Internet companies tap imported seafood market

A woman holds three sea crabs at a Lianyungang wharf in Jiangsu province. Sales of seafood products are popular on Chinese e-commerce platforms. [China Daily]

Yao Boda was born on the small island of Tongtou near Ningbo, a coastal city in eastern Zhejiang province, and grew up catching shrimps and crabs.

As a child, he watched his grandfather head off to work as a fisherman, braving the whims of the East China Sea. Now, 30 years later, Yao is riding a different wave and using the e-commerce boom to transform the traditional seafood sector.

Last year, he set up Shanghai Import Fresh Co Ltd, which specializes in importing seafood from countries such as Japan and Norway.

"Traditionally, it was impossible for small businesses to import seafood from foreign suppliers because they had to buy between 20 tons to 25 tons of produce at a time," Yao, 39, said.

"Most small seafood businesses, or restaurants, are looking for orders worth several thousand yuan a time."

Spotting a gap in the market, his company rolled out the online platform jinkouxian.com, which acts a "middle man" for the industry's army of family-owned vendors.

"Now they can place orders online at jinkouxian.com and we will source the products directly from foreign countries or the major distributors," Yao said.

"With long-term partners in dozens of countries, we can help small businesses access the best seafood at the lowest prices."

Since Shanghai Import Fresh is privately owned, there are not detailed financial figures. But so far, its online platform jinkouxian.com has reported sales of 2 million yuan ($314,000) for the past four months.

With numbers like these, it is hardly surprising that this sector of the massive e-commerce market is proving popular as China's online shoppers show a growing appetite for imported fresh products.

This has resulted in the rapid expansion of business to business, or B2B, sites, and specialized food platforms for consumers.

"The emergence of online platforms is starting to boost the efficiency of global sourcing and delivery services," Zhang Xiangli, an e-commerce analyst at iResearch Consulting Group in Beijing, said.

One of the largest sites is 1688.com, a B2B owned by Internet giant Alibaba Group Holding Ltd.

Unlike jinkouxian.com which only deals in seafood products, the platform sells an array of imported fresh food, such as cherries from the United States and beef from Australia, to around 120 million small and medium-size businesses, according to the company.

"Our aim is to build 1688.com into the world's largest distribution platform for imported products," Wu Minzhi, senior vice-president at Alibaba, said in May.

By flexing its Internet muscle, the online heavyweight has been able to launch a "one-stop solution service" on 1688.com. This means small firms can go direct online to place orders instead of dealing with distribution companies and wholesale outlets.

"Compared with the traditional way of importing foreign products, our platform can help enterprises save between 20 percent and 40 percent in costs and reduce delivery times by 15 to 60 days," Liu Fei, senior director at 1688.com, said.

In a move to further streamline its operation, the Internet platform is working on a bar coding system with China's custom authorities, so customers can track their orders.

Still, when it comes to the logistics chain, the majority of online players are using established express delivery companies to ship their goods.

"Fresh food, such as seafood produce, meat and fruit are perishable and vulnerable to bacteria," Xu Yong, chief consultant for the express delivery and logistics website cecss.com, said.

"They need to be transported at low temperatures and that is where recognized logistics services come in."

Indeed, express delivery platform Sfbest is expanding its nationwide cold storage business to cope with increased demand from the seafood sector.

The online site is owned by SF Express, which is based in Shenzhen, Guangdong province, and is one of the largest logistics companies in the country.

"Our low-temperature delivery services are in about 48 cities, including third-tier ones such as Langfang in Hebei province," Kong Fang, director of the cold-chain logistics business at SF Express, said.

The company has already set up 13 world-class refrigerated warehouses across China in cities such as Beijing, Shanghai and Xiamen. Another seven will be fully operational by the end of this year to make sure produce is as fresh as when it left its original destination.

"We maintain that standard throughout the whole cold storage chain, starting from the aircraft we use to import seafood from foreign countries to the trucks that transport it to our warehouses and eventually to the doors of our customers," Kong said. "Vehicles and warehouses are all equipped with cooling devices to maintain low temperatures, with some below－18 degrees Celsius," he added.

A computerized system is at the heart of SF Express' logistics business. It regulates temperatures in the company's warehouses and makes sure orders are delivered within the recommended time frame.

"Contrary to what outside people think, the cold-chain system is highly computerized with sophisticated refrigerating equipment," Xu, of cecss.com, said. "It is a cash-burning project."

To keep costs down, major online company JD.com Inc has put together partnership deals with thousands of convenience stores across China. Fresh seafood ordered on its Internet site is now delivered to shops before being picked up by customers.

"Partnering with bricks-and-mortar outlets is a way to reduce logistical costs," Xu said. "It works well with some consumers, but home delivery services are the future. When the logistics costs come down, the online market for seafood will really take off."