One-hour delivery of online grocery orders is spreading to some of China’s largest cities.
Tmall Supermarket, the online grocery service operated by e-commerce giant Alibaba Group Holding Ltd. launched its Tmall Supermarket web-ordering service in Beijing in July 2017 and has since expanded it to large parts of five other metropolitan areas: Shanghai, Chengdu, Wuhai, Hangzhou and Chongqing.
Residents of about 10,000 communities within those metro areas can use this service, according to the China E-Commerce Research Center, an e-commerce research firm independent of the government.
Consumers can choose among 500 products and receive free delivery within one hour as long as the value of the order is at least 29 yuan ($5). Alibaba says it plans to expand the product selection and to move into more of China’s large cities.
“There are about 500 million active shoppers on our platform and most of them need a faster grocery service,” Alibaba vice president Jing Jie said at a press conference. “The goal of Tmall Supermarket is to meet those consumers’ demands in this category in a fast way.”
Tmall Supermarket says the number of daily orders has surpassed 5,000 in Hangzhou, where Alibaba is headquartered. Most orders are received between 9 a.m. and noon, and about 70% of shoppers are female. The average order twice as high as the typical order in a grocery store, Alibaba says.
Tmall Supermarket operates 73 warehouses in five Chinese cities and works with 44 grocery stores to allow online shoppers living nearby to purchase products from those stores.
Alibaba invested aggressively in expanding from online shopping into bricks-and-mortar stores in 2017, aiming to offer shoppers greater convenience. In November, Alibaba spent $2.9 billion to acquire a 36% stake in Sun Art Retail Group Ltd., which operates about 400 hypermarkets in China under the Auchan and RT-Mart banners. Alibaba also put money into regional grocery store chains like Snajiang Shopping Club Co. Ltd. and Lianhua Supermarket Holdings Co. Ltd.
According to the State Post Bureau of China, courier services that provide express grocery delivery represent the fastest-growing sub-sector in the logistics industry and will maintain an annual 30% growth rate over the next five years. The bureau estimated that revenue for those courier services will exceed 200 billion yuan ($31 billion) by 2020 and that shoppers using express delivery services will reach 350 million in 2018.