A new distribution channel to China’s hinterlands is opening opportunities for seafood suppliers in China.
As online sales of fresh produce like seafood have rapidly increased in China, online group buying is becoming increasingly popular in the country’s more far-flung regions, where home delivery is less frequently available.
Termed “she quan ji gou” in Mandarin, which translates roughly to “community group buying” in English, the groups – the biggest of which are Xingsheng Youxuan and Shihui Tuan – are built around community leaders who coordinate orders through a WeChat group and take commission of 10 percent on sales.
Community group-buying platforms have proliferated in the past year, with names like Ai She Gou (“Love Social Shopping”), Bai Sha Song (“100 Delivery”), and Hello Xian Sheng (“Hello Fresh”). Earlier this year, one of the most prominent platforms, Shihui Tuan (also known as Nice Tuan) drew USD 196 million (EUR 161 million) in investment from Alibaba and other investors.
A typical group, such as one contacted by SeafoodSource that is located in a suburb of Penglai in Shandong Province, allows members to order imported cod, salmon, and shrimp (stocked by Shihuituan), which they order through a leader or coordinator, who in turn helps place orders for less tech-savvy members. Leaders are often shopkeepers, retirees, and full-time mothers seeking extra income. Each WeChat group is capped at 500 people and posts a selection of products every day, with orders dispatched when they total a certain value. The community leader takes the bulk delivery and delivers individual products to the end-customer’s doorstep.
The model aligns well with Chinese system of social management, whereby residential compounds and small neighborhoods are overseen by groups of locals – who often wear red armbands – entrusted by the Communist Party to gather and disseminate information regarding social services, crime, and party policy.
The new sales model is likely to give consumers in lower-tier cities and more far-flung regions and towns greater access to a wider range of perishable goods, including seafood. It also creates a workaround for the expensive delivery service fees for fresh produce ordered from conventional e-commerce platforms.
China’s retail grocery market – estimated to be worth USD 800 billion (EUR 657.3 billion) in 2019 – remains largely offline, accounting for only 10 percent of the 2019 spend online, though that figure has increased during the ongoing COVID-19 pandemic. The grocery market remains a battleground of thousands of platforms, most of them loss-making, with a handful of big players like Alibaba and JD.com seeking an edge.
Photo courtesy of Shihui Tuan
