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Buy your wild boar tripe online
By Xu Wenwen |
December 14, 2009, Monday
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Print Edition
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ORDERING fresh meat and veggies online in Hangzhou is as easy as ordering pizza, though definitely not as fast, as entrepreneurs try to provide convenience to young people too busy to shop.
Though online shopping is all the rage nationwide and Hangzhou is the headquarters for Taobao.com, which is a leading online shopping marketplace, selling farm produce via the Internet is in its infancy.
It's not as easy as it might sound, profit margin is slim, food must be stored, there are delivery costs as well. And many people prefer to select their own food, rather than have it sent. Many older people don't use the Internet and for them, daily shopping for fresh food is a way of life.
Today there are three online food stores in Hangzhou (see below).
One strategy is selling only organic produce to health-conscious people as well as specialized products: wild boar tripe, local free-range poultry and "high mountain beef" from cattle that graze in the hills of Zhejiang Province and don't come from a commercial feed lot.
Hzmaicai (Buying Food in Hangzhou) online store opened in June and still has not yet made a profit.
Nor have 0571mc.com, 365txp.com and several others, which all went out of business. There's an Internet advertisement for 0571mc.com, but the Website is no longer available.
Yang Ronghui, owner of Hzmaicai, has run a number of businesses and studied the market potential before launching his latest venture. He notes that online shopping is familiar to people; more and more young people are getting married and are unwilling to shop or cook much; they are often too tired to go to the food market after work.
But business is still difficult and he's trying to come up with new ideas.
Chen Huajiao used to run 365txp.com, but sold it to another company and then opened her new online venture Tubaobao in October. It specializes in local organic produce.
Hangzhou's first online fresh food store E-Riye was founded in 2006 but only survived a little more than a month. A similar Website called 365life spent 500,000 yuan (US$73,250) and operated for less than one year.
What's the problem for virtual food shops?
According to Yang and Chen, there are three major factors.
First, online food prices are equivalent to those in grocery stores because they use the same purchasing channels. Bricks-and-mortar stores must lease space and online stores must pay for warehouse space and employees for purchase and delivery. For example, Yang's company, Hzmaicai, employs 12 staff for delivery and purchase, Website support and customer service. A "real" shop could be run by a couple of people.
"The profit margin is very thin," says Yang. "Even though real stores and online stores use the same wholesale market, the wholesale price for us is higher because we buy in smaller quantity and we have to charge a delivery fee to cover the delivery man's salary. Price drives away many thrifty customers."
Second, online food shopping is not a mindset for many middle-aged housewives who are the biggest group of food buyers, not the young. And they are not interested in Internet food shopping.
Third, produce and fresh meat cannot be stored long. All Websites require customers to place an order one day in advance, so staff can make purchases. In reality, most shoppers call shortly before they want to start preparing a meal. This means shops have to scramble and rely on stored food, which means it's not as fresh as it should be.
"To stand out on the Internet depends on a store's prices, service and quality advantage," says Chen, Tubaobao's owner who has a master's degree in psychology. "Since online shopping doesn't have price advantages, we try to provide a distinctive quality edge by offering special local food."
Mountain-raised beef, wild boar tripe and free-range local poultry are valued by customers who are considered about food quality and healthy living, but they are hard to find in the supermarket.
Chen and her staff go door-to-door, buying them from village farmers. To reduce transport costs, Tubaobao takes orders from customers on Friday, purchases in the countryside on weekends and then delivers to clients. Chen has hired only two employees.
One fresh-food organic grocery store, Cailao, has a small online business and is doing well. But online service accounts for only 10 percent of the revenue, the rest comes from restaurants.
Cailao sells all kinds of vegetables and fresh meat and has more than 1,000 online members. Every day it receives more than 20 online orders, more on weekends. Each order ranges from 80 yuan to 120 yuan, so it just breaks even.
"We only set aside a small amount of produce for individuals," says the owner, Zhang Qiya. "Our advantage is freshness, no pesticides and fair price, and the market response is mostly positive."
Cailao buys a lot of food for restaurants, which require high quality and food safety, so when online customers order, it can offer fresh produce. Since it buys in quantity, it can offer lower prices online.
Even so, Cailao is not confident in the market.
"We don't yet know the requirements of our customers and we need more investigation," says Zhang.
Everyone agrees that online shopping is a trend but online groceries are not yet popular. Time, investigation and creative business practices are needed.
Cailao and Hzmaicai plan to open real stores next year so food can be sold to nearby residents before it goes bad. They will hand out flyers to publicize online shopping.
