---
title: "Offline Supermarkets 'Counterattack' Fresh Food E-commerce"
description: "Fresh food e-commerce has suddenly entered a period of ebb, while offline supermarkets, which were expected to lose business, have already sounded the charge. By leveraging mini-programs, they have found a new path of online-offline synergy, winning back consumer favor."
author: "锌刻度"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2021-08-24"
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# Offline Supermarkets 'Counterattack' Fresh Food E-commerce

> Fresh food e-commerce has suddenly entered a period of ebb, while offline supermarkets, which were expected to lose business, have already sounded the charge. By leveraging mini-programs, they have found a new path of online-offline synergy, winning back consumer favor.

**Click to read the original text for details**
Source: Zinc Scale (ID: znkedu)
Fresh food e-commerce has suddenly entered a "ebb period," and the offline supermarkets that were expected to have their business taken away have long since sounded the "counterattack."
In the past two years, fresh food e-commerce platforms have entered the market one by one with huge subsidies. Seeing this crisis, offline supermarkets did not sit idly by. Riding the wave of online mini-programs, they fully practiced what it means to "use magic to defeat magic":
All they needed was to develop a mini-program to provide users with online services that have lower minimum order thresholds, lower delivery fees, and shorter delivery times.
By the time fresh food e-commerce platforms were struggling with profitability issues, cutting subsidies, and being rejected by users, offline supermarkets had, through this experience, found a new path of coordinated online and offline development.
As one rose and the other fell, consumers' inner scales began to tip back toward offline supermarkets that are closer to daily life...
**Using Mini-Programs to Go Online: The Strong Counterattack of Offline Supermarkets**
During the peak of community group buying, Yu Lin tried it a few times out of curiosity. But soon, she was put off by frequent problems in quality control, delivery, and after-sales service.
"At the time, I thought that such poor online grocery shopping services could only survive during special periods like the pandemic, or if the platform offered more discounts."
It wasn't until the small supermarket at the entrance of her community developed an online shopping mini-program, and the owner strongly recommended it to her, that Yu Lin's view on "online grocery shopping" began to waver. "For me personally, the online grocery mini-program is more practical."
Speaking of the advantages of community supermarket mini-programs, Yu Lin said frankly: First, the delivery threshold is as low as 0 yuan, and the delivery fee is only 1 yuan, with free delivery for orders over 28 yuan.
Second, delivery time is basically within half an hour, and even if the owner is busy, the goods can be delivered within an hour.
Third, community supermarkets have complete storage facilities, which are enough to ensure the quality of goods; of course, there is also the unique location advantage of community supermarkets, so even if there are after-sales issues, they can be resolved quickly.
(Image: A grocery mini-program paired with an offline supermarket)
"So, if you don't want to go to the store yourself, what reason is there to refuse this online service?" After stating the facts, Yu Lin asked Zinc Scale this rhetorical question, without avoiding the weaknesses of supermarket mini-programs compared to fresh food platforms:
"Yes, the product categories in the mini-program are relatively limited now, but they sell daily necessities, which is actually enough. Ordinary families don't eat wagyu beef every day or cook seafood every meal. At most, we go to the supermarket on weekends to stock up, and on weekdays, we just need to ensure we can buy the vegetables we need for the day."
As Yu Lin said, **mini-programs have now become the main way for supermarkets to achieve "online shopping."** Zinc Scale searched using Yu Lin's home location and found at least 7 supermarkets within 5 kilometers that could provide her with online services.
When Zinc Scale searched with other random addresses, it could also find 4 to 7 supermarket mini-programs within 5 kilometers.
(Within a 5-kilometer radius, 4 to 7 supermarket mini-programs can be found)
Zinc Scale also noticed that another supermarket at the same distance from Yu Lin's community was advertising "free delivery" and had set an even lower minimum order. "If one store doesn't have what I need, I can check another, just like shopping offline at different stores."
"The community group buying was so aggressive that everyone was worried about business, and mini-programs started to become popular during that time."
A community supermarket owner told Zinc Scale that the mini-program, which provides the same "online grocery shopping" service as fresh food e-commerce, was built for him by someone for a few thousand yuan.
"The functions are definitely not as complete as those of big platforms. We just need a simple selection, ordering, and payment function. We handle delivery ourselves, and since we're close by, it's not much trouble."
The owner said that **community supermarkets like theirs, which use mini-programs to go online, usually limit delivery distance to about 5 kilometers, overlapping with the activity range of customers who usually shop in-store.**
"Actually, thanks to group buying, everyone now knows how this works, so we don't need to advertise the mini-program specifically. We just put a QR code in the store, and when customers come to shop, we recommend it to them."
In fact, the online service of community supermarkets is generally a supplement to offline consumption. "After life returned to normal, compared to in-store customers, online orders are fewer."
But the owner admitted that the new online channel has attracted some new customers who prefer online shopping, and overall, the store's order volume has increased.
From sticking to physical stores and "waiting for customers to come" to developing mini-programs to "capture traffic," it can be said that **mini-programs not only helped community supermarkets survive the competitive crisis but also allowed them to successfully open up new online markets in the Internet age,** thereby forming a new retail model of "online orders, offline fulfillment."
