Nice Tuan (Shihuituan)
Alibaba-backed Chinese community group buying platform: raised USD 1.3 billion, closed in 2022
- Founded
- 2018
- Closed
- 2022
- Lifespan
- 4 years
- Total funding
- $1.3 billion
- Country
- China
- City
- Beijing
- Sector
- E-commerce
- Founders
- Chen Ying, Wang Peng
- Investors
- Alibaba, GGV Capital, Huachuang Capital
- At its peak
- More than USD 1.3 billion raised over seven rounds, including a USD 750 million Series D in March 2021
- Cause of closure
- Lost to competitors
What did it do?
Nice Tuan, known in Chinese as Shihuituan, was a community group buying platform that sold fresh food and daily goods to neighbourhood groups in China. It was founded in 2018 by Chen Ying. It grew with Alibaba's backing and spread to more than 2,000 counties and cities. Headcount peaked at about 10,000. It raised more than USD 1.3 billion over seven rounds.
Why did it shut down?
When it closed its USD 750 million Series D on 31 March 2021, the company was in the middle of a cash-burning price war with far larger rivals. In March 2021 the regulator fined it RMB 1.5 million. Alibaba set up its own MMC unit in the same period. In August 2021 founder Chen Ying told staff in a letter that it was pulling out of many cities; a plan to raise USD 1 billion at about USD 5 billion came to nothing, and more than 20 cities were handed to Alibaba's Hema. Part of wages was deferred from November 2021. In March 2022 operations closed in every city, and suppliers were offered about 30% of what they were owed.
The story
Shihuituan was founded in Beijing in 2018. Chen Ying's company built a model that took orders through neighbourhood chat groups and delivered goods to a local group leader. Alibaba became an early investor.
The pandemic made this one of the hottest fields in China. The company spread to more than 2,000 counties and cities, staff numbers went from 4,000 to 9,000 in four months and reached about 10,000. On 31 March 2021 it closed a USD 750 million Series D.
But Pinduoduo, Meituan and JD.com were burning cash for the same customer, and Alibaba set up its own MMC unit. In August 2021 Chen Ying wrote to staff that they were pulling out of many cities. A planned round at about USD 5 billion fell into doubt.
In March 2022 operations closed in every city, leaving suppliers offered 30% of their money and deferred wages behind.
Lessons for founders
- Customers won with subsidies are not yours when a rival has deeper pockets: work out how many months you can last before entering a price war with giants.
- A strategic investor can also be your competitor: when Alibaba built its own MMC unit, the company lost a source of both money and traffic. Do not depend on a single strategic partner.
- Spreading to 2,000 cities does not mean winning in each: shrinking an organisation that went from 4,000 to 9,000 in four months costs more than building it.
Sources
- Shihuituan closed its business nationwide and community group buying is turned off (FreshPlaza, 2022-03-30)
- Shihuituan shuts down nationwide (Chinese) (Jiemian, 2022-03-31)
- Behind the shutdown of Shihuituan (Chinese) (Yicai, 2022-03-30)
- Shihuituan founder's internal letter on closing multi-city operations (Chinese) (PEdaily, 2021-08-21)
- Alibaba looks on as Nice Tuan hits bottom (Jiemian)
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