Fruit gets a welcome cold reception

E-commerce giants increase efforts to improve logistics and delivery systems to ensure fresh produce and boost sales

Major e-commerce giants have stepped up their efforts to upgrade their cold-chain logistics infrastructure and delivery systems to keep fruit fresh and boost sales.

JD.com, China's second-biggest e-commerce player, said it's in the process of improving its logistics chain to deliver fresh cherries from Yantai, Shandong province.

The company said that because of limits in the existing logistics infrastructure, most Yantai cherries are currently sold in northern provinces. However, with growing demand from Guangdong, Hunan and Hubei provinces, cold-chain delivery has become a necessity.

"We have a specialized delivery team with 60,000 people. And nearly 30,000 people are engaged in aftersales services," says Xia Meng, the head of fresh food and cold-chain deliveries at JD Logistics.

"We have 10 warehouses to store fresh food and about 7,000 distribution sites, covering more than 2,600 districts and counties."

Last year, JD opened a warehouse next to a cherry sorting center in Yantai, to reduce the number of product shipments and cut costs.

Xia said the number of dedicated aviation routes for transporting cherries will be increased to eight this year, with its cold-chain system covering more than 200 cities in 20 provinces and regions.

"The key is to reduce the inventory rate and sell the cherries as quickly as possible," said Sun Dali, a cherry seller in Yantai.

Other e-commerce platforms are also making moves to speed up their deliveries. On June 1, Cainiao Network Technology Co, a courier aggregator for Alibaba Group Holding, opened a warehouse in Maoming, Guangdong, a center of litchi production.

Cainiao said it provides a cold-chain delivery service that ships fresh litchi to the doorsteps of consumers within 72 hours.

The company said that after precooling, screening and packaging, fresh litchi are transported to refrigerated cabinets and then shipped to customers' homes in more than 130 cities.

According to marketing research company AC Nielsen, total online sales of fresh food hit 75 billion yuan ($11 billion; 9.8 billion euros; ￡8.5 billion) last year, and sales this year are expected to reach 100 billion yuan.

Analysts, however, said only 1 percent of 4,000 online retailers of fresh products are profitable.

"Because of high delivery and storage costs, online retailers of fresh produce are facing grave challenges," says Lu Zhenwang, chief executive officer of Shanghai-based Wanqing Consultancy.

Online retailers should try to improve their gross profits, increase sales to affluent middle-class consumers, and diversify their delivery channels to lower logistics costs, Lu says.

Zhang Qiange contributed to this story.

fanfeifei@chinadaily.com.cn

(China Daily European Weekly 06/09/2017 page29)