2015 Fresh Food E-commerce Development Trends: Why Fresh Food WeChat Sellers Are Doomed

2013-2014 were two years of rapid development for fresh food e-commerce. Since it is hard to achieve breakthroughs in product categories, the growth in the number of online fresh food shoppers will also slow down. Therefore, in 2015, the growth of the overall market size will slow, and B2C will remain the mainstream.

2015 Fresh Food E-commerce Development Trends: WeChat Sellers Are Doomed, B2C Still Mainstream

Because of the market potential of a scale of hundreds of billions and an e-commerce penetration rate of less than 1%, fresh food e-commerce was once hailed as the last blue ocean of e-commerce, and competition surrounding this market has become increasingly fierce. 2013-2014 were two years of rapid development for fresh food e-commerce. On one hand, fresh food merchants settling on e-commerce platforms experienced explosive growth; on the other hand, several major vertical fresh food e-commerce players expanded nationwide, while new vertical e-commerce players also entered the scene. In the capital market, fresh food e-commerce enterprises also received huge capital injections in these two years. So what development trends will fresh food e-commerce have this year? How much more can the penetration rate of a trillion-scale market increase? With thousands of troops charging in, has the blue ocean turned into a red ocean? Do latecomers still have opportunities? What else in the 2015 fresh food e-commerce market is worth watching?

1. The Fresh Food Red Ocean - Will Anyone Fall?

Although the e-commerce penetration rate of fresh food is less than 1%, compared with the 20% of clothing and 3C digital products, it has huge potential. However, due to many difficulties such as a low price-to-shipping-fee ratio, difficulty in preservation, and difficulty in packaging and transportation, fresh food products suitable for e-commerce channels have been almost fully developed. When it is hard to achieve breakthroughs in product categories, the growth in the number of online fresh food shoppers will also slow, because the rapid growth in user numbers was basically completed in 2013-14. Therefore, in 2015, the growth of the overall market size will slow. Under the premise of slowing market growth, new competitors will pour in again this year, and fresh food e-commerce has already turned from a blue ocean into a red ocean.

Competition has become fiercer, and those making profits are few, so will anyone fall this year? Based on the author's observation, platform-type fresh food e-commerce has been monopolized by Taobao (including Tmall) and JD.com, and it will be very difficult for other platform types to gain a foothold; while the eight major vertical fresh food e-commerce players: SFbest, Womai, Benlai Life, Tuotuo Community, Fields, Fruit Day, Yiguo, and Meiwei Qiqi, because they all have huge financial support, will continue to compete for the channel brand of fresh food e-commerce. But in the off-season for fresh food from March to September this year, they will face enormous pressure, and changes in management teams will definitely occur. Apart from these eight, vertical fresh food e-commerce players doing full categories will find it very difficult to operate. If they do not want to fall in the fierce competition, they had better choose a segmented market within fresh food.

2. Opportunities for Latecomers - Those with Resource Advantages Focusing on Segmented Markets

As mentioned in the previous point, opportunities for latecomers exist in two categories: one is those with resource advantages, and the other is those focusing on segmented markets. In terms of resource advantages, those source enterprises (individuals) in fresh food/agricultural products have more advantages when entering fresh food e-commerce. This is mainly because, in the current industrial chain of fresh agricultural products, high-quality agricultural products are more scarce; on the other hand, fresh food is not standardized and requires more "first-scene" knowledge. Last year, a large number of source enterprises (individuals) directly faced consumers through e-commerce channels. Although the product lines of individual source enterprises (individuals) are relatively single and their products are relatively few, and overall sales are not as good as full-category vertical fresh food e-commerce, the sales of individual products are mostly not inferior to vertical e-commerce. For example, for the best-selling fruit kiwi on Taobao, half of the top ten in sales were direct sales by farmers (farms) from the place of origin.