In this regard, a market observer said that using mini-programs to complete product data integration creates a full-process retail O2O closed loop. "The mini-program retail model not only helps merchants quickly connect stores, consumers, marketing, and e-commerce, but also improves business efficiency and customer experience."
**Competing for the Same-City Market: Where Did Fresh Food E-commerce Lose?**
After seeing the successful exploration of community supermarkets above, a question worth exploring is: In the same-city fresh food market, why have offline supermarkets, which are not at an advantage in price or category, managed to survive?
Or, why did those fresh food e-commerce platforms that once made community supermarkets feel threatened and prompted them to seek new paths, fail?
(Image source: Forward Industry Research Institute)
Let's not talk about how fresh food e-commerce used money to open market gaps and fought price wars to attract consumers. Going back to when fresh food e-commerce first started laying out same-city business, **for those who wanted to quickly build a sales loop of "attract users—order online—pay instantly—same-city delivery—complete after-sales—generate repeat purchases," they were generally stuck on same-city delivery.**
It should be noted that due to the inherent attributes of fresh products—perishability, difficulty in storage, and susceptibility to spoilage—fresh food logistics is necessarily different from the transportation of general goods.
The market generally believes that fresh food products have the following requirements in logistics and distribution: First, reduce circulation links so that goods enter the market as quickly as possible; second, fully ensure quality stability during circulation; third, minimize logistics and distribution costs.
**The customer groups that fresh food e-commerce competes with community supermarkets, fresh food retail stores, and other offline supermarkets for are characterized by uneven distribution, diverse needs, and instability.**
So, how to get the freshest products to users as quickly as possible tests the delivery capacity of fresh food e-commerce.
For C-end consumers who are scattered and have small demand, the delivery cost of fresh food e-commerce is inevitably higher than that of offline supermarkets. How to reduce costs and increase efficiency becomes the key to whether the platform can be profitable (survive).
From the overall development status of fresh food e-commerce, there are two specific situations.
**First, self-built warehousing and distribution.** The most typical cases are the established fresh food platforms Miss Fresh and Dingdong Maicai. They laid out a large number of front warehouses offline and used professional fresh food delivery systems to achieve sorting and delivery functions.
But after also launching Hema Xiaozhan with the front warehouse model and confirming the failure of that attempt, Hema CEO Hou Yi publicly stated, "Theoretically, the front warehouse model cannot succeed. From the perspective of the business model itself, the front warehouse is a false proposition and cannot be profitable."
The debate over whether the front warehouse model is a false proposition has never stopped in the market. Zhu Danpeng, a researcher at the China Brand Research Institute, once analyzed, "Many platforms with the front warehouse model are prone to supply chain problems, and this model has extremely high capital requirements."
After burning money to build warehouses until going public, Miss Fresh's IPO broke on the first day, and Dingdong Maicai's financing was reduced by 70%, far below expectations, which seems to confirm the industry's judgment: "The more investment in front warehouses, the greater the loss."
**Second, not self-building warehousing and distribution.** After concentrating a large number of customer orders, they let offline stores distributed across communities handle centralized delivery, using centralized delivery to share the cost pressure of individual deliveries.
This logic was fully practiced after fresh food e-commerce platforms entered the market with the community group buying model. Platforms such as Chengxin Youxuan, Xingsheng Youxuan, and Shihuituan all used community convenience stores, which are very close to users offline, as the terminal of their delivery chain.
If nothing unexpected happens, community group buying might be the circulation method that can best achieve cost reduction and efficiency improvement. But the "online grocery shopping" business attracted too many capital-rich internet giants to participate.
> According to relevant media reports, by early 2021, community group buying had formed a 5+5 structure nationwide, namely five giants—JD.com, Alibaba, Meituan, Didi, and Pinduoduo—and five startups—Xingsheng Youxuan, Shihuituan, Shixianghui, Tongcheng Life, and Meijia Youxuan.
In the community group buying segment that flourished due to the influx of fresh food e-commerce, original startups and newly entered internet giants invested heavily in competing for group leaders and users to expand the offline market.
As a result, operating costs continued to rise, and under disorderly competition, fresh food e-commerce lost the original intention of finding effective ways to reduce costs and increase efficiency.
In addition, after integrating third-party resources for delivery, fresh food e-commerce found it difficult to control product quality and service quality, ultimately leading to a deterioration of user goodwill, or even direct user loss, and the large subsidies invested earlier were wasted.
For fresh food platforms themselves, in the process of developing the same-city market, the probability of encountering difficult problems is too high:
No clear business model, large investment with no hope of profitability for the time being... With such a poor user experience, how can they retain customers and guide them to make repeat purchases? After a wave of buying frenzy, the traffic naturally dispersed.
