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Despite leaving work after produce markets close around 7 p.m., Wang Jia, a Shanghai-based interior designer, still manages to cook dinner every night. For her, shopping online for fresh produce has become a necessity.
Online grocery platforms such as Miss Fresh, Alibaba’s Freshippo (also known as Hema), and newcomer Dingdong give customers access to food delivery at the touch of a button, with the ability to order 24 hours a day and select delivery times.
Online-to-offline (O2O) e-commerce, which connects online purchase interfaces with offline fulfillment, became popular with investors in China beginning in 2014. There were 198 fresh food O2O companies established that year, according to data from BigData-Research widely cited in Chinese media, with intense competition for consumers from entrants including then-popular and now defunct Beequick and Xuxian.
After a 2014 to 2015 peak, many small- to medium-size companies were closed down or acquired in 2016, indicating a cooling market. E-commerce giants such as Alibaba and JD took part in the competition, pouring money in supply chain, logistics, and other infrastructure.
According to an iResearch report, the gross merchandise volume (GMV) for the fresh food e-commerce market grew nearly 60% year on year to RMB 139 billion (around $20 billion) in 2017.
However, the convenience offered by the service is indisputable for some consumers TechNode spoke with in Shanghai.
“I don’t know how to pick vegetables. Vendors in vegetable markets might overcharge me. Shopping online is more fair,” Kelly Wang, a housewife who has been using the service for years, told TechNode.
Tian Gang, a real estate agent, uses the service because he doesn’t like going out after work. “Young people nowadays have more pressure than before. They are too lazy to go out,” he said.
However, concerns still remain in terms of waste, quality, user experience, and sustainability. As frequently as Wang cooks at home, she said food in her fridge still goes bad because the combination box she buys from JD Fresh is too much for her needs.
“I bought two green onions last time and they were wrapped with too much plastic. Over-packaging is an issue,” Zhuo Yihuan, a music student from Shanghai Conservatory of Music, told Technode.
“It looks like a great bargain. But it’s just a promotion, you end up receiving a tiny discount,” Modi Ma, a copywriter, said.
Housewife Liu Jianhua does not buy groceries online because she is concerned online products are not as fresh as those she buys from street vendors. She added, “Real vegetable markets are good for elders like me who are not familiar with the internet. For young generations, it has fallen out of favor.”
Despite increasing demand, financial pressures continue to plague even the big e-commerce players. According to Chinese media outlet 36Kr, JD.com’s fresh grocery platform, JD Fresh, is planning to lay off employees after the 618 e-commerce shopping festival later in June. Meanwhile, Alibaba’s Freshippo closed one of its offline shops in Suzhou, in eastern Jiangsu Province, and announced that it was shifting ownership of another offline shop in the southern province of Hainan.