Internet shoppers get a taste for fresh food

By Meng Jing (China Daily) Updated: 2015-11-12 10:44

"With such a big investment, many of the smaller firms will struggle to break even. They will either go to the wall or join up with major players," Lu said, citing JD.com's multimillion-dollar investment in startup Fruit Day as an example.

Online players also face tough competition from traditional retailers such as supermarkets and chain stores. They are not going to give up market share without a fight.

"I think most of the online players will struggle to make money at this stage," Wang Xiaoxing, an e-commerce analyst at Analysys International in Beijing, said.

"They have to compete with offline supermarkets, which have mature cold chain logistics and strong relations with fresh produce suppliers," Wang added.

"They also offer cheaper goods, and shoppers can immediately pick up what they want instead of waiting days for online purchases."

But Carol Fung, corporate vice-president at JD.com, has a different view.

She has studied the supermarket business model and is looking to branch out in a new direction.

"Online grocery has to be different from offline supermarkets," she said. "You cannot sell what already exists in bricks-and-mortar stores, because you can not beat them in price. But in terms of high-end food, such as imported steaks or seafood, those can generate a profit."

Tmall Fresh, an online site launched by Alibaba in 2013, has a similar strategy. It offers Chinese consumers dragon fruit from Vietnam, steak from Australia and cod from Canada, which can be delivered directly to homes within 72 hours.

Even Chu's home-grown oranges can be found there. At 148 yuan for 5 kilograms, they are slightly more expensive than Sunkist oranges from California.

"The demand and the willingness of shoppers to pay higher prices for what they perceive to be high-quality food has fueled the growth in the online grocery market," Huang Aizhu, who is in charge of Tmall Fresh, said.

"With China's growing middle class, we believe the demand for high-quality food in the country will become even stronger," she added.

Last month, Tmall Fresh put together a raft of agreements with about 100 associations dealing with fresh food suppliers from 25 countries.

This has allowed the platform to introduce a greater range of imported goods, such as avocados from Mexico and kiwi fruit from New Zealand. The move came just weeks before the online shopping festival on Nov 11－the biggest annual sales event in China.

"To help customers avoid getting poor products, we have already offered a service which allows them to check the origin of their purchases to make sure they are authentic," Huang said.