Wal-Mart start to run online grocery in China

Wal-Mart start to run online grocery in China

“Wal-Mart’s fresh-delivery strategy in China is actually the smarter strategy than in the U.S.,” says Jennifer Bartashus, an analyst with Bloomberg Intelligence. The model “in China is something they should really look at establishing in the U.S. if they want to do home deliveries properly one day.”

Fresh food is considered the last frontier of Chinese e-commerce. Internet sales account for only a tiny fraction of China’s 4.6 trillion-yuan (695 billion USD) annual market for fresh foods. Wal-Mart’s efforts in China, where it has more than 400 stores, revolve around trying to tap into a convenience-craving, smartphone-obsessed population that views errands such as going to the supermarket or bank as unwanted burdens.

Wal-Mart believes it’s cracked the code with its partner, JD.com Inc., China’s second-largest e-commerce platform, with 260 million monthly users. Wal-Mart owns 10 percent of JD.com and has invested $50 million in its Dada app, which crowdsources deliverymen for all kinds of products on JD’s website. Grocery shoppers make orders for Wal-Mart’s one-hour delivery through a section of JD’s app called JD Daojia, and the drivers are assigned through Dada.

At the heart of Wal-Mart’s operation are what it calls “dark stores,” or convenience-store-size areas in its main locations that stock 1,500 different products such as bananas, pork ribs, frozen dumplings, and fresh chicken feet. Workers grab printouts of the online orders, zip through the aisles placing items in a bag, and exit the other side, where they hit a button summoning a delivery driver. The drivers are independent contractors, such as Uber drivers, with cellphones and scooters. The time from picking up the order printout to hitting that button can’t exceed 10 minutes, or else the one-hour delivery is in peril.

Shelves are stocked with products based on order patterns for the surrounding area—meaning a store in northern China may have more soup ingredients as winter comes. The company adjusts each store’s online inventory every four weeks, and the added information about fresh grocery demand from web orders helps boost the accuracy of Wal-Mart’s product forecasting for offline stores.