Amongst the plethora of e-commerce commodities, food products have been a recent addition to the list. While countries like UK and USA are still shaping up their online food shopping platform, China has officially become the world’s biggest online grocery market.
China : the world’s biggest online grocery market.
The abundance of risks associated with selling food products online has prevented this particular industry from blooming as fast as digital and hardware commodities. The uncertainties of buying and selling food products are aplenty, specifically fresh produces and groceries. Yet, combatting those predicaments, the Chinese online grocery market has grown up to $41 billion in 2015. According to the reports of IGD, ‘China’s grocery growth story has been phenomenal’. The Chinese online food market is expected to reach $180 billion by 2020.
Several factors have been affecting the exponential growth of online groceries in China.
Demand: From Alaskan Crab to Italian cheese, the demand for authentic and exotic products have grown in the Chinese market. The meat, seafood, dairy, fruits and vegetables from the US are being sold widely in the Chinese market. Mid budget shoppers are increasingly interested in experimenting with these products. Foreign cuisines, thanks to media for promotion, have been a major influence in the Chinese food industry which is resulting in a booming demand for such supplies.
Supply: These business opportunity has been successfully utilized by the e-commerce portals like Alibaba and JD.com. These two websites have been leading providers of digital gadgets, apparels, and everyday products. But they have introduced a fresh food section to meet the growing demand for foreign produces.
One of the major challenges that has been taken care of is collaborating with wholesalers from overseas. Alibaba has launched an edible section in Tmall website which directly allows producers from Australia and New Zealand to sell products to the Chinese customers. Several renowned foreign brands like Quaker cereals, ocean spray juices have tied up with JD and Alibaba and are now directly selling commodities to the Chinese consumers via these two websites.
Cost: Believe it or not, the price of most of these fresh foreign products is much cheaper than those available in the supermarket. Several exotic products like Kiwi fruit, Mexican avocados, mackerel, live lobster and other imported food items are available for a cheaper price. One of the most used online food portal is Alibaba’s Taobao. This is because Alibaba and other e-commerce websites are directly working with the wholesalers and as a result, are able to make ingredients available at a cheaper price.
Health Hazards: When it comes to food safety and health related issues, Chinese products rank at the bottom. Most of the workers of the food industry have little or no education, they are poorly paid and have the least concern about hygiene and sanitation. Lack of awareness, safe food processing, and negligence has made the Chinese food very unsafe for consumption. Food corporations like Shuanghui International, one of China’s leading meat supplier, has been reported for the presence of maggots, harmful bacteria, illegal additives in their meat. Yet, they continue to conduct their business.
Availability of fresh imported food has been a blessing in the Chinese market. The knowledgeable people in the mainland rely on these produces rather than local products. Food poisoning and cancer have plagued the Chinese population, and as a last resort, people head towards the foreign products even , at times, at a higher price. (more information on Food scandals)
Benefits of e-commerce: Instead of setting up a store, it is always beneficial to sell the commodities online. Not only does it reduce the establishment charge, but also exclude the complicated government policies which can lead to a hassle. Tiresome legal proceedings often prevent foreign traders to set up a store in China. Moreover, the option to buy online and fast delivery service is also making online grocery purchase more popular amongst the masses. Advertising can cost a lot in China… that s sure !
A major section of the Chinese population are well-off and prefer premium groceries over unhealthy local products. Apart from JD and Alibaba, other grocery companies like Walmart has also launched their own food e-commerce portal, yhd.com which offers express delivery options. So, the grocery and food products are made available in less than 24 hours to the buyers. The flexibility, availability and hygiene of the groceries and produces are the primary reasons behind the rampant growth of food in e-commerce in China.