After decades of stunning growth, there’s little space left in China’s highly consolidated e-commerce market. Fresh food e-commerce—one of the few less-tapped verticals to crack into this field—is, however, expected to become the next “whirlwind” driven by the wide adoption of healthier lifestyles, product diversification, and customer habits.

Different from traditional e-commerce, fresh food e-commerce in China has much higher logistics requirements both in shorter delivery time and cold-chain logistics to ensure product quality. The timely and high-frequency nature of fresh food e-commerce orders clicks with what China’s O2O and “new retail” trends can offer. Coined by Jack Ma, the term refers to a new format where internet technology connects and optimizes offline outlets, online stores, and the overall supply chain for achieving high efficiency and self-service.

China’s fresh food e-commerce has recorded strong growth with trading volume soaring 80% YoY to RMB 91.3 billion in 2016 (in Chinese), increasing steadily from RMB 4.05 billion in 2012, according to a report by China E-commerce Research Center (CECRC). This figure is expected to jump to RMB 150 billion in 2017.

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Trading Volume of China’s fresh e-commerce market 2012-2017, unit: RMB 100 million                       (Image credit: CECRC)

Despite the swift market growth, the fresh food e-commerce industry has experienced a roller-coaster journey for the past few years. The rising market potential has drawn crowds of players to the battlefield together with vast amounts of funding from VCs. The number of domestic fresh food e-commerce platforms reached 4,000 in 2016, concentrated mostly in first-tier cities like Beijing, Shanghai, and Shenzhen.

However, the market remains relatively untapped compared to previous e-commerce booms for a reason. The high cost of building end-to-end cold chain logistics, reducing waste, and increasing margins, have all raised the barrier to entry. Even those who manage to build their cold-chain logistics systems will still face profitability problems: Margins in the sector are very low not only due to expensive sourcing and logistic costs but also to low retail prices as more players enter and can only compete on price.

The asset-heavy nature of this industry makes funding a crucial link to support the healthy development of a platform. Due to the high costs, incomplete cold food chain logistics system, however, 88% of the companies are losing money, 7% are recording heavy losses with 4% breaking even and only 1% are actually profitable, according to the CECRC report.

So when the capital winter hit China’s internet market in 2016, fresh food e-commerce platforms were among those who most felt the pressure. Another CECRC report (in Chinese) shows that a total of fourteen companies in this field closed their business last year, including Amazon-backed Yummy77.

This year, together with the revival of China’s capital market, the fresh e-commerce market is warming up. Nearly RMB 3 billion was raised this year in six fresh food e-commerce fundings. After the reshuffle of last year, however, this market is no longer a playground for small startups; there are deep-pocketed backers standing behind nearly every top platforms that survived 2016.

Top-10 fresh food e-commerce platforms in terms of MAU (Image Credit: TrustData)

JD Daojia (京东到家), an O2O e-commerce platform that offers one-hour fresh food and grocery delivery, takes the first place in terms of monthly active users (MAU), data from research institution TrustData shows. The service now partners with over 70,000 local merchants and provides on-demand grocery, fresh products, snacks, flowers, baking and pharmacy shopping in 22 cities, with more than 30 million registered customers. The company’s latest report shows that its income jumped nearly eight times in the first half of this year.

Tencent-backed Miss Fresh (每日优鲜), Womai (中粮我买网, the online fresh food retailer operated by state-owned food processing holding company COFCO Group), Alibaba-backed Hema Store (盒马鲜生), and JD-backed Fruit Day (天天果园) took the other four places in the top-five list.

Additionally, the data shows that top platforms enjoy a dominating advantage in the market, leaving little space for new entrants. MAU of JD Daojia is on par with that for rest of the top-ten platforms combined. Brand awareness, mature logistics support, and traffic are all contributing to the rise.

However, there’s no definite winner in China’s fast-evolving e-commerce market. Numerous competitors are poised to dig in the field. Alibaba can easily create synergy effects among its Tmall Supermarket, Hema Store,, and Yiguo, a fresh e-commerce platform that Tmall invested in. Traditional supermarkets (Walmart and RT Mart) and logistics companies (SF Express and YTO Express) are also setting their sights on the sector to achieve their online transformation.

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Emma Lee

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.

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