Coronavirus drives spike in online grocery in China-

Demand spikes for online grocery in response to coronavirus

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Demand spikes for online grocery in response to coronavirus

China's coronavirus has caused a jump in online grocery business in the country, says The Economic Times. Millions of consumers across the country who previously had refused ordering their groceries online have used meal-delivery and grocery delivery services for the first time.

This may be because fresh grocery delivery platforms are seen as essential for consumers to minimize the risk of infection, strategy manager at AgencyChina Michael Norris told the paper. The epidemic has forced consumers to seek other eating options, setting the expectation that the online food delivery sector will account for even more of China's retail sales in 2020.

Demand from the epicenter of the outbreak - Wuhan - has caused Alibaba's Hema chain to increase vegetable supplies. Missfresh, Tencent-backed delivery platform, experienced a quadrupling in online grocery orders during the first five days of the Lunar New Year as compared to last year.

So, big funds and tech giants that run leading platforms in China are seeing a sudden increase in demand.

Some of these same companies - like Alibaba Group Holding LTD. and Tencent Holdings Ltd. - were previously on the brink of collapse. Norris went on to say that “before the Chinese New Year, many of these firms were looking precarious and their only lifeline was the deep pockets of their big backers,".

While e-commerce platforms have benefited from the onslaught of first-time customers, few have the concrete resources to fulfill such spikes in demand. Logistical issues with inventory, delivery staff and difficulties with physical roadblocks pose challenges for the platforms.

Additionally, delivery times have as much as doubled and companies are running out of stock. Missfresh manager Liu Guofeng said that vegetable supplies ran out every day during the first week of the Chinese New Year.

What the publication calls a "boom" is one of the many complexities of how the virus is transforming markets and consumer behavior in the world's second largest economy. While the grocery delivery sector has faced challenges to gain traction in China

“Even though the virus outbreak brings a lot of challenges, it will also create opportunities for these online grocery startups,” the publication quoted Richard Peng saying.

“It’s fundamentally changing user habits, as they open up to the idea of buying groceries online.”

Similarly, online services like mobile gaming and internet mails have surged in the country since the outbreak began.

Read the full article here.

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