New Retail digitalizes fresh food trade to top huge potential

On-demand food delivery platform Ele.me is banking on China's fresh food e-commerce sector and developing its new Exianda project to help its customers buy fresh vegetables from home.

The company will cooperate with local vegetable markets to run the project, in an attempt to help groceries improve their digital operations, and let consumers and small restaurants buy their food more efficiently.

Xiong Bin, vice-president of Ele.me, said the company will also build an open digital platform for supermarkets and retail chains. The platform will include supports in the form of a digital supply chain, distribution, finance and retail functions. It has inked in-depth cooperation agreements with Carrefour, RTMart, Bailian and Wumart.

Xiong said the growth of orders for fresh products from third-and fourth-tier cities has surpassed that from first-and second-tier cities, showing huge potential.

Ele.me data revealed fresh product delivery is continuously increasing and the transaction volume jumped ten-fold in the past year. More than 33 percent of consumers who buy fresh vegetables through the app are the younger generation, with their ages ranging from 25 to 29.

The number of middle-aged and elderly Chinese customers who buy fresh vegetables on Ele.me has increased by more than 500 percent in 2018, compared with 2017.

The average value of an order placed on Ele.me for vegetables is about 60 yuan in Beijing, according to the platform. So far, the fresh food delivery services of Ele.me have expanded into 400 cities from 100 in March 2019.

Data from consulting firm iResearch showed China's fresh food e-commerce trading volume exceeded 200 billion yuan ($29.1 billion) in 2018, and the number is expected to soar to 705.4 billion in 2022, representing huge market potential.

The rapidly growing number of China's high-income consumers has become a key driver of premium brands and other high-quality food products.

Chinese e-commerce giant JD said it would open more than 500 7Fresh－JD's fresh food stores－within five years, eyeing the opportunities emerging from the fresh food retail sector.

"Fresh food is the most demanding category in e-commerce, and covers a range of fields including logistics, finance and user-end operations. But at the same time, it has huge market potential," said Lyu Haoze, an analyst with the China E-Commerce Research Center.

Lyu said the online fresh food sector has entered a shakeout phase, and survivors are likely to see explosive growth.

Hema Fresh, a fresh food chain backed by Alibaba Group Holding Ltd, is also likely to reshape the landscape of China's retail industry.

As a pioneering example of Alibaba's New Retail strategy, which integrates online with offline shopping and provides a refreshing consumer experience, Hema had opened 150 brick-and-mortar stores across the nation as of June 30, 2019.