INTERNET: Online Grocer Shuts Down, Q&A Site Pares Back

Bottom line: The closure of online grocer Tablelife and a major overhaul at paid advice service Fenda show investors are growing more impatient with Chinese Internet companies without clear road maps to profitability.

Online grocer Tablelife shuts down

Two news items on downsizing websites reflect not only intense competition on China’s Internet, but also a growing impatience among financial backers for money-losing sites without a clear road map to profitability. It wasn’t long ago that anyone with a dot-com name could easily find hundreds of thousands or even millions of dollars in funding, as both domestic and foreign investors threw money at anything with even the slightest hint of growth potential.

Fast forward to the present, when investors are becoming far more selective and avoiding companies that can’t show a clear paths to profits due to stiff competition and notoriously stingy Chinese web surfers. That reality has apparently spelled the end of the line for online gourmet grocer Tablelife, and a major scale-back for paid advice service Fenda following a 47-day disappearance from the Internet. 

Online groceries have become a tough area of the Internet lately, following recent massive new campaigns by e-commerce juggernauts Alibaba (NYSE: BABA) and (Nasdaq: JD) to build up their businesses. Both companies have announced plans to spend 1 billion yuan ($150 million) or more on the space, including a major JD campaign to promote the Yihaodian site that it acquired this year from Walmart (NYSE: WMT). (previous post)

That kind of pressure was apparently too much for Tablelife, which has officially shuttered its service just a year after its founding, according to media reports. (Chinese article) The company’s website was still functioning when I checked it, though it only contained a QR code that linked to an app that I was unable to install.

Reports say that all food items have been removed from the app, and that calls to the company’s customer service phone number are going unanswered. One persistent reporter did manage to reach a representative, who said the closure was only temporary and that Tablelife would be back online in the future. Another enterprising reporter went to the company’s headquarters in Shanghai, to find the place empty of all workers.

Obviously it’s impossible to say what’s happening at the company without more insider knowledge, but speculation is rampant that Tablelife will never reopen. Such a closure would follow a similar collapse earlier this year of Yummy77, whose backers included US e-commerce giant Amazon (Nasdaq: AMZN). (previous post) Online fresh fruit specialist FruitDay may also be running into trouble, following other recent reports that it had closed all of its offline stores.

Fenda Sharpens Focus

Next there’s Fenda, which is trying to build a business in the tough market for paid consultations for web surfers who don’t usually like to pay for anything. The company’s website reportedly went silent on August 10, before suddenly coming back to life 47 days later, according to Chinese media reports. (Chinese article)

Now the newly reopened Fenda has greatly scaled back its scope to only offer advice in three areas, namely workplace, health and science questions. Fenda explained its 47 day absence by saying it was making technology upgrades as part of a “big move” at the company. Previous reports had indicated that Internet giant Tencent (HKEx: 700) has become a stakeholder in Fenda, so perhaps the company will still have some time to show it can earn profits in its new form.

At the end of the day, Tablelife’s sudden closure shows that investors are probably withdrawing from the online grocery business due to fierce competition from Alibaba and JD. The online advice business is far less competitive, which is good for names like Fenda. But it’s also a problematic area since it’s far from clear that consumers will be willing to pay for this kind of consultation when they can probably find similar information for free at other online sites.

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