5 Ways Coronavirus Is Changing Retail in China

Online shopping and livestreams are in demand

Key insights:

• Orders of daily supplies are on the rise.
• Farmers, florists and retailers are turning to livestreams.
• Drone deliveries minimize contact.
• Platforms like JD and Freshippo have vowed not to price gouge.

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.”

Meanwhile, grocery chain Freshippo has sourced more than 600 tons of fruit and vegetables from around the country and is offering a non-contact delivery option in its app, Alibaba said.

According to JD, China’s flower market has also suffered as wholesale markets and florists are closed, so flowers have simply been thrown out. That’s why it’s is helping florists livestream to attract customers. It even enlisted florists to provide courses on flower arrangement to boost consumer interest in the streams.

Booksellers are also tapping into livestreams and JD said dozens of bookstores have reached out about opening stores on its online platform to tap into last-mile delivery options from JD Logistics and Dada-JD Daojia. JD Computer and Digital Products stores are also moving online and livestreaming as 200 locations remain closed.

JD has helped staff at other brick and mortar retailers move online via social platform WeChat, which it says has been particularly important for the clothing industry as “nearly all” clothing stores have been closed to avoid cross-infection.

Through cloud stores, shop assistants can share and sell products online, helping offline stores reduce losses. Consumers are also encouraged to share their favorite products with friends to earn commissions. JD said sales reached nearly RMB 10 million ($1.4 million) in the first seven days.

To date, JD said it has helped 128 brands launch these cloud stores with nearly 100 more planning to open stores soon.

Drone and Robot Delivery

In another effort to minimize contact, JD completed its first drone delivery in Hebei earlier this month and said it will continue to operate the route during the coronavirus period. Previously, JD couriers delivered packages to the area by boat and they would have to detour more than 100 km (60 miles) if they used land-based routes.

“The drone dropped the parcels at a fixed point in the village, where customers picked them up without human-to-human contact,” JD said.

It plans to expand drone delivery to other cities.

JD is also using an autonomous delivery robot, which made its first delivery at the hospital designated for the treatment of coronavirus in Wuhan on Feb. 6.

“JD autonomous delivery robots can help reduce human-to-human contact making them an ideal solution for last-mile delivery in Wuhan during this unique time, protecting both our customers and our employees,” said Qi Kong, head of autonomous driving at JD Logistics.

Prices

One thing that won’t change is cost.

While third-party sellers on Amazon have responded to some product shortages with price increases, both JD and Alibaba have vowed not to change prices.

JD said will not increase prices as a first-party vendor and it is “rigorously regulating” its third-party platform to “forbid unfair price hikes, with penalties to third-party sellers if unfair price hikes are discovered.”

Alibaba’s Freshippo has also promised to remain open and stocked and not raise prices, particularly in the 18 stores it operates in Wuhan.

 

This article was originally published by Lisa Lacy, adweek.com