China online food retailing booms after safety scares
China online food retailing booms after safety scares
Consumers shaken by series of contamination scandals turn to the internet to buy safe produce with Cofco one of the biggest players
Mainland consumers are responding to a powerful new marketing tactic that plays to a widespread fear of food contamination - the promise of safe groceries sold online.
Pledging produce direct from the farm, vendors have found food is becoming one of the fastest-growing segments of internet retailing as they cash in on scares from cadmium-tainted rice to recycled cooking oil.
The trend is adding momentum to an online retail boom driven by a rapidly expanding middle class, with companies such as Cofco and Shunfeng Express betting that a decent slice of a 1.3 billion population will pay for the peace of mind they say their services offer.
"People are willing to pay a higher premium than in the West. In other markets, like the UK, food e-commerce is about convenience. Here, there's going to be a higher quality and safety premium," said Chen Yougang, a partner at consultancy McKinsey.
People are willing to pay a higher premium than in the West. In other markets, like the UK, food e-commerce is about convenience. Here, there's going to be a higher quality and safety premium
CHEN YOUGANG, MCKINSEY
But convincing some sceptical consumers about food quality will remain a battle. Shanghai-based Zhang Lei expressed doubt on the credentials of some products being touted as organic.
"Everyone knows in China organic is not the real thing," said Zhang, a mother of one.
Nonetheless, total online sales of fresh produce on the mainland could rocket to 40 billion yuan (HK$50.7 billion) in five years from about 11.5 billion yuan this year, said Zhou Wenquan, a senior analyst at Beijing Orient Agribusiness Consulting.
Research firm Euromonitor predicts growth will comfortably beat that in major overseas markets. It expects the mainland market to grow by about 8 per cent by 2017 from
Consumers shaken by series of contamination scandals turn to the internet to buy safe produce with Cofco one of the biggest players
Mainland consumers are responding to a powerful new marketing tactic that plays to a widespread fear of food contamination - the promise of safe groceries sold online.
Pledging produce direct from the farm, vendors have found food is becoming one of the fastest-growing segments of internet retailing as they cash in on scares from cadmium-tainted rice to recycled cooking oil.
The trend is adding momentum to an online retail boom driven by a rapidly expanding middle class, with companies such as Cofco and Shunfeng Express betting that a decent slice of a 1.3 billion population will pay for the peace of mind they say their services offer.
"People are willing to pay a higher premium than in the West. In other markets, like the UK, food e-commerce is about convenience. Here, there's going to be a higher quality and safety premium," said Chen Yougang, a partner at consultancy McKinsey.
People are willing to pay a higher premium than in the West. In other markets, like the UK, food e-commerce is about convenience. Here, there's going to be a higher quality and safety premium
CHEN YOUGANG, MCKINSEY
But convincing some sceptical consumers about food quality will remain a battle. Shanghai-based Zhang Lei expressed doubt on the credentials of some products being touted as organic.
"Everyone knows in China organic is not the real thing," said Zhang, a mother of one.
Nonetheless, total online sales of fresh produce on the mainland could rocket to 40 billion yuan (HK$50.7 billion) in five years from about 11.5 billion yuan this year, said Zhou Wenquan, a senior analyst at Beijing Orient Agribusiness Consulting.
Research firm Euromonitor predicts growth will comfortably beat that in major overseas markets. It expects the mainland market to grow by about 8 per cent by 2017 from