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E-commerce of Agricultural Products Develops Rapidly, but Hard to Make a Profit

China Agriculture Report By CnAgri2014-01-15 09:52:50China Agriculture Report Print In order to deal with the situation of cheap vegetables hurting farms, expensive vegetables hurting consumers, e-commerce of agricultural produces develops rapidly, but the model has brought negative profit so far.

According to E-commerce and Information Division of Ministry of Commerce, in recent years, the e-commerce of agricultural products in China develops rapidly. Currently there are over 30,000 platforms involving e-commerce agricultural products in China and 3000 agricultural products only e-commerce platform, and the number of e-commerce platforms appears sprouting.

Cai Guanjia, under O2O model, the total investment amounted to 35 million yuan in four years and it’s operating in a loss till now. Justeasy Company was founded in 2011 and is an agricultural products e-commerce platform for Wuhan region. The company developed proprietary rights of “electronic vegetable basket” and is included in the intelligent city plan and supported by the government. The company has developed rapidly. Within two years, it has developed into the biggest online trading platform of fresh agricultural products in China, but it still doesn’t get out from the loss dilemma. According to the person in charge at Justeasy Company, for the past two years, the company has invested 60 million yuan, but it still operating with loss. 

Complicated procedures contribute to difficulty in making profit by e-commerce trader. First of all, the varieties of agricultural products are numerous and the source of supply needs to be secured, as well as the quality. The requirement for storage is strict. During distribution, the customers are scattered and fresh agricultural products require freshness, hygienic, high quality and safety.

Caiguanjia states that they will tackle the issues from two perspectives. On one hand, market differentiation is necessary, to target middle and high end consumers with green agricultural products. On the other hand, working with local logistic companies to deal with distribution of fresh products to optimize sources and save cost.

From “China Fruit &Vegetable Market Monthly Report

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