Chinese consumers 'more accepting' of produce e-commerce, says Yiguo

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Chinese consumers 'more accepting' of produce e-commerce, says Yiguo

Despite the Chinese consumer trend of spending less on each online fruit and vegetable purchase, an executive from the country's leading fresh food online retailer says there is no cause for concern. yiguo

Yiguo vice president Eric Li told the reduction in average spend had resulted from smaller family sizes, but highlighted there was more variety per order and more frequency of purchases.

Li will be speaking at next month's Produce Marketing Association (PMA) Fruittrade event, to be held in the Chilean capital Santiago on Nov. 9 and 10. He will participate in a session entitled ‘The Next Frontier: Exploring New Opportunities in China’ and will focus on the 'key competitiveness, challenges, creativities' required to succeed in the world of online sales.

"There are more varieties per order, more frequency to purchase, and the preference of smaller packages given generally smaller family sizes in China. This is what we observed as a trend in the online fresh food retailing industry," he said.

"It actually also reflects the fast development of the industry in terms of the capability of carrying more items, delivering on a more cost-efficient basis, and consumers’ higher acceptance of purchasing fresh food online."

The trend was also recently noted by co-founder Loren Zhao at another PMA-hosted event, the PMA Fresh Summit, held in Orlando this month. In a seminar, Zhao said new approaches would be needed to grow.

Li went on to say Yiguo was positioned as a 'one-stop shop' for consumers to purchase high-quality fresh food from all over world, including fruit, meat and seafood.

"This brings significant synergy in our business and greatly helps us in building stronger supply chain, cold chain logistics, and sales capabilities, which eventually bring further values to consumers," he said.

He highlighted there was still large growth potential in the online fresh food category, and said the company therefore did not see the necessity in moving into other retail sectors, like Alibaba and JD have done.

"We are proud of our specialties and capabilities in sourcing, selling, and delivering cold chain required food products," he said.

"In 2015, online sales takes around 13% of total retail sales. In comparison, online sales for fresh food only takes around 3%. This shows a big market and a large potential for the growth of selling fresh food online.

"Also, because of the high cost to build cold chain storage and delivery networks and the significant time required to build unique sourcing capability, we believe that entrance barrier is high in the industry and first movers will have competitive advantages. So far, we have not been thinking about selling other products."

Yiguo has now become the leading online fresh food retailer in China, according to Li, who said the company has 10 million registered users and a daily gross merchandise value (GMV) of US$1.6 million.

It is also exclusively operating the Tmall Supermarket Fresh Food business under Alibaba - China's leading business to consumer (B2C) sales platform - and is targeting higher-end consumers with its website.

"Overall, we believe in the importance of “economy of scale” for success in the industry, especially from the purchasing and cold chain logistics perspectives," he said.

"Of course, unique propositions would also be necessary, particularly from sales perspective, followed by customized purchasing practices supporting the unique sales proposition."

'Catching up with old and new friends' at PMA Fruittrade

Li's talk at November's PMA Fruittrade will provide critical insights for those doing business in China's online fresh food sector, or for those wishing to do so in the future.

"[The session] is about the facts and trends of the fresh food e-commerce industry in China, and we will use Yiguo as a case study to discuss the key competitiveness, key challenges, creativities required for the business, as well as where the future lies in the industry," he said.

"Some specific attentions will be paid on the potential of tier 2 and 3 cities in China for online fresh food sales."

He added that attendance at the event provided great benefit to Yiguo, and allowed him to forge new contacts and learn about regional suppliers.

"As Yiguo provides quality fresh food products around the world to Chinese consumers, in PMA Fruittrade we can always get a chance to catch up with our old and new friends in the industry, i.e. meeting the world’s major suppliers to make deals, getting updated on supply side info and trends, and as a front-end retailer bringing the most updated consumer preference information to our suppliers," he said.

"This year, we are also very interested in learning more about South American suppliers and products in the event."

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