Groupon says its focus is on the bottom line, rather than top-line growth.
Chinese consumers can pre-order U.S. cherries on Tmall.com.
Through the magic of e-commerce, consumers in such big Chinese cities as Beijing, Shanghai and Guangzhou are receiving cherries just two days after they are picked by producers in the U.S. states of Washington, Oregon, Idaho, Montana and Utah.
The Chinese shoppers place orders on a special section of Tmall.com, along with Taobao.com, one of the two big online marketplaces operated by Alibaba Group, China’s dominant e-commerce company and No. 1 in the Internet Retailer Asia 500. That area of the site, Yushou.Tmall.com, is set aside for consumers to place deposits on items for later delivery.
A consumer pays a deposit of 10 yuan ($1.60) to reserve a box of cherries. Once the cherries are picked, they are placed in 2-kilogram (4.4-pound) boxes along with four bags of ice to keep them cool, and shipped by air to China. The price of a 2-kilogram box is 179 yuan ($29.21), or $6.64 per pound, 22% less than the $8.50 per pound price of comparable cherries in Wal-Mart Stores Inc.’s bricks-and-mortar stores in China, according to China media reports. Wal-Mart is No. 4 in the Internet Retailer Top 500, which ranks North America’s leading online retailers, and No. 244 in the Asia 500.
Tmall first offered the option to pre-order U.S. cherries from June 27 to July 8. That led to over 50,000 orders, says Keith Hu, overseas marketing director for the Northwest Cherries Association, which promotes sales of cherries from Washington, Oregon, Idaho, Montana and Utah. There were two other cherry promotions on Tmall this month, and Hu says total shipments this month will be over 200,000 kilograms, or roughly 450,000 pounds.
The U.S. Department of Agriculture’s office in Shanghai collaborated with the Northwest Cherries Association in working with Tmall on the cherries promotion.
“The power and potential of e-commerce in China is unparalleled compared to any other country or region around the world; it has already become a new way of life in China, especially for younger consumers,” says U.S. ambassador to China Gary Locke, who attended several events promoting U.S. cherries. “E-commerce is bringing about new opportunities for U.S. and facilitating enhanced U.S.-China trade, and we are proud to be serving as a bridge for our businesses into the burgeoning Chinese consumer market.”
Tmall has offered the cherries only to consumers in 35 of China’s biggest cities because China has limited facilities for preserving products at low temperatures as they move through the supply chain from producer to consumer. “After China builds more sophisticated cold-chain networks, we hope Chinese customers will consume more U.S foods in the future,” Locke says.
In fact, Chinese consumers have been demanding more imported food—and looking for it online—recently as a result of widespread warnings about the safety of certain Chinese food products. Sales of imported food on Tmall have increased 500% in the first half of 2013 over the prior year, says Daniel Zhang, president of Tmall.com.
U.S. agricultural exports to China in 2012 were $26 billion, up 38% from 2011, according to the U.S. Department of Agriculture. The Northwest cherry started selling heavily to Japan and Taiwan several years ago, Hu says, but in recent years the biggest growth has been in sales to China. He says producers in the five northwestern states he represents sold 2 million 9-kilogram boxes of cherries in 2012, up from 200,000 boxes in 2005.
Tmall touts the pre-order model as ideal for agricultural products, because it allows the producer to ship exactly what customers have ordered. The Alibaba unit says pre-ordered products typically reach Chinese consumers within two to three days of their being shipped directly to the end customer, versus seven days if they are shipped to a warehouse and then sold through a store.