China : the world’s biggest online grocery market.
In 2018, China’s online grocery (foods, beverages, personal care, household care, and pet care) accounted for 32.5%of all grocery expenditures, up from 1.4% in 2010.
Between 2014 and 2018, online grocery revenues increased at an average rate of 35.1% per year in China, whereas the annual growth rate of brick-and-mortar grocery varied between 5.7% and 3.7%.
In 2019, the market value reached around USD 65.5 billion. The online grocery sales in China are expected to grow rapidly in the coming years.
Several factors boost online sales revenue 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.
There are 5 principal reasons for the increasing demand:
- Higher penetration of internet and smartphones
- Increasing affluence and emerging middle-class
- Rising population of young generation
- Less shopping time (social competition and job pressure)
- E-commerce facilities (home delivery service)
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.
Selling foreign brands on Chinese online grocery distribution platforms
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.
While for some tier cities where it is impossible to purchase exotic groceries, e-commerce platforms are channels for those people who live far way from big cities like Shanghai and Beijing to have access to imported trendy products.
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 optimization by online grocery channels
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.
Foreign brands are perceived as more reliable in China
In China, consumer prefer imported dairy, baby & mother groceries as they are perceived as reliable and premium. And for the young generation, foreign snacks are for them very fashion and have a different and better tastes.
Health Hazards: When it comes to food safety and health related issues, Chinese products rank at the bottom. 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 online grocery selling
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. Hema 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.
Chinese online grocery platforms are great opportunity for foreign brands, especially for those companies who are not yet present in China, because they don’t have to have physical presence in China to sell their products.
However, it is easy said than done. If you need any help, you can contact us, we will guide you hand by hand until your brand’s success. Gentlemen Marketing Agency, an expert in Chinese marketing.