Research on the Upgrade and Transformation of Fresh Food E-commerce in China under the Background of New Retail

Xu Yang

(Woosong University,South Korea,Daejeon 34606)

Abstract:Jack Ma believes that e-commerce will be replaced by new retail and gradually withdraw from the stage of history.As a model similar to e-commerce but more advantageous than e-commerce,new retail is a combination of the Internet and physical stores.After more than 10 years of development,fresh food e-commerce has faced many problems and obstacles,and has entered a bottleneck period of development.This article analyzes the development environment of fresh food e-commerce companies under the background of new retail,reveals their development difficulties,and proposes that e-commerce companies should empower new retail,integrate all channels,overcome disadvantages in development,and accelerate the pace of transformation and upgrading.

Key words:Upgrade and transformation;New retail;Fresh food e-commerce

With the new round of development and application of newlyemerged technologies such as the Internet of Things,big data,and artificial intelligence,as well as the rapid increase in people's consumption level and demand,traditional e-commerce users have been increasing due to the widespread popularity of the Internet and mobile devices,and the traffic dividend is gradually disappearing,the growth“bottleneck”faced by traditional e-commerce has begun to appear,and the traditional e-commerce model failed to meet the development of the times and the increasing demands of consumers.At present,with the deepening of the supply-side reform and the proposal of the international and domestic dual cycle concept,domestic economic environment and structure of China entered an important period of adjustment and transformation,and the competition in the retail industry is alreadyintense.The retail industry has basically achieved penetration of the end consumer user base,and market competition has shifted from a rough expansion stage to a new stage of optimized and integrated development[1].New business formats,product structures,and more efficient business operation models are also emerging.The“New Retail”model has undergone several years of development.During this period,it has continuously evolved and iterated,exhibiting a complex and diverse development trend,and has been widely used in many industries.

The new retail of agricultural products is a new type of agricultural product retail model that is driven by information technology,centered on consumer experience,and reconstructed the relationships between consumers,goods,and markets with big data technology.Compared with traditional retail model,new retail consumers have become identifiable,accessible,traceable,and analyzable;the value of agricultural products has been extended from pure edible value to experience value that meets more individual needs,and new retail stores have upgraded from channels.To the scene,you can achieve what you see is what you get.For the fresh food e-commerce industry,new retail caters to consumers' needs for quality of life and scene-based consumption experience.It uses big data resources to analyze and tap consumer differences,reduce consumers'shopping costs and increase their willingness to shop to effectively promote the rapid development of the fresh agricultural product market.

1 Macro‑environmental Analysis of the New Retail of Fresh Agricultural Products

1.1 Political Environment

The policies formulated by the government to support new industries have become an important factor in the development of new retail of fresh agricultural products.In recent years,the Chinese government has strongly supported the promotion of the development of innovative enterprises and encouraged the reform and upgrading of traditional enterprises.In November 2016,the General Office of the State Council issued the“Opinions on Promoting the Innovation and Transformation of Physical Retailing”,which clarified the guiding ideology and basic principles of the innovation and transformation of the real economy.In August 2019,the General Office of the State Council again issued the“Opinions on Accelerating the Development of Circulation and Promoting Commercial Consumption”,covering various sub-sectors from adapting to changes in consumption to adjusting e-commerce retail.The introduction of these favorable policies greatly stimulated retail sales and the transformation and development of the enterprise In the field of fresh agricultural products[2].

1.2 Economic Environment

Demand drives production,and new retail stems from the increase in consumers' disposable income.The domestic consumer market has bright prospects.The current consumer market is not saturated.With the acceleration of urbanization and the increase in residents' income,it will continue to stimulate consumption growth.At present,new retail only covers some major cities,and the market in many large and medium-sized cities still leaves room for development.The domestic economic growth momentum is stable.At present,the GDP of China still maintains a growth rate of 6% to 8%.Even in the face of various unfavorable factors in the world,it still maintains a trend of rapid growth,which means that Chinese consumers have sufficient consumption potential.

