Tapping into China’s e-commerce scene
E-commerce, wildly popular in traffic-paralyzed cities, is fast becoming a cost-effective option for seafood traders. Extensive seafood offerings have popped up on the country’s leading shopping portal, Taobao.com, and online grocery store Yihaodian.com. Traders on both websites point to the lower costs of doing business as well as the increasing acceptance of online shopping in China.
Seafood marketing professionals see online sales as a realistic option for sales of higher-end product. Fan Xubing, head of Beijing Bridge, a marketing consultancy advising importers of seafood, sees online sales as “a new trend getting more popular recently. Some of our clients have already started to sell their products online. But it’s more of a compliment to other sales channels than a strategy in itself.”
Both Taobao and Yihaodian operate nationally, unlike most local retail chains. However, a survey of Taobao suggests the bulk of online seafood sellers operating stores on the site appear centered on Zhejiang Province near Shanghai. The most commonly sold products were oysters, yellow croaker and hairtail fish.
While traders don’t identify themselves by company name, one such trader contacted on the Taobao instant messaging system offers domestically sourced oysters at RMB 32 per 500 grams, pomfret (RMB 72 per 500 grams), prawns (RMB 60 per 500 grams) and sea bass (RMB 35 per 500 grams). Based in Ningbo, an hour from Shanghai, the trader also sold squid and yellow croaker at RMB 30 per 500 grams on Taobao.com.
The Taobao trader explained most customers are based in Zhejiang Province and neighbouring Jiangsu Province as well as Shanghai.
“This means the delivery fees won’t be very expensive. We seldom sell seafood to customers who live far away. We’d rarely sell in Beijing,” he said. However, the trader said he has air-freighted deliveries of seafood to Beijing, “with bubble chamber and with ice in it.”
Other Ningbo traders on Taobao said they’d deliver to Beijing during cold weather months, but not during hotter summer months due to difficulties controlling freight temperatures.
Unlike Taobao, which lists fresh product, Yihaodian restricts seafood sales to frozen and dried product. The site also restricts customers to what’s on offer in each of the 31 cities it serves. Brands like Taiwan-based Royal Ocean, which markets crab from Chile and Ireland in Beijing through Yihaodian. The firm retails the crabs at RMB 98 per box with each box containing a frozen 500- to 700-gram crab. Royal Ocean uses its page on Yihaodian to display photos of the crabs and the packaging as well recipes and photos of the firm’s office. Royal Ocean doesn’t distribute through conventional supermarkets in Beijing.
Fan Xubing has noticed prices are “generally higher” on outlets like Yihaodian. “This works for a higher-end consumer who’s not so conscious or aware of wholesale prices. This won’t be a problem for them,” he said.
Delivery charges for Yihaodian users in Beijing depend on spend: Customers spending less than RMB 50 on product weighing less than 5 kilograms pay RMB 10 for delivery. Orders worth more than RMB 100 are delivered free for the first 10 kilograms, with each kilogram over that charged at RMB 1. Likewise, an order of RMB 200 weighing less than 20 kilograms is delivered free, with additional kilograms charged at RMB 1 for delivery.
Yihaodian engages local express delivery firms, which operate legions of couriers on electrical bikes around city streets. Customers can pay online or pay cash on delivery. Taobao customers are required to use the Paypal-like payment processing service Alipay, created by parent company Alibaba.
Online retail is growing fast in China: Internet shopping accounted for 4.3 percent of total Chinese retail sales in 201,1 but this figure will rise to 8.6 percent by 2015, according to Analysys International, a Beijing-based e-commerce consultancy. It says online transactions will be worth RMB 255 billion in 2015. While 40 perncet of the country’s Internet users currently shop online, this figure will rise to 50 percent by the end of next year, predicts Analysys.
Majority-owned by the Ping An financial services group, Yihaodian grew its sales in 2011 by more than 100 percent, according to company reports. While the site has operations nationwide, its sales are strongest in more affluent cities like Beijing. Yihaodian co-founder Gu Gang has been quoted in local media saying his website’s operating costs are 5 precent less than those of bricks-and-mortar stores.
Whereas Yihaodian is a specialized online grocery store, Taobao is an e-commerce giant targeting various ends of the market. The Alibaba Group, which owns Taobao, last year split the portal into an e-Bay style Taobao Marketplace, a B2C Taobao Mall, and a search site, eTao. Taobao effectively drove e-Bay from the China market while dropping all charges to users, instead making its money from advertising and charges for search optimization.
Given China’s embrace of e-commerce, portals like Yiahaodian and Taobao may be a smart way of driving sales here for foreign seafood importers. Fan Xubing sees the bulk of sales confined to localities. “Buyers in each city who buy on Taobao will only choose the supplier in the same city as them,” he said.
Likewise, Yang believes seafood sales won’t take off until Taobao promotes seafood on its site in the same manner as it publicizes fast-moving consumer goods and clothes sales on the site.