Online sales changing China’s seafood market

Published on
January 20, 2013

China’s thriving Internet commerce scene is becoming an increasingly important distribution channel for domestic seafood sales, in some cases cutting out the middle man and allowing producers ship directly to end users. That’s the case for Xia Xinmin, a 25-year old in Houmen, in southerly Guangong province who opened a shop on the eBay-style Taobao.com, part of the Alibaba group founded by Chinese Internet business icon Jack Ma.

Speaking to SeafoodSource, Xia explains his yellow croaker — RMB 38 (USD 6.11, EUR 4.58) per 500g — and Mantis shrimp — RMB 22 (USD 3.53, EUR 2.65)/500g — sell to private buyers on a Taobao store he has named ‘Houmen Pearl.’ “Restaurants usually have their own suppliers.” Sales usually peak in summer, when he makes RMB 2,000-RMB 3,000 (USD 321-482, EUR 241-362) per month, compared to an average RMB 1,500 (USD 241, EUR 181) in winter. “Everything we sell is farmed by my family members so I can assure buyers that it’s fresh and of good quality,” says Xia, who also offers dried shrimp — RMB 24 (USD 3.86, EUR 2.90)/500g — on his online store. Given the average annual rural income was RMB 6,700 (USD 1,076, EUR 808) in 2011, Taobao sales are a useful supplement to Xia’s earnings.

Vendors who spoke for this article explained that as well as avoiding rent, Taobao.com is also a promotional opportunity, and a cheap source of market information. “We can talk with and know more people online,” says Xia. Taobao.com provides an Internet chat service to allow buyers to communicate. The Taobao store is a good complement to the brick-and-mortar store for Zhejiang-based Zhao Jia, who sells 50 kilos of crabs per month online, two thirds as many as he sells from his store. “But selling online isn’t easier than selling face to face. You have to advertise really well online to draw customers. And then the problem is you don’t know what kind of people you’re dealing with.”

The issue of insurance remains key for the vendors interviewed by SeafoodSource. Taobao.com allows buyers to add a “return insurance” fee to each order, which ensures that unsuitable items can be returned. Zhao Jia says he’ll take back crabs from unsatisfied customers if the crabs are dead upon arrival. “I insist customers take a photo of the dead crabs and then I take responsibility for them.”

Luckily for him that doesn’t happen very often. “We engage only reputable freight companies, such as Shunfeng, and that’s expensive when you’re sending crabs by air.” Zhao charges RMB 65 (USD 10.44, EUR 7.84) per 250g male crab and RMB 100 (USD 16.07, EUR 12.07) per 300g female crab. He adds RMB 20 (USD 3.21, EUR 2.41) per crab for freight costs and accepts minimum orders.

However many vendors also speak of the communication problems inherent in online sales. Wang Jia, who sells freshwater crabs on his Taobao store out of his sales yard in the central city of Wuhan, says his store is “still in the stage of establishing a good reputation among online users … it’s important that sellers and buyers communicate successfully … the danger is that some buyers will post negative comments online just because of communication mix-ups. I try to be nice and proper with each potential and actual buyer in order to keep my store’s reputation intact.”

Wang sells 70kg per month during peak season, and covers freight costs when customers purchase eight or more crabs — “eight crabs is worth about RMB 1000 (USD 160.67, EUR 120.66), it’s a good order for us.” He expects to expand his online sales by 50 percent in 2013.

Wang is evidence that Taobao.com is helping change business models in China’s seafood business. The son of a crab farmer, Wang hopes to use his online store to build a brand name for his crabs and cash in on demand for crabs such as the Yang Chenghu variety from a lake of the same name in Jiangsu province. “I want to let people know that the crabs from Honghu Lake are as good as the crabs from Yang Chenghu Lake.”

Whereas his father depended on finding customers in wet markets, Wang will work from home, online. The country’s 564 million Internet users helped ensure China’s Internet industry was worth Rmb 450 trillion (USD 72.3 trillion, EUR 54.3 trillion) in 2012, up 32 percent year on year according to Gao Xianyin at the Internet Society of Group, an umbrella group representing e-commerce and other enterprises such as gaming. While he doesn’t have precise figures for e-commerce Gao believes online sales are an “important way of easing the effect of the economic crisis” on Chinese businesses.

Internet commerce has proven popular in China, where traffic jams make travel arduous in sprawling cities like Beijing. Yihaodian.com, the online arm of WalMart, had much to be happy about in 2012 with sales of imported foodstuff increasing five-fold in the first 11 months of 2012, according to company vice president Guo Dangdong. Privately owned Taobao doesn’t release results.

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