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16 Dec 2016
Maserati, lobster and a window into China
What do a Maserati and a lobster have in common? They’re often red? Luxurious? Pricey?
Those links may be a stretch but there’s one place two such disparate items can be purchased within a few clicks of each other – and it’s providing a fantastic opportunity for Australian businesses to tap into the ever-changing Chinese market.
"Australia already has an established reputation amongst Chinese consumers and therefore its food producers have a significant advantage."
John O’Loghlen, Alibaba Group Director, Business Development
With a head office soon to open in Melbourne, the world’s largest retail commerce company Alibaba Group believes Australian producers, especially agribusiness, can benefit from China’s growing internet population.
“Around 439 million Chinese shoppers are using our platforms annually and many of these consumers are looking to create a wellness lifestyle through their purchases which requires access to quality, nutritious and fresh foods,” Alibaba Group’s Director of Business Development for Australia and New Zealand John O’Loghlen says.
“During Alibaba Group’s Double 11 Shopping Festival, Australia was ranked fourth of all countries selling into China through Tmall and Tmall Global, up from fifth place in 2015. Australia already has an established reputation amongst Chinese consumers and therefore its food producers have a significant advantage.”
According to a recent IbisWorld report, China’s online shopping industry (or e-tailing) is expected to generate $US779.0 billion in 2016, a rise of almost 30 per cent on 2015. Growth is supported by a competitive B2C e-commerce industry including Alibaba, Jingdong, Tencent, Suning, Dangdang, Yihaodian and Amazon China.
Cross-border consumer e-commerce is also growing and amounted to an estimated 259 billion renminbi ($US40 billion) in 2015, more than 6 per cent of China’s total consumer e-commerce - and is growing at upward of 50 per cent annually.
Photo: Supplied.
EARLY STARTERS
There are already more than 1,300 Australian brands using Alibaba’s retail platforms, and in September Alibaba and the Australian Trade and Investment Commission (Austrade) announced an agreement to strengthen trade opportunities and an expansion of Australian products on Alibaba’s business to consumer (B2C) e-commerce platform Tmall.
This includes Tmall Fresh, a platform dedicated to selling refrigerated goods direct to Chinese consumers. Current categories include seafood, meat, fruit, ice cream, eggs and vegetables.
In a recent pilot, Alibaba worked with a lobster fisherman in Geraldton, Western Australia, fitting go-pro cameras and creating a live stream via Tmall Fresh.
“We had hundreds of people in China bidding against each other for lobster and we used live streaming as a key marketing channel given it’s aligned with China’s mobile usage and gaming society,” O’Loghlen says.
“Marketing, including interactive content, is important to capturing the attention of social savvy Chinese consumers.”
ANZ Head of Agribusiness Mark Bennett believes the Chinese market represents untold possibilities for agricultural companies, but there are a number of challenges for them to navigate.
“When we talk fresh food in particular, on one level it opens enormous potential but it also creates challenges around supply chain, logistics, packaging and marketing, all of which is required to deliver a consistent quality product in the required volumes,” he said.
“If food producers can get those elements right and focus on building relationships across the supply chain, moving forward we see some fantastic outcomes across agriculture in an online marketplace.”
RESHAPING POTENTIAL
According to ANZ Head of Agri Insights Michael Whitehead, consumer data collected by Alibaba and similar companies has the potential to reshape the entire food supply chain - not just into China but globally.
“Advanced predictive data analytics allows us to forecast what foods millions of consumers are likely to buy tomorrow, next month, or even next year,” he says.
“Through properly utilising this data, the food and agri sectors will be able to far more precisely tailor what they grow and produce to match the specific needs of consumers, as well as in the right volumes.”
“For example, this could be specific grains for new breads or noodles, or innovative cuts and varieties of beef for growing markets.”
Whitehead says the challenge for food and agri sectors is how best and quickly to integrate the data into their operations.
This includes going “…right back through the supply chain, through distribution, logistics, processing, and back to on-farm production itself.”
Simone Stella is a contributing editor at BlueNotes
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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