The Rising Growth of Food E-Commerce in Asia

While categories such as fashion, media, entertainment and IT traditionally dominate e-commerce, the food category is picking up steam in the e-commerce space. In China, it is bigger than the toys category, and in Indonesia it has taken over the health and beauty category. Last week Food Industry Asia (FIA) held its latest Lunch Series session focusing on food e-commerce which served as a platform to discuss the growth of the sector across Asia.

In recent years, Asia has become the strongest B2C e-commerce region with a turnover of USD$100 billion, compared to North America and Europe at USD$664b and USD$505b, respectively. The reason for this growth is simple – transformative technologies have enabled consumers to purchase a supermarket’s entire range without leaving their seat. Improving logistics networks which enable faster and more efficient purchases and deliveries will lead to a change in consumer behaviour, especially as more people begin to rely on e-commerce for their grocery purchases.

Jiang YiFan, Head of Science and Regulatory Affairs of Food Industry Asia, highlighting potential regulation on e-commerce market

“While the e-commerce market is still in its infancy stage, it’s growing very fast,” shared Jiang Yi Fan, FIA’s Head of Science and Regulatory. According to a report by IGD, Asia’s online grocery channel is set to grow by USD$176 billion (194%) by 2022.

Alaap Tatwawadi,Business lead, FMCG, Retail and Food of Google Asia Pacific, talking about online consumer trends & behavior and e-commerce opportunity

Alaap Tatwawadi, Business Lead for Fast Moving Consumer Goods (Retail and Food) at Google Asia Pacific, explains that there is a driving ecosystem change, which has increased the reliance on online services such as e-commerce, ride hailing and on-demand video. “We spend eight to 10 hours a day online, and it has become a massive part of what we do on a daily basis,” Tatwawadi pointed out.

“In China, the adoption of e-commerce is prevalent everywhere we go. Even in the small-tier cities, we’re able to pay by AliPay. Sometimes I struggle with remembering to bring cash,” Yew Chee Chin, FSIS, Market Entry Lead at PWC China chimed in with his own personal experience.

Despite the high adoption rates and the convenience that e-commerce brings to consumers, there are still cause for concern when it comes to product authenticity, along with ensuring food safety from the first mile to the last mile.

“There is no foolproof solution against fraud and counterfeits entering the supply chain,” says Patrik Jonasson, Public Policy Director for GS1 Asia Pacific. However, he adds that it is vital for retailers to be able to facilitate returns in such events.

Chong Nyet Chin, Food Safety and Quality Director of NTUC FairPrice Co-operative Limited, providing perspective on Singapore's food safety and quality control within online platform

Chong Nyet Chin, Food Safety and Quality Director at Singapore’s NTUC Fairprice Co-Operative Limited, the country’s largest supermarket chain, believes that in traditional shopping methods, all of the legal responsibilities were placed on the retailer. However, with e-commerce, the initial responsibility is now on the buyer to alert the retailers of any potential issues where authenticity is concerned.

Roy Tharakan, Sales Director of Food Ingredients Asia Pacific at Cargill and moderator for the panel discussion, brought up the challenges that food producers may face with the rise of e-commerce. “How does a global organisation adopt this change? How do you adapt to the new model?”, he asked.

L-R: Ganesh Kashyap, Mondelez International; Chong Nyet Chin, NTUC Fairprice Co-Operative Limited; Patrik Jonasson, GS1; Alaap Tatwawadi, Google Asia Pacific; Chee Chin Yew, PwC; Roy Tharakan, Cargill (moderator); giving their insights on the challenges and opportunities for food e-commerce across Asia

“We created dedicated teams in the key markets that had the right cross-functional skills within the team. We drove our business in a partnership-oriented way, by partnering with Amazon in India, TMall in China and RedMart in Singapore. This helps grow and market the category and brands, which drives conversion,” clarified Ganesh Kashyap, Senior Director for E-Commerce and growth platforms and the Head of E-Commerce at Mondelez International.

With the big online players like Amazon, TMall and RedMart right in the center of the food e-commerce chain, it is inevitable that the food e-commerce industry will continue to grow exponentially. And with this, the importance of quality control and having a stringent regulatory framework in place has never been higher.

The food e-commerce industry has huge potential, especially with the unprecedented acceleration it has seen in the past two years and with its massive existing customer base. To ensure that food e-commerce stays relevant, it is vital for companies to craft the user experience with convenience in mind, for example, optimising mobile applications to work on various phones across the region.

To find out more about Food E-Commerce, read FIA’s recently launched white paper ‘Food E-Commerce Across Asia’ which discusses the risks and opportunities that comes with the growth of the industry and helps readers understand the issues at stake and solutions to address those issues.