More importantly, for the consumer groups that fresh food e-commerce targets, the same-city business they have worked so hard to develop is not irreplaceable. **Apart from gradually decreasing cash subsidies and the not-often-used additional product categories, they are no more attractive than offline supermarkets that have been integrated into daily life for years.**
**Daily Fruits and Vegetables Don't Make Money,
Better to Sell Mid-to-High-End Agricultural Products**
Data is more intuitive. According to a survey by Yuncaiyuan, the market share of fresh food e-commerce is indeed negligible:
To date, traditional wet markets and supermarket offline distribution remain the main places where domestic consumers buy fresh products, firmly occupying more than half of the fresh agricultural products needed by Chinese households.
The second largest channel for buying fresh products is traditional supermarkets, accounting for 36.4% of the total; the last major channel is innovative fresh food sales driven by internet technology and capital investment, which saw explosive growth during the pandemic after five years of development, but only accounts for 2.5% of total distribution.
**Under such a stark data comparison, it's not so much that consumers are too picky and hard to please, but rather that these fresh food e-commerce platforms have failed to take the pulse of their users.**
Excluding the possibility that bulk purchases of agricultural products may reduce procurement costs, considering the three key points of transportation loss of agricultural products, logistics costs of agricultural products, and customer acquisition costs of fresh food e-commerce, fresh food e-commerce has more additional costs compared to its competitors.
First, low transportation loss is based on having a complete cold chain transportation system. Few of the latecomers in fresh food e-commerce have such strength, and cold chain transportation brings high costs.
Second, as mentioned above, fresh food e-commerce has not yet found an effective warehousing and distribution method to achieve cost reduction and efficiency improvement in logistics and transportation.
Third, in order to quickly open the market and grab customers, fresh food e-commerce has to invest more in marketing costs to fight price wars.
The result of the above is that **fresh food e-commerce attempts to use higher-cost products to compete for the offline market originally belonging to community supermarkets, vegetable stalls, and comprehensive supermarkets...** But reality tells them that focusing on daily fresh fruits, vegetables, and other agricultural products may be unwise.
Due to the dispersion of domestic agricultural production, and influenced by different factors such as soil conditions, regional geographical and climatic environments, planting technology levels, logistics, and other infrastructure, we occasionally receive news of unsalable or excessively fluctuating prices for agricultural products like cabbage, pineapple, and citrus in certain regions.
But it should be noted that **regardless of the consumption channel, high-quality agricultural and sideline products never worry about sales.** For example, high-quality fresh products like Ningxia Tan sheep and grass-fed yellow cattle are truly hard to find.
Although with the continuous penetration of fresh food e-commerce and the continuous rise in people's consumption levels, users' demand for agricultural products shows characteristics of convenience, quality, and high cost-performance, they hope to access agricultural products from more regions and categories.
According to an industry data analysis by iiMedia Research, at this stage, surveyed netizens are quite dissatisfied with the richness of agricultural products they can consume, with 59.7% and 42.4% of surveyed users respectively believing that they can only consume agricultural products from fewer regions and categories.
In this regard, iiMedia Research analysts believe that **although more agricultural products can directly reach consumers with the promotion of fresh food e-commerce, under the trend of quality consumption, consumers have a greater demand for the richness of agricultural products.**
"In the future, we still need to strengthen the supporting role of e-commerce platforms in agricultural product retail, combine innovative business forms and logistics systems to expand the circulation radius of agricultural products, and optimize both supply and demand."
The richness here definitely does not mean simply selling daily fresh agricultural products online as fresh food e-commerce is currently doing, but rather those unique agricultural products that are hard to buy daily.
(Image: A high-end brand agricultural product, from the internet)
"If there is no absolute and long-term price advantage, it's better to go into the mid-to-high-end agricultural product market."
A practitioner told Zinc Scale that compared to daily necessities like fruits and vegetables, mid-to-high-end agricultural products have more pricing space, leaving more profit space for merchants, and can also form differentiated competition with existing agricultural product merchants, which will appeal to consumers who demand high-end products.
"When visiting friends and relatives, it's a matter of face to bring some uncommon high-end agricultural products."
However, the difficulty of building a high-end agricultural product brand is no less than winning the "vegetable basket" battle. In plain terms, both have a common point: **Only when consumers believe that "your products are worth your price" can the platform truly have the strength to retain users.**
And now, fresh food e-commerce can only look forward to this unreachable goal.
**PS**: From September 23 to 25, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will open in Shanghai. **Focusing on industry trends + practical cases + growth through connections**, **3,000** FMCG practitioners will gather for the event.
11 themed forums cover under new consumption: **0 Snack Era·Light Wellness, Small Categories·Big Bang, Z Generation·New Wine and Tea;** under new retail: **Community E-commerce: Midfield or Endgame? Interpretation, Heavy Investment in Same-City Retail (O2O), Short Video and Livestream Commerce;** under new marketing: **Digitalization, BC Integration, Martech, DTC and Private Traffic, Distribution B2B, Big Merchants and Digital Distribution**, etc., with operators from various segments bringing the latest case studies.
Confirmed heavyweight guests so far include: **1. Tao Shiquan, Founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company, former Vice President of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior Vice President of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, Vice President of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, General Manager of E-commerce at Gold Hong Ye Paper Group...**
**A grand gathering for FMCG practitioners, you must be there!**
**Are you "watching" me?**


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