In 2016, the successful online retailer Alibaba took one of many important steps – this time in the fresh produce supply chain – when it founded Win-Chain. The first time I personally encountered this new Alibaba subsidiary was on 4 September this year, during my visit to the Asiafruit Congress in Hong Kong, when various leading producers on several continents sealed their partnership with Win-Chain at a signing ceremony. It made me wonder why those major global players were so keen to join forces with the new Alibaba subsidiary, so I decided to take a closer look at Win-Chain’s strategy.
Steven Jin, Win-Chain’s vice-president, has described the fresh produce category as a way to attract visitors to websites; after all, the purchase frequency of fresh food is high (Asiafruit magazine, July/August 2018). Alibaba’s older subsidiaries, Tmall Fresh and Yigou, have been investing heavily in the category over recent years, according to him. Supply chain, logistics and retail are three completely different segments, however. Win-Chain has enabled Alibaba to separate off the supply chain by making it the purchasing hub for the fresh produce category. By entering into partnership with suppliers worldwide, Win-Chain intends to supply the entire Chinese market with fresh produce – not only through Alibaba’s own sales channels, but also through external ones.
On further investigation, I discovered that Win-Chain is far from a standard supply chain. It all revolves around big data, with the aim of building an ecosystem for the global food industry to enable organisations to understand one another better. There is currently a lack of such understanding in China because much of the procurement is traditionally done through intermediaries, plus there is very limited contact between producers and consumers.
So it’s a smart move by Alibaba, which can now have omnichannel consumer reach thanks to Win-Chain and gather data about both retail sales and consumption. The resulting data is then made available to the suppliers so that they can collaborate with Win-Chain to manage and align the production levels, product quality and packaging specifications. Additionally, the data is used to optimise both the purchasing and the supply activities.
Hence, Win-Chain sees its primary added value as being the collection and analysis of consumer data which it then shares with its partners, enabling them to better meet consumer needs. In today’s fiercely competitive food industry, I fully appreciate the need to use data to optimise production and to develop innovative products. But can’t the major producers do this in China without the help of a powerful giant like Alibaba, on which they might later become completely dependent? To be honest, I think the answer to that is a clear-cut ‘No’.
For a grower of melons or cherries, for example, it takes years to establish a full omnichannel platform, plus they will have little chance of success when they only have a single product to market. And that’s not to mention the high supply chain costs, which make a considerable dent in the profits of even the big online players. Of course, it is possible to gain access to such data in other ways, such as from market research companies like GFK – but their data can never be as detailed and up to date in real time as the data from the Win-Chain platform.
The founders of Win-Chain probably chose the company name based on the concept of ‘winning’ in the sense of gaining information from the supply chain – or at least, I’d like to think that was their reasoning behind the name. Either way, to answer the question posed in the title of this column, ‘Will Win-Chain be the fresh-produce winner in China?’, my conclusion is a resounding ‘Yes’. The name says it all!
Columnist: Heleen van Rijn-Wassenaar, Specialist Marketing & Business Development Rijk Zwaan