The increasing demand for imported goods in China comes to a great extent from the association with safety and quality standards. According to Sung Min Chun, Senior Project Leader at Daxue Consulting, 42 percent of Chinese consumers agreed to the statement “food safety of imported food is guaranteed.” Daxue Consulting’s research shows an enormous potential of the Chinese online retail market with the convenience of mobile shopping and improved logistic systems in China. As an international business, it is crucial to be aware of key characteristics of the environment, distribution channels and methods as well as restrictions.
The client wanted to decide on the right operation mode for its business
Daxue Consulting’s client, one of the largest food retailers with over 130,000 employees worldwide, sought to assess current market operations in China to identify strategies for online grocery commerce and selling its goods directly to Chinese consumers. Therefore, the company contacted Daxue’s research team to execute an extensive research on logistic systems in China, warehousing, distribution, and payment methods.
An in-depth analysis of logistic systems in China
Daxue Consulting started with a comprehensive desk research. It comprised the identification and profiling of the main competitors, the benchmark of e-commerce platforms, their business performance, consumer profile, details on assortment and payment methods, as well as their types of logistic systems in China. Besides, the research team investigated regulations on custom and tax policies.
Chun explains: “The winning attributes of Chinese online grocery are the same-day delivery, M-commerce which is becoming the new battlefield for e-commerce platforms, and the convenience of Alipay and WeChatPay, third party payment platforms providing fast and easy transactions.”
As delivery efficiency differs from region to region, the consultants then conducted in-depth interviews with market experts to gain deeper insights into the logistic systems in China. This step enabled Daxue Consulting to evaluate the various operation modes, its advantages, and disadvantages, considering the following aspects:
- Warehouses and storage
- Delivery network
- Requirements & permitted products
- Price, delivery fees, and payment methods
- Logistic services such as customs clearance, or traceable delivery information
- Delivery speed and coverage
- Settlement and return; refund policies
A full business plan helped the client to break into the Chinese online retail market
After analyzing the gathered data, Daxue Consulting provided the client with a comprehensive overview of the online imported food shopping landscape in China, market players, assortment complexity, consumer preferences, and its regional differences. The consultants also recommended the client the most suitable logistic systems in China for its operations and prepared a full business plan, including competition benchmark, cost planning, and marketing planning.
Daxue Consulting executed various projects in the logistics field
Another project, carried out for a western client producing syrups, included the optimization of transport and encompassed:
- The investigation of export and import volume of the raw materials
- Analyzing and mapping of producers and processors comprising production capacity, cooperation with farmers, delivery area, and prices
- Classification of zones according to criteria such as the distance from the production site, cost of transport from the production site to the respective city
- Organization of zones: distribution networks, storage and catchment areas
Matthieu David-Experton, CEO, and founder of Daxue Consulting adds an interesting fact on the project: ”While the Western world uses syrups also for kids, the usage is different in China where syrups are solely utilized as ingredients for cocktails or coffee, for instance.”