offering a RMB 600 referral bonus for new delivery hires.
There are two main paths to reducing fulfillment costs: directly compressing labor costs to the extreme or utilizing technology and optimizing algorithms to improve workforce efficiency.
The average size of an instant delivery warehouse in the industry is about 300 square meters, but PUPU Supermarket expands its warehouses to 800-1000 square meters, stocking 6000-8000 SKUs. This allows for a wider coverage area per warehouse, aiming to reduce the total number of warehouses needed and dilute the unit fulfillment cost through higher order volume.
A part-time PUPU Supermarket rider revealed that the delivery fee per order has gradually declined in recent years, from an initial RMB 5 to RMB 3.5, then to RMB 3.2 and RMB 3. Last year, there were even rumors in the Fuzhou area of fees dropping to RMB 2.5. The aforementioned station supervisor added, "New riders start by taking one order at a time. Their permissions are gradually increased; to take 5 or 6 orders simultaneously requires providing more working hours and achieving a higher service score."
Challenges for Independent Platforms
Founded in 2016, PUPU Supermarket took nearly a decade to achieve profitability, a rare feat in the industry.
In 2024, PUPU Supermarket reported revenue of approximately RMB 30 billion with a gross margin of 22.5%, achieving its first annual profit while keeping its fulfillment expense ratio under 17.5%. In core areas like Fuzhou and Xiamen, this ratio decreased from 22% in 2021 to 15% in 2024.
Reaching this point was not easy. A long-time supplier recalled that during PUPU's early development, especially when its foothold in the Fujian market was not solid, the platform faced relatively tight cash flow and even experienced delays in supplier payments.
This history reflects the common survival struggles of independent instant delivery warehouse platforms. PUPU Supermarket has not disclosed the specific profit amount for its first profitable year in 2024. In the same year, Dingdong (Cayman) Limited reported revenue of RMB 23.07 billion with a GAAP net profit of only RMB 300 million.
Before its acquisition by Meituan, Dingdong (Cayman) Limited had achieved profitability for several consecutive quarters, proving its ability to "survive." However, its net profit margin remained at an extremely low level, easily eroded by cost fluctuations, failing to solve the problem of "thriving."
The dramatic collapse of Missfresh serves as a heavy footnote for the industry. Once listed on Nasdaq as the "first fresh produce e-commerce stock," after raising over RMB 10 billion, it fell into operational shutdown and payment defaults just a year after its IPO.
Within the same sector, the outcomes for pioneers have varied, but the lessons are strikingly consistent: if the instant delivery warehouse model cannot fundamentally solve the profitability issue, even substantial financing only prolongs a war of attrition.
As the industry converges and internet giants, with their denser warehouse networks, stronger capital, and willingness to forgo short-term returns, continue to intensify their efforts, the living space for independent platforms is being progressively narrowed.
In the latter half of last year, market reports suggested that Meituan's Xiaoxiang Supermarket was planning to enter Fuzhou, recruiting staff and selecting warehouse locations. Hema, which fully withdrew from the Fujian market in 2020, is also making a comeback, preparing to open new stores in Xiamen and Fuzhou after six years, directly challenging PUPU Supermarket's home turf.
According to its app, PUPU Supermarket's services currently cover only nine cities, including Fuzhou, Xiamen, Shenzhen, Guangzhou, Wuhan, and Chengdu. The aforementioned supplier analyzed that, given its current financial conditions, PUPU faces significant difficulty in nationwide expansion. It is more likely to open warehouses only in third- and fourth-tier cities within Fujian, such as Zhangzhou and Putian, to further consolidate its regional advantage.
Corporate records show that from 2016 to 2021, PUPU Supermarket completed five rounds of financing, with backers including prominent institutions like Gaorong Capital and IDG Capital. The company has also considered an IPO. Media reports indicated that in 2022, PUPU established a red-chip structure in preparation for a Hong Kong listing, and in May of last year, there were rumors it was engaging with top investment banks to restart listing plans.
However, the red-chip route, once a "golden channel," is not what it used to be. Following the implementation of new overseas listing filing regulations in 2023, red-chip structures and H-shares were brought under unified supervision, leading to a sharp decline in filing approval rates. In the first quarter of 2026, only one red-chip enterprise received overseas listing filing approval, while the H-share path accounted for over 80% of approvals.
For PUPU Supermarket, dismantling its long-established red-chip structure would not only be time-consuming but also involve high costs like share repurchases and tax settlements, making the path to an independent IPO increasingly distant. Whether from the perspective of its investors or its own capital progression, seeking acquisition may be a more rational exit strategy for PUPU Supermarket.
Comments