The profit situation of agriculture-related e-commerce is not optimistic and still needs improvement in the future
The "2014-2015 China Agricultural Products E-commerce Development Report" points out that currently only about 1% of agriculture-related trading e-commerce businesses in China can achieve profitability --
Recently, the China Food (Agricultural Products) E-commerce High-Level Seminar released the "2014-2015 China Agricultural Products E-commerce Development Report." Hong Tao, dean of the China Food (Agricultural Products) Safety E-commerce Research Institute and a professor at Beijing Technology and Business University, said that although there are currently nearly 4,000 agriculture-related trading e-commerce businesses in China, due to disorderly market competition and high logistics costs, only about 1% of e-commerce businesses can achieve profitability. The seminar was co-hosted by the China Food Industry Integrity Alliance and the China Food (Agricultural Products) E-commerce Research Institute, and organized by Longbao Traceability Mall and others.
The report points out that in 2014, China had 31,000 agriculture-related e-commerce enterprises, including 4,000 agriculture-related trading e-commerce businesses, forming a market structure of "two superpowers, many strong players, and a niche minority," in which the "two superpowers" composed of Alibaba and JD.com occupied the main share, while in recent years some emerging agricultural product e-commerce businesses have also formed their own distinctive development models after obtaining capital injections. According to statistics, the sales of agricultural products on the Alibaba platform grew from 3.7 billion yuan in 2010 to more than 80 billion yuan in 2014, with an average annual growth rate of 112.15%. As for fresh food e-commerce on Taobao, in 2013 the national fresh food e-commerce transaction scale reached 13 billion yuan, a year-on-year increase of 221%, and it was expected to reach 26 billion yuan in 2014.
Regarding the problems existing in China's agricultural product e-commerce, Hong Tao believes that the serious homogenization of e-commerce website construction has led to disorderly competition, operating at a loss, and even the coexistence of website building and website closure. According to the report's statistics, among domestic agriculture-related trading e-commerce businesses, only 1% can be profitable, 7% have huge losses, 88% have slight losses, and 4% break even.
Zhang Guo, director of the Market Circulation Division of the Department of Market and Economic Information of the Ministry of Agriculture, said: "At present, many people still do not fully understand agricultural product e-commerce. If every farming household does e-commerce, it will lead to a situation where goods are sold out on the first day and there is nothing to sell on the second day, which is also a waste of resources." He suggested developing agricultural product e-commerce in an intensive way, establishing brand awareness, and exploring profit models for agricultural product e-commerce.
"Rural e-commerce models cannot be measured by urban e-commerce models; rural and urban consumption habits and ways of thinking are different." Huang Hai, deputy director of the Academic Committee of the China International Economic Center, believes that taking urban village supermarkets in Beijing as an example, the products they sell differ in category from those of urban supermarkets, but their business is equally good. At present, developing rural e-commerce should highlight individualization and differentiation.
Nie Linhai, deputy inspector of the Department of E-commerce of the Ministry of Commerce, believes that the development of rural e-commerce can draw on medium- and long-term trading as well as customized and quota production in financial markets, to effectively avoid the conflict between the traditional production mode of "small production, large market" and modern e-commerce.
Logistics, as the "long-standing difficult problem" in the development of agricultural product e-commerce, still exists. Nie Linhai said that China has long had the problem of high logistics costs, the fundamental reason for which is information asymmetry. At present, there are about 700,000 logistics enterprises and 1.7 million related delivery vehicles, but 40% of trucks on highways are running empty. The logistics industry is too fragmented, and solving this problem requires accelerating the development of smart logistics.