China: Fruit e-commerce market slow to ripen
Many consumers have begun using apps to buy fruit online but barriers remain to establishing a successful business model.
The purchasing demographic is key. Although white-collar workers and the middle class have signaled a willingness to buy produce online, they gain confidence in the quality of the produce through offline purchases before switching to online, according to a survey. These consumers are critical to the purchasing environment, product structure and product differentials.
About 50%-70% of mainstream online-to-offline (O2O) greengrocers keep their fruit stored at room temperature, but higher-end consumers demand imported, exotic fruit at reasonable prices, which would require refrigeration. Most O2O fruit sellers cannot meet such demand.
If middle-class consumers look for high-end fruit at department stores, the fruit is typically sold in clusters at at an average of more than 300 yuan (US$47) — beyond their price range.
The freshness of the fruit is key to a grocer's success. Some fruit e-commerce firms have responded to this need by inviting wholesale fruit sellers to set up e-commerce operations directly through a partnership. This controls fruit quality and reduces procurement costs, the report said.
Fruit e-commerce sellers hope to build consumer confidence and reputation by setting up offline stores but the operational costs are too high. If they do manage to set up both components, they often operate independently of each other and do not take advantage of the perks gained through their offline consumer base.
Fruit e-commerce firms are by and large creating mobile apps to sell but higher marketing costs have limited their potential to expand their user base, the report said. These conundrums have stunted the growth of the majority of startup fruit e-commerce operations.
Source: wantchinatimes.com