'Intelligent Vegetable Market' opens in Tianjin

Tianjin's first vegetable market supported by app, WeChat and other diverse online services including delivery and procurement, opened before Spring Festival and saw its Lantern Festival sales triple its figures from the eve of the lunar Chinese new year.

The market, named the Zhihui Vegetable Market, or "Intelligent Vegetable Market", offers 24-hour service to clients in a 1.5 kilometer area for more than 49,000 families, promising one-hour door delivery for free, said Yang Zhenxiang, senior manager at Guoan Technology Holdings (Tianjin), the market's parent company.

Covering 1,000 square meters, the market is run by Guoan Community, a neighborhood comprehensive service provider including vegetable shops, healthcare, rental, delivery and laundry service, just to name a few.

Initiated in 2016, Guoan Community has 41 shops in Tianjin and plans to open six Intelligent Vegetable Markets there this year.

Tianjin's new vegetable market makes Guoan's total shops around China 449 in 11 cities including Beijing, Tianjin and Hangzhou.

The company's app users number 146,875 to date and the number of WeChat buyers has hit 135,418 in China.

Yang Chen, general manager of Guoan Technology, told China Daily the community shops and vegetable markets have different business models compared with popular e-commerce offline service providers such as Freshhema, JD Home Arrival and Meituan.

Freshhema's evolution is based on hefty private investment operation, while Guoan is State-owned, with more meticulous investment plans.

JD Home Arrival and Meitun operate their services by chain management in delivery and product providers, while Guoan has its own production centers around China and in Tianjin, it has a warehouse of up to 5,000 square meters and 500 deliverymen.

The profit for Guoan is narrow, 1 to 2 percent, and this is also true for the newly opened Intelligent Vegetable Market. The investment for a 1,000 sq-m market hit above 10 million yuan ($1.59 million), and it is likely to take five years to achieve sound profits for such shops, market insiders noted.

The general manager indicated the community shops envision the "stickiness" between the brand with local neighbors rather than short-term profits.

"We're keenly aware of the challenges and only solid services can cement our presence among savvy competition," he said.

To that end, since its beginning the company has launched its services including healthcare, rental, medicine, laundry and shoe-washing services simultaneously with the sales of vegetables and fruits and Guoan plans to move into more fields, such as drug stores.

For Guoan, he said, the key challenge is never the cost of labor and delivery, as is the case with other ecommerce providers, but building long-term trust.

Yang expects the one-hour arrival, first of its kind among e-commerce offline services, as well as the household services addressing the needs of the grassroots population, could create synergic effects for the brand.

Statistics indicated Guoan Community achieved a combined revenue of 150 million yuan in Tianjin last year.