Online food retail growing on the back of food scares

By William Hao Wei Yang

- Last updated on GMT

Related tags: Retailing

Online food retail growing on the back of food scares
China is witnessing a change of consumer behaviour towards online food sales as a result of a spate of safety scares across the country. 

Chinese consumers have grown more skeptical toward what they buy and where the food comes from​,” said Yung Chou, professor at Shanghai Business School. “They don’t ask for cheap prices, but for good quality​.” 

Internet retailers like womai.com and Shengfung Express have seen food become one of the fastest-growing online sectors, with increasing numbers of consumers, mainly from the emerging middle-class, willing to pay for what they believe to be greater quality and safety. According to Reuters, experts estimate that China’s online sales of fresh produce could reach RMB40bn (US$6.5bn) by 2017. 

Middle-class customers are the backbone of this growing trend of online food shopping​,” said Chou. “Many domestic and international retail giants like Walmart and Yunghuei are planning to devote more resources to the online food sales sector. They foresee the value and potential in this sector​.” 

‘Revolutionary moment’

According to Chou, the convenience of online food shopping has brought sales in excess of what traditional supermarkets have been seeing. Euromonitor predicts that China’s online shopping will reach 664m tons by 2017, an 8% growth compared to 2013. However, it won’t completely replace the role that traditional supermarkets play in people’s everyday lives. 

I call this a revolutionary moment in China’s food industry,” he explained. “But still, Chinese people still enjoy going to supermarkets with their family on weekends so it will always have a cultural meaning to Chinese consumers​.”

While Walmart announced the launch of its online fresh produce channel in China late last month, domestic retailers like womai.com are also ramping up their online efforts. 

Self-sustaining

According to Chang Chu, the vice president of produce major Cofco, which owns womai.com, the online retailer is quickly expanding across the country. In its first year of operation, womai.com provided more than 500,000 customers with deliveries. But unlike other similar businesses, womai.com has focused on growing its self-sustained food sales ahead of seeking expansion. They only sell Cofco’s products to their customers because they want to maintain customers’ trust in that brand. 

We see a huge potential in the food sales sector, and it is still growing​,” said Chu. “We decided to be self-sustained because we want to ensure the quality of our food. Our goal is to let our customers shop without security concerns​.” 

Unlike local supermarkets, where consumers struggle to find real fresh produce, womai.com sources its produce directly from local farmers. By skipping the middlemen, Chu believes it can guarantee the freshness of its items. 

We shorten the process of food circulation by directly buying them from local farmers​,” he said. “We also provide nationwide delivery services to our customers. They can order anything they want from our website and the food will be at their doorsteps by the end of the day​.” 

Related topics: Markets, East Asia, Supply chain, China

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