Xu Zheng is the founder and CEO of MissFresh, the online grocery retailer established in 2014. The online platform delivers fresh produce, including fruit, vegetables, meat, dairy products, and beverages. In March 2021 the grocery platform had 7.9 million active users, and listed on Nasdaq on June 25th 2021, raising USD $273 million. According to MissFresh’s website, it aims to be the “largest platform to drive digitalization of China’s neighborhood industry.” Xu Zheng is a graduate of CKGSB’s Chuang Community, a start-up incubation program jointly run by CKGSB and tech giants like Tencent, JD and Baidu.
In this new alumni series, we track down CKGSB’s most influential graduates, many of whom have gone on to lead unicorn companies – privately held companies valued at $1 billion USD or more. According to CB Insights – a global platform which provides authoritative and up-to-date information on the world’s billion-dollar private companies – China has created a total of 217 unicorn companies between 2017 to 2021. Thirty-nine (or 18%) of these companies are run by CKGSB alumni, including 35 companies where CKGSB alumni are founders or co-founders, and 4 companies where they serve as the chairman, CEO or president.
As China’s leading business school, it’s not surprising that CKGSB has been able to produce so many business leaders playing a pivotal role in China’s economic development. More than 18,000 successful entrepreneurs, industry leaders and executives of multinational corporations have chosen to study at CKGSB for the original China insights, world-class faculty and peer-to-peer learning with China’s movers-and-shakers. More than half of CKGSB’s alumni are at the CEO or Chairman level and, collectively, lead one-fourth of China’s most valuable brands.
Xu Zheng was admitted to the University of Science and Technology, Beijing, at the young age of 15, majoring in a double degree in mathematics and business administration. By 28, he had become Lenovo’s youngest general manager, and by 33 had set up MissFresh.
At Lenovo, Xu was instrumental in setting up the Legend Holdings subsidiary, Joyvio Group, an agricultural company. After three years managing the Joyvio Group, Xu Zheng had gained a thorough understanding of the agricultural supply chain and drew up plans to create an online platform which used data analytics to integrate the entire grocery supply chain – from sourcing to warehousing to delivery. As of November 2021, MissFresh’s direct sourcing rate reached 93%. It also owns 200 farms and 350 factories across China.
Xu Zheng introduced MissFresh’s innovative “Distributed Mini Warehouse” (DMW) model in 2015. It involves every city having a larger warehouse as well many smaller DMWs, located within a radius of 3 kilometers of every household. This permits MissFresh to guarantee a maximum delivery time of one hour, and an average delivery time of 36 minutes. In March 2021, there were 631 DMWs spread across 16 cities in China.
The DMW model was the first of its kind when Xu Zheng introduced it in 2015. Since then, many companies around the world have sought to emulate the highly innovative model such as the European grocery retailers Gorillas and Flink, both of which have received large amounts of venture capital investment.
MissFresh has accumulated a great deal of consumer data through its Retail AI Network (RAIN), which automates 98% of decisions in procurement and inventory management. MissFresh has also used RAIN to provide software as a service to more than 20 supermarket chains and 150 stores, helping companies improve store layouts, product variety and inventory management.
In January 2022, Xu Zheng partnered with the digital marketing platform Ocean Engine, owned by ByteDance to launch a livestream online grocery shopping service on Douyin (the Chinese version of TikTok), which allows customers to make grocery purchases in real-time.
Xu Zheng’s aim with MissFresh is “to give people access to good-quality food at any time.” The platform was initially targeted at millennials who Xu Zheng believes are the generation that is open to using mobile apps, who do not want to spend a lot of time in a supermarket. Xu Zheng also sought to provide an alternative to the traditional grocery retail industry which leads to food wastage and low gross profit margins. Although online grocery retail accounts for 5-8% of the total market, Xu Zheng expects this will increase in the future.
Moreover, the industry is not slowing down – MissFresh orders increased by 300% year-on-year during the pandemic due to the ‘stay-at-home’ economy driving the neighborhood retail market. Research also suggests that after the pandemic consumers will continue to use on-demand grocery shopping platforms: According to data by iResearch, the online grocery delivery market will surge from a RMB 458.5 billion (USD $73 billion) in 2021, to RMB 820 billion (USD $130 billion) by 2023.