ByDr Mathew McDougall
The founder & chief executive officer for Digital Jungle
It is no secret that China is the world’s largest e-commerce market, thanks to the staggering amounts of money Chinese consumers have been spending online. According to China’s National Bureau of Statistics, online retail transactions in the country hit 3.877 trillion yuan ($589.61 billion) in 2015, a 33.3 percent increase from a year earlier.
Online grocery sales in China over the past few years rose nearly 50 percent, while hypermarket and supermarket sales rose only 6.7 percent. Due in part to the intersection of eCommerce adoption and the Chinese culture emphasising food; occupying their daily life, celebrations, festivals and holidays.
Chinese consumers are loving foreign grocery/food products. Health-conscious middle class Chinese consumers are seeking imported grocery products that are clean, green and trustworthy, even if they have to pay a little more.
Chinese consumers are typically purchasing from a range of established cross border/eCommerce marketplaces (Tmall, Tmall Global, JD,Yihaodian – Number One Store) from a wide range of International grocery players. These same grocery retailers are now also evolving their strategies to include branded eCommerce sites and developing their social commerce channels.
One Australian grocer, Woolworths has established a presence and is rapidly growing their Chinese social media channels (on Wechat and Weibo) to grow brand and engage their increasingly growing social community. (Note: Digital Jungle manages these social media channels on behalf of Woolworths)
Sainsbury’s started with Tmall last September, joining British grocery retailer, Waitrose. Waitrose plans to export own-label products to China sold under the Waitrose Duchy Organic and Waitrose Baby brands available via the Royal Mail store on Alibaba Group-owned Tmall Global. Initially 30 products will be on sale in China, including biscuits, cereals and nuts as well as organic and non-food items. The UK retailer will extend its offering in China to include Essential Waitrose and Waitrose 1 items later this year.
Woolworths, Sainsbury’s and Waitrose are in the company of Carrefour, Walmart, Tesco and many other International grocery retailers. All vying for the Chinese consumer and their interest in Western goods.
Further to that, new entrants from regional and non traditional geographies such as South America, Eastern Europe are getting involved. Online grocery shopping will continue to grown but face some challenges in particular sub-categories of grocery (i.e., fresh foods) due to the slow development of cold-chain delivery infrastructure and shipping standards.
Additionally, Chinese consumers are frequently moving across channels, platforms and devices when they do their grocery shopping, and are increasingly looking for an integrated shopping experience. Grocery retailers in China will have to implement initiatives to transform themselves into omni-channel retailers to provide convenient and satisfying shopping experience by expanding single channel offerings to multi-and cross-channel, such as bricks-and-mortar stores, online platforms and social media. In addition, online-to-offline (O2O) strategies need to be adopted by hypermarkets and supermarkets to get leverage on social media and brand cut through.
Certainly an interesting sector and one that is rapidly evolving. But at the end of the day, it will be price, quality and delivery that will bring repeat business.