Are the Chinese About to Be Big Online Grocery Buyers?

March 24, 2017         By: Steven Anderson

On the surface, China looks like the kind of place that’s tailor-made for online shopping. The entire country is slightly smaller than the United States—assuming you factor in water area as part of the overall equation—but it has four times the population and a lot more densely-packed urban operations.

That means delivery is easier, ordering can be simpler, and options that are only occasionally heard of in the United States, like online grocery shopping, can be widespread. There are even reports that suggest China could be the biggest thing going in online grocery shopping.

One of the biggest signs that China could be a major force in online grocery shopping is Alibaba, the Chinese online titan, who recently put a lot of investment behind the notion of providing grocery shopping capabilities to the local market.

This is a fairly rational move, as China has previously been seen as a major force in eCommerce, for many of the reasons I’ve already cited. Around 460 million Chinese—about one in three—made a purchase online in 2016, and that represents about 15.5 percent of overall retail spending.

Alibaba hasn’t just been investing in its own online grocery operations, but has also been putting cash behind elements that will help develop this market, like on-demand courier operations. These are operations that will be vital to the rapid movement of product, a key element of online grocery shopping.

Perhaps the only real problem in China’s online shopping ambitions is the populace’s lack of cash. While there are signs that there’s a middle class developing, which is always valuable, the average gross domestic product per capita is just over $6,800 per year. That’s not a lot of disposable income, and while groceries tend to find a way into most budgets, spending any extra for online, delivered groceries may be a bridge too far.

Still, if all these companies can keep the customer-facing costs down, then there’s a good chance that the comparatively lower incomes of Chinese residents will be able to accommodate online grocery shopping. Throw in the increasing Chinese mobile presence and there could be some real value here. Only time will tell how well it works, but China as an online grocery shopping paradise isn’t so far out of line.