China Doesn't Want to Go to the Store for Groceries, Either

Issue 12-04-17   |   Reviewer:   Michael S. Raisinghani, Ph.D.
Disciplines:


Abstract

One of the great puzzles of American e-commerce is how to sell fresh foods to online shoppers with the same speed and predictability that the industry has for, say, books or computers. 

Wal-Mart's fresh-delivery strategy in China, where it has more than 400 stores, is capable of transporting fresh produce from its shelves to homes within an hour by creating a network of chilled mini-warehouses, using artificial intelligence to tailor inventories, and employing an army of crowdsourced deliverymen to rush meat, fruits, and vegetables to customers' doorsteps.

Internet sales account for only a tiny fraction of China's 4.6 trillion-yuan annual market for fresh foods. Wal-Mart's efforts in China are bearing fruit, and its third-quarter 2017 net sales in China increased 4 percent from a year earlier as one-hour delivery expanded to 140 stores.

Wal-Mart's more than 400 stores revolve around trying to tap into a convenience-craving, smartphone-obsessed population that views errands such as going to the supermarket or bank as unwanted burdens. However, rivals want a piece of that growth, and in November, Alibaba, China's biggest e-commerce platform, agreed to pay $2.9 billion for a 36 percent stake in China's biggest supermarket chain, Sun Art Retail Group Ltd., which operates about 400 hypermarkets in China.





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