5 Ways Coronavirus Is Changing Retail in China

Online shopping and livestreams are in demand

A man with a mask on moving boxes of products
Consumers in China are seeking ways to buy goods with minimal human contact.
JD.com

Key insights:

As U.S. officials say the spread of coronavirus in the U.S. appears inevitable, authorities in China have been working for weeks to contain the outbreak which was first detected in Wuhan late last year.

Measures so far include closing businesses and limiting transportation in some areas, which, in turn, has disrupted the nation’s supply chain. And with 77,000 confirmed cases of coronavirus so far, consumers are eager to avoid any unnecessary contact.

The result: Shopping habits in China are changing.

While Chinese retail giant JD.com has been around since 1998, it moved into ecommerce in 2004, a year after the SARS epidemic ravaged the nation. Founder Richard Liu saw an opportunity to bring shopping online amid store closures and consumer fear over SARS.

“The whole genesis of our company and ecommerce is because of the public health epidemic,” a JD.com spokesperson told Adweek.

This time around, cities like Shanghai are “almost semi-shutdown” as social media drives awareness and fear. As a result, change is once again afoot in how consumers in China procure goods.

Here’s how exactly.

Online Grocery

JD said an increasing number of consumers are buying their daily products online. In fact, from Jan. 24 to Feb. 2, its sales of rice and flour increased 5 times.

That’s why JD is working with brands to ensure its warehouses are stocked and it is going as far as picking up products directly from CPG brands like Welch, Safeguard and SC Johnson Wax, which were not able to ship additional goods.

It is also working with brands to accelerate production of in-demand products, like masks. In a four-day period from January 19 to 22, JD said it sold over 126 million masks, 310,000 bottles of disinfectants and 1 million bottles of soap.

Meanwhile, Alibaba said average basket size at its Freshippo and Taoxianda banners has “increased significantly as a result of consumer migration to online purchasing of fresh food, groceries and a broader selection of daily necessities.”

At the same time, Alibaba also said restaurant visits and food delivery orders “declined noticeably year-over-year” because many restaurants have not resumed normal operations.

Produce

According to JD, road closures and transportation restrictions are bad news for farmers who need to transport produce that will otherwise go bad. That’s why it launched the National Fresh Produce Green Channel, or simply the Green Channel, to help farmers sell through JD.

Its online food business, JD Fresh, is spotlighting the Green Channel on its JD app so it’s easy for consumers to find. JD Logistics established a special transportation channel to prioritize produce. JD is also launching a channel for local vegetables and fruit farms to sell produce in its brick-and-mortar supermarkets and a Mobile Fresh Basket program to deliver produce to more than 100,000 families in Hubei. (Most cases are in Wuhan, the capital city of Hubei, a province in Central China with about 60 million people, according to the World Health Organization.)

In Beijing, JD set up vending machines so consumers can buy fruits and vegetables without human contact. It plans to bring the vending machines to cities like Shanghai and Chongqing “with increasing demand for unmanned shopping experiences during the epidemic period.”

Livestreams

Since launching its Rural Support Program on Feb. 6, Alibaba said it has opened its livestream platform to farmers for free. One Foodie Livestream channel connects farmers to 41 million followers. As a result, Alibaba said they sold 15 million kilograms (33 million pounds) of produce in the first three days of livestreaming.

Alibaba said orders placed via livestreams are shipped within 72 hours to over 50 cities and it is working with partners to create new and direct routes to “transport truckloads of mangoes and melons from the southernmost tip of China all the way to cities like Beijing in three days and to Shanghai in just two.”


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