FreshFresh: An Online Fresh Food Supplier as a Lean Startup

This case describes how FreshFresh, a Shanghai-based online fresh food platform, worked to develop a sustainable business model by following the lean startup approach. After coming up with the idea to create FreshFresh at the end of 2013, Bin (Leo) Shen and Baiyuan Fang conducted round after round of hypothesis formulation and testing. After 2 years of efforts, FreshFresh became a online fresh food platform well regarded by both customers and investors. As of June 2016, FreshFresh had 700,000 registered users, and the majority had a repeat purchase rate (i.e., making two or more purchases) of around 45%. In March 2016, FreshFresh announced that it had raised USD 20 million in Series A round financing. On June 30, FreshFresh won the 2016 TopDigital award, making it the only fresh food e-commerce platform recognized at that year's innovation publication ceremony among all the TMT players. However, like 99% of companies in the online fresh food industry, FreshFresh hasn't built a profitable business model yet. In 2015, it lost about RMB 20 million, accounting for 20% of its total revenue. After a series of adjustments carried out in the previous years, Shen saw signs of hope that FreshFresh would make a profit in the following months. Yet looking at FreshFresh's performance report in July 2016, Shen decided to change the expansion strategy and give up entering other cities. In his mind, working in the online fresh food industry would be a marathon. Looking into the future, how should FreshFresh lay out its strategic resources? How could this new startup develop a profitable and sustainable business model?