JD.com, the second-largest e-commerce company in China after Alibaba, has unveiled a major push to grow its imported food business. The company will partner with food producers from the U.S., Australia, Canada, Chile, France, and New Zealand.
The program is significant because imported food is one of China’s fastest-growing markets and therefore an important vertical for Alibaba, JD.com, and other e-commerce companies.
In fact, during last November’s Singles’ Day (an online shopping bonanza similar to Cyber Monday in the U.S.), JD.com’s one-day milk sales jumped 900 percent over last year—a sign that consumers are comfortable using online stores to stock their fridges and pantries with food staples.
In addition to importing seafood, fruit, and wine, JD.com will bring in products from U.S. companies like Ocean Spray, Ghirardelli, Silk, Starbucks, Organic Valley, Mars, Quaker, Dead Guy Ale, Sun-Maid, and Pringles.
China became the world’s largest consumer market for food and beverages (F&B) in 2011. Between 2000 and 2013, total food exports to China grew from $8.3 billion to $95.1 billion. Appetite for food made by overseas producers was stoked by a series of food safety scandals, including the discovery of tainted milk in 2008 and concerns over unsafe beef and chicken last year.
A recent study by the China Market Research Group showed that many consumers are willing to pay premiums of 30 to 40 percent more for imported milk, meat, fruits, and vegetables because they are perceived as being safer.
Furthermore, food producers in China are struggling to meet domestic demand because farmland has been snatched up to build factories.
JD.com’s initiative is meant to help it compete with Alibaba, which has also aggressively grown its selection of imported foods. For example, Tmall.com, Alibaba’s online marketplace for brands, has cooperated with the U.S. Department of Agriculture’s trade office in Shanghai to bring in fresh fish and produce, while its other sites, including Taobao Marketplace and group deals site Juhuasuan, have also offered special promotions.
Like JD.com, Alibaba is also working with trade offices in several countries, including Chile, Taiwan, Thailand, Denmark, and Australia, to import food.
During a press conference, JD Mall CEO Haoyu Shen said “this initiative is a major step forward in JD.com’s strategic efforts to dominate the verticals most important to our customers, from travel and cars, to imported foods.”