1.3 Social Environment

The diversification and individuation of consumer needs in the SOLOMO era makes it necessary for companies to study consumer behavior and psychological factors and make corresponding adjustments in order to meet consumers needs of diffen ent levels.At present,China is in the third stage of upgrading its consumption structure,and the consumption trend of fresh agricultural products is also changing.The demand for the quality of fresh agricultural products is increasing.As a basic consumer goods industry for people's livelihood,the fresh food industry has a trillion-level market volume.Fresh agricultural products are purchased frequently,difficult to store,and are fast-moving consumer goods.Research shows that Chinese consumers buy fresh agricultural products every week more frequently than other countries globally.Fresh food e-commerce has played a huge role in ensuring people's livelihood.Consumers can get fresh fruits and vegetables that are not higher than the market price without leaving their homes.This saves time and effort in shopping in the supermarket.Consumers are beginning to realize the advantages of this model,and more and more consumers spontaneously use e-commerce to buy fresh agricultural products,and once this habit is formed,it is irreversible.

1.4 Technical Environment

New retail was born from the development of Internet technology and the progress of e-commerce,which changed the way consumers shop.People can enjoy the convenience brought by new technologies,and companies can also perform big data and artificial intelligence calculations and pushes through the Internet,which helps companies to integrate and upgrade channels and provide consumers with a seamless and consistent experience across all channels .Consumers are free from time,space and geographical restrictions for shopping.The development of smart technology enables unmanned retail to rely on mobile payment technology to realize consumer fragmented shopping and complete the transformation of smart retail.The consumption behavior of consumers using mobile payment has greatly increased the efficiency of online operations,and omni-channel retailing has become possible.All this provides technical support for the boom of fresh food e-commerce.

2 Main Issues in the Development of Fresh Agricultural Products E‑commerce

2.1 The Logistics Cost is High,and the Cold Chain Logistics System is Not Sound

Fresh products are different from ordinary commodities in that they are fresh and perishable.Therefore,higher requirements are placed on cold chain logistics.This has always been a bottleneck in the development of fresh food e-commerce in China.Due to the relatively high transportation cost of the cold chain logistics system,from the perspective of the current logistics and distribution of fresh agricultural products,the cold chain logistics circulation rate is still lower than that of developed countries.There is still a lack of logistics and transportation of large vehicles and specialized transportation equipment.The construction investment of cold chain logistics is large,and the technical requirements are also high.It will take a long time to recover the cost in the later stage,which will easily cause financial pressure on the enterprise and increase the risk of later operation.In addition,the industry concentration is relatively low,and a complete integrated cold chain logistics system has not been formed.At present,except for JD.com,SF Express and Hema Xiansheng,which have their own cold chain logistics,most fresh food e-commerce companies are small and medium-sized enterprises,the construction of a systematic cold chain logistics system is naturally impossible to talk about.The“last mile”problem of logistics and distribution is still a pain point[3].

2.2 The Brand Awareness of Fresh Food E-commerce is Not High,and the Homogeneity is Serious

The dispersion and weakness of agriculture make it difficult for a single production manager to build a corporate brand.Brand consumption has become a new growth point in the consumer demand for agricultural products,especially the reliance on brands for online shopping of agricultural products has gradually increased.Due to the low added value of agricultural products,the brand chain is difficult to maintain,and the cost of quality management and circulation is high,the current degree of branding of agricultural products is low,and the phenomenon of homogeneity is severe.Small and medium-sized e-commerce companies often only sell in a certain area.Consumers buying fresh agricultural products mainly value the popularity of e-commerce brands.Only the products of e-commerce fresh agricultural products with a good reputation will enable consumers to buy with confidence.Therefore,the popularity of e-commerce brands has an important influence on consumers' choices.The products sold by different e-commerce companies are similar,and the competition among e-commerce companies in the same region is fierce.The main consumer users of fresh food e-commerce are young people and white-collar workers with higher incomes.These consumers possess the general characteristics of pursuing new things and valuing the quality of life.Personality has become their label,and they are also happy to purchase personalized products and have a high awareness of famous brands.At present,the main focuses of fresh food e-commerce are price and freshness,and the failure to segment the market makes it difficult for consumers to choose when faced