Ama­zon to bring fresh gro­cery to Shang­hai doorsteps

China Daily (Canada) - - FRONT PAGE - By WANG YING in Shang­hai


China’s fast- grow­ing on­line gro­cery busi­ness now has a new heavy­weight player, as Ama­ Inc, the largest on­line re­tailer in the US, an­nounced last week it would en­ter the fresh pro­duce field, which an­a­lysts ex­pect will gen­er­ate more than 100 bil­lion yuan ($16 bil­lion) in rev­enue in the com­ing years.

By co­op­er­at­ing with a set of part­ners that are spe­cial­ized in fresh gro­cery e-com­merce, Ama­zon is now of­fer­ing more than 600 fresh gro­ceries of fruit, veg­eta­bles, meat, eggs, seafood and cakes to Chi­nese cus­tomers.

Ama­zon’s lat­est move is en­cour­aged by the bright fu­ture of the on­line gro­cery mar­ket in China.

Fig­ures from con­sult­ing firm show China’s e-com­merce fresh gro­cery mar­ket ex­panded 69 times to 29 bil­lion yuan in 2014 from a mere 420 mil­lion yuan in 2010, and the mar­ket po­ten­tial is ex­pected to surge to 54.4 bil­lion yuan in 2015.

Ac­cord­ing to fore­casts from the China E-com­merce Re­search Cen­ter, in the next five years, the in­dus­try will grow at an an­nual rate of 100 per­cent, and dou­ble to more than 100 bil­lion yuan, ac­count­ing for about 15 per­cent of the to­tal fresh gro­cery mar­ket by then.

Ama­zon’s trial in China’s on­line fresh gro­cery mar­ket can be traced back to May 2014, when it in­vested $20 mil­lion into a lo­cal gro­cery e-com­merce plat­form

“Chi­nese peo­ple have a unique pas­sion for eat­ing, and their strict re­quire­ments for fresh raw ma­te­ri­als are also sec­ond to none,” said Shi Jian­jun, vice-pres­i­dent of Ama­zon China. “Ama­zon strives to be the go-to place for cus­tomers to shop high­qual­ity au­then­tic se­lec­tion and that ap­plies in fresh area, where we see in­creas­ing cus­tomers’ de­mands. High qual­ity fresh gro­cery de­liv­ery ser­vice en­sures a bet­ter cus­tomer ex­pe­ri­ence for such re­quire­ments.”

Mar­ket in­sid­ers ex­pect Ama­zon to bring its so­phis­ti­cated ex­pe­ri­ence in the on­line re­tail­ing mar­ket to the highly com­pet­i­tive gro­cery mar­ket in China.

“In spite of be­ing a late­comer, Ama­zon is still a strong player be­cause it has rich ex­pe­ri­ence in dis­tri­bu­tion lo­gis­tics and ef­fi­cient sup­ply chain, some­thing most Chi­nese play­ers lack,” said Li Cheng­dong, an in­de­pen­dent e-com­merce strat­egy an­a­lyst.

As early as 2007, the on­line book­seller-turned-re­tail­ing be­he­moth made a foray into the fresh gro­cery mar­ket in the US. It es­tab­lished Ama­zonFresh on Mercer Is­land, Seat­tle, to of­fer on­line gro­cery de­liv­ery, and then ex­panded to a num­ber of ar­eas in Seat­tle, Los An­ge­les area, San Fran­cisco, San Diego area, New York City, and Philadel­phia.

In China, the on­line gro­cery busi­ness de­vel­oped fast too. Since 2012, many big­name e-com­merce play­ers have launched fresh gro­cery plat­forms, in­clud­ing lead­ing ex­press de­liv­ery com­pany Shun­feng Ex­press, and ma­jor Chi­nese e-com­merce op­er­a­tors of Alibaba, Yi­hao­dian, and oth­ers.

How­ever, the in­dus­try is still wait­ing for a dom­i­nant player, Liu Jiangfeng, founder and CEO of Dmall, was quoted as say­ing by South­ern Me­trop­o­lis Daily.

In spite of the rosy out­look, the cruel fact is that al­most no com­pany has ac­tu­ally made a profit from sell­ing fruit or veg­eta­bles, ac­cord­ing to Li, who be­lieved low­er­ing lo­gis­ti­cal costs is of great im­por­tance to th­ese com­pa­nies.

“Fresh prod­ucts are heavy, big and ex­pen­sive to trans­port and stor­age, and the av­er­age loss for th­ese on­line op­er­a­tors could reach 10 per­cent, and can be as high as 50 per­cent if it is fruit,” said Li.

The key to cost cut­ting is qual­ity con­trol. There are some com­pa­nies do­ing well in cost con­trol, but gen­er­ally speak­ing, the high cost of the fresh gro­cery e-com­merce mar­ket is yet to be solved.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.