Tassie cherries on China’s echeckout

JD.com is one of China’s biggest ecommerce companies and its largest nationwide fulfilment network, selling a variety of goods from vitamins and electronics to clothing and books.

During a meeting last week at its Beijing headquarters, 15 Australian horticulture farmers participating in ANZ’s latest agriculture delegation to Asia, were told just how enormous the ecommerce opportunity is, with 236 million current active JD.com users and growing 40 per cent year-on-year.

Super days

Established two years ago, JD.com’s fresh-food department hosts a series of ‘super days’, where it gives consumers the chance to experience quality products from across the globe.

On ‘super cherry day,’ JD.com sold 160 tonnes of cherries in one day, demonstrating the size of the market and the significant production required to fulfil demand.   

Many Australian products, such as boxed Tasmanian cherries and oranges sold on the platform, have commanded a premium price compared with competitor imports, and there’s also demand because of the seasonal variability between Australia and China.

However exporting via ecommerce introduces a new range of complexities. The biggest issue is being able to consistently supply large quantities of quality and uniform produce. Repackaging may also make origin identification difficult which can impact the ability for growers to manage their brand. 

Australian berry farmer Bob Benning believes ecommerce could change the way Australian agriculture does business over the long term - but says quality and on-shelf presence will be key to building demand.

“Australian producers must remember that the products we are selling overseas via ecommerce, especially in China, tend to be marketed as premium, requiring us to look at each individual fruit to make certain our produce is the best and is displayed well,” he says.

“Finding the right distributor that will ensure on-shelf presence is vital.” 

Mildura-based avocado grower Ryan Marr agrees.

“One of the messages from our discussions with JD.com is consumers in China will pay for quality and branding will play an important role as more Australian fruits and vegetables gain market access,” he says.

“So industry will need to consider the best way to label and promote the qualities of Australian produce to create a first-class image over and above our global competitors.”

Given China’s own substantial production output, the biggest opportunities lie in commodities not readily grown locally - such as avocados - those that don’t directly compete with Chinese producers due to seasonality - such as citrus – as well as unique varieties.

Extravaganza

During ecommerce giant Alibaba’s latest Singles’ Day, a one-day online shopping extravaganza, consumers purchased nearly one million avocados. The majority of avocado imports are from Mexico, Chile, Peru and the USA with significant growth in avocado exports to China in the past two years.

While this is no doubt an opportunity for Australian producers it does highlight the ongoing challenge of gaining market access, a reality that is at least another two to three years away for Australian avocados.

Social media is also enabling new ecommerce start-ups such as Shanghai-based FreshFresh, which was established in 2014 and uses WeChat to market and sell its products.

The company’s aim is to deliver fresher and safer food (using refrigerated trucks for delivery) at an affordable price and it currently sells Australian dairy, citrus and grapes.

Many of FreshFresh’s one million registered uses are what FreshFresh Co-founder Adrian Fang refers to as Shanghai’s mature middle class.

“Unlike new entrants to China’s middle class who might make a luxury purchase such as a car to show they’ve made it, the mature middle class are travelling frequently,” Fang says. “They are therefore more westernised with a growing desire for better-quality food.”

Ecommerce and its potential for Australian agriculture, is only just beginning. Consumer preferences and demand, marketing, production volumes and working with the right distribution partners, will be some of the major considerations for industry.

Excitingly, however, it can enable greater access to China’s growing middle class and the ability to compete in the world’s largest market for fresh food - which may soon be just one click away for Australian farmers. 

James McKeefry is State Agriculture Manager, Victoria and Tasmania at ANZ