Another aspect of opportunity comes from segmented markets. On one hand, they can be segmented by product: imported milk, imported Australian beef, organic food, deep-sea seafood, etc. For example, last year nearly ten merchants specializing in imported Australian beef and mutton emerged on Tmall; on the other hand, they can be segmented by consumers: pregnant and infant groups, foreigner groups, etc. There is also doing a small and beautiful Niche Market. Although it is small and beautiful, China's consumer group is huge, and any niche market is enough to support a 300-500 mu farm.

The above two points are both about avoiding competition with full-category vertical fresh food e-commerce. In fact, latecomers who want to enter full-category fresh food e-commerce still have opportunities, because customer satisfaction with online fresh food purchases is generally low, and so far no one has been able to form a strong channel brand. Consumer loyalty is low. If they can do well in their own segmented field and gradually expand reasonably, they still have the opportunity to cut into the big cake of fresh food.

3. Alibaba's Dominant Position Is Hard to Shake

The Alibaba system (Taobao and Tmall) undoubtedly currently holds an absolute advantage in the fresh food e-commerce market. As a platform e-commerce player, Taobao already has a monopoly position, and many vertical fresh food e-commerce players have opened flagship stores on Taobao. For many vertical e-commerce players, Taobao sales and official website sales are almost equal. Alibaba's current advantage is not only an advantage in volume; the adjustment of several special sections on Taobao is also more suitable for the development rhythm of the fresh food e-commerce market. The current special channels: Miaoxiansheng, Huichi, Tiaoshi, and Fresh Food Supermarket. Among these, Miaoxiansheng focuses on various fresh food bestsellers, mainly imported fruits, imported seafood, and meat, all of which are mature fresh food bestseller categories; the Tiaoshi channel focuses on small and beautiful products, all of which are distinctive niche foods/agricultural products; the Fresh Food Supermarket targets daily life purchases. By contrast, JD.com and Yihaodian still remain focused on direct supply from places of origin and regional specialty halls. This year JD.com's fresh food layout is direct supply from places of origin, price advantages, and upgrading its cold chain delivery system; Yihao Fresh combines community experience stores to improve delivery services. But direct supply from places of origin, price advantages, and improved delivery services are things all fresh food e-commerce players are doing. Relying only on these will make it very difficult to shake Alibaba's dominant position in fresh food this year.

4. WeChat Sellers Doing Fresh Food Are Doomed

Doomed! This is the answer the author is most certain about among the five questions. When Moments has turned into a mask circle, it is already very annoying. Do you still want Moments to become a fruit circle or a pork circle? Although what I am saying here is due to personal preference, in fact, looking at the essence of things, our various applications and models should make life more convenient and communication smoother. Moments is a place to communicate about life with friends. If Moments and WeChat groups are flooded with all kinds of showing off, all kinds of chicken soup, plus masks and cosmetics, and now another farmers' market, is life more convenient? Is communication smoother? If not, then this kind of application or model will soon be replaced by something new. In 2014, a few "successful WeChat seller" stories like Egg Brother and Fruit Sister circulated on WeChat a few times, and after that there was nothing more, just like Weibo back then.

5. Will the Model Be Disrupted? - B2C Is Still the Mainstream

Fresh food e-commerce began with the most basic B2C model, and later developed and derived models such as F2C (farm direct supply), C2B (consumer customization), C2F (contract farming), O2O, and CSA (community-supported agriculture). These later models are all supplements to the traditional B2C model, and the one truly occupying the commercial mainstream is still the traditional B2C model. The reason is simple: the traditional B2C main road has not yet been walked well, so it is not the time to run quickly along small paths. Look at "Xiaonongnv", which sold prepared vegetables on WeChat back then. Selling vegetables as a WeChat seller did not work, so the business was suspended, and this year it simply opened a physical store, starting by practicing with a traditional physical vegetable stall.

Although various new terms will still appear in the industry this year, such as Mobile XX, Micro XX, Community XX, or X2X, most of them will be like the "WeChat sellers" and "O2O" that were hot in 2014: they look hot, but by the time you have figured out what is going on, they are already outdated.