Tech

Online food sales on the up

By Chen Limin and Wang Xing (China Daily)
Updated: 2010-09-17 07:47

Hungry office workers are increasingly turning to online food retailers to satisfy their cravings. Provided to China Daily

Sector gets seasonal shot in arm as customers snap up mooncakes

BEIJING - With growing sales online, food may well be the next hot commodity in China's e-commerce market.

Online food sales are experiencing a boom as the Mid-Autumn Festival, when eating mooncakes is a traditional practice, draws near, and as growing numbers of Chinese companies enter the online food market.

Mooncake sales reached 6 million yuan ($891,400) between Aug 31 and Sept 6 on Taobao.com, the country's largest online shopping site, where up to 20 mooncake brands are now available.

Another e-commerce site Amazon.cn, Amazon.com Inc's Chinese subsidiary, has also embarked on large-scale mooncake sales this year, part of its effort to boost sales in its newly launched food section.

Wang Hanhua, chief executive officer of Amazon.cn, said that food sales take up a large proportion of China's retail industry, and "it's just a matter of time" before online food sales match those offline.

Amazon, which ventured into the field in June, now offers around 8,000 different kinds of food.

But it was not the first to sell food online. Dangdang.com, another popular online retailer, started selling food in 2008.

Jiang Qiang, vice-president of Dangdang, said that food sales now account for 10 percent of its total revenue, and this proportion is expected to grow in the future.

Clothes and electronic devices accounted respectively for 23 and 17 percent of total online sales in China in the second quarter of this year, according to domestic research firm Analysys International.

Food currently accounts for a fraction of sales compared with clothes and electronic devices, as it requires special conditions such as the right temperature and humidity, which can be a big challenge to retailers.

However, major e-commerce players think selling food online still has a rosy future.

"Strict controls on storage and delivery are the key," said Shang Yan, marketing manager of Womai.com, a popular food retail site under China Oil and Food Corporation, one of China's largest food manufacturers.

Womai set up a zone with constant temperature and humidity in its storehouse for products such as chocolates and red wine.

It also requires that products that have passed one-third of their shelf life are not allowed to be put in storage, and those that have passed two-thirds are not allowed to be delivered.

It is now setting up its own delivery team, instead of using third-party logistics companies, and aims to have 95 percent of its products delivered within 24 hours.

Dangdang, on the other hand, said that food with high profit margins, such as health products and local specialties, can help set its products apart from those sold offline and cover the additional costs of selling food online.

"Over the past few years, Chinese Internet users have become used to buying things online, such as clothes, cosmetics, electronic devices, and food," said Cao Fei, an analyst with Analysys International.

However, certain kinds of food, such as seafood, are not ready for online sales yet, as they are highly perishable.

Most online food retailers avoid selling such products as they are not easy to store or deliver. If they do, they usually sell a ticket, which customers can use to pick up the products from designated outlets.

China's e-commerce sales volume surged 60 percent in the first half of the year to 2.25 trillion yuan, with the number of online shoppers reaching 142 million, according to China e-Business Research Center.

China Daily