Online produce
Hzmaicai: http://hzmaicai.net
Tubaobao: www.54tbb.com
Cailao: www.cailaolao.com
Though online shopping is all the rage nationwide and Hangzhou is the headquarters for Taobao.com, which is a leading online shopping marketplace, selling farm produce via the Internet is in its infancy.
It's not as easy as it might sound, profit margin is slim, food must be stored, there are delivery costs as well. And many people prefer to select their own food, rather than have it sent. Many older people don't use the Internet and for them, daily shopping for fresh food is a way of life.
Today there are three online food stores in Hangzhou (see below).
One strategy is selling only organic produce to health-conscious people as well as specialized products: wild boar tripe, local free-range poultry and "high mountain beef" from cattle that graze in the hills of Zhejiang Province and don't come from a commercial feed lot.
Hzmaicai (Buying Food in Hangzhou) online store opened in June and still has not yet made a profit.
Nor have 0571mc.com, 365txp.com and several others, which all went out of business. There's an Internet advertisement for 0571mc.com, but the Website is no longer available.
Yang Ronghui, owner of Hzmaicai, has run a number of businesses and studied the market potential before launching his latest venture. He notes that online shopping is familiar to people; more and more young people are getting married and are unwilling to shop or cook much; they are often too tired to go to the food market after work.
But business is still difficult and he's trying to come up with new ideas.
Chen Huajiao used to run 365txp.com, but sold it to another company and then opened her new online venture Tubaobao in October. It specializes in local organic produce.
Hangzhou's first online fresh food store E-Riye was founded in 2006 but only survived a little more than a month. A similar Website called 365life spent 500,000 yuan (US$73,250) and operated for less than one year.
What's the problem for virtual food shops?
According to Yang and Chen, there are three major factors.
First, online food prices are equivalent to those in grocery stores because they use the same purchasing channels. Bricks-and-mortar stores must lease space and online stores must pay for warehouse space and employees for purchase and delivery. For example, Yang's company, Hzmaicai, employs 12 staff for delivery and purchase, Website support and customer service. A "real" shop could be run by a couple of people.
"The profit margin is very thin," says Yang. "Even though real stores and online stores use the same wholesale market, the wholesale price for us is higher because we buy in smaller quantity and we have to charge a delivery fee to cover the delivery man's salary. Price drives away many thrifty customers."
Second, online food shopping is not a mindset for many middle-aged housewives who are the biggest group of food buyers, not the young. And they are not interested in Internet food shopping.
Third, produce and fresh meat cannot be stored long. All Websites require customers to place an order one day in advance, so staff can make purchases. In reality, most shoppers call shortly before they want to start preparing a meal. This means shops have to scramble and rely on stored food, which means it's not as fresh as it should be.
"To stand out on the Internet depends on a store's prices, service and quality advantage," says Chen, Tubaobao's owner who has a master's degree in psychology. "Since online shopping doesn't have price advantages, we try to provide a distinctive quality edge by offering special local food."
Mountain-raised beef, wild boar tripe and free-range local poultry are valued by customers who are considered about food quality and healthy living, but they are hard to find in the supermarket.
Chen and her staff go door-to-door, buying them from village farmers. To reduce transport costs, Tubaobao takes orders from customers on Friday, purchases in the countryside on weekends and then delivers to clients. Chen has hired only two employees.
One fresh-food organic grocery store, Cailao, has a small online business and is doing well. But online service accounts for only 10 percent of the revenue, the rest comes from restaurants.
Cailao sells all kinds of vegetables and fresh meat and has more than 1,000 online members. Every day it receives more than 20 online orders, more on weekends. Each order ranges from 80 yuan to 120 yuan, so it just breaks even.
"We only set aside a small amount of produce for individuals," says the owner, Zhang Qiya. "Our advantage is freshness, no pesticides and fair price, and the market response is mostly positive."
Cailao buys a lot of food for restaurants, which require high quality and food safety, so when online customers order, it can offer fresh produce. Since it buys in quantity, it can offer lower prices online.
Even so, Cailao is not confident in the market.
"We don't yet know the requirements of our customers and we need more investigation," says Zhang.
Everyone agrees that online shopping is a trend but online groceries are not yet popular. Time, investigation and creative business practices are needed.
Cailao and Hzmaicai plan to open real stores next year so food can be sold to nearby residents before it goes bad. They will hand out flyers to publicize online shopping.
Online produce
Hzmaicai: http://hzmaicai.net
Tubaobao: www.54tbb.com
Cailao: www.cailaolao.com
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