E-commerce Platforms: Relationships and Growth
Food e-commerce’s growth in China has been bolstered by the rise of the internet industry. However, according to our specialist, it has reached a bottleneck – and the penetration rate will not grow as rapidly anymore. There are also particular obstacles that this industry faces, namely achieving freshness, timeliness, quality and logistics.
When asked about what kinds of fresh food e-commerce platforms can be profitable, the former head stated: “I doubt the profitability of an e-commerce business that solely engages in fresh food… As far as I know, most of them are losing money now.” The added value of fresh food is relatively low and unable to cover warehousing and distribution costs. However, he adds, this could be remedied by adding high value-added products, such as ready-to-cook and frozen food.
Despite the difficulties, there is plenty of competition. There are varying business models and targeted audiences – Dingdong Maicai, Meitnan Maicai and Miss Fresh all use close to store warehouse models, whereas JD Daojia and Ele.me have a platform that vendors sell from. Hema, owned by Alibaba, merges offline and online elements. Dingdong Maicai focuses on its vegetable offering, while Miss Fresh is known for fruit and Hema for seafood.
Dingdong Maicai has high expectations for its future turnover and orders per day. To reach its goals, the company will have to cover more cities and gain new users. However, expansion is a “double-edged sword”. Building up the supporting system to be able to move into new markets takes investment, and this is before knowing what profit will be made and any later growth. And there are different habits and preferences in every city that need to be understood.
To access all the human insights from Third Bridge’s Dingdong Maicai & China’s Fresh Food E-commerce Platforms Interview, click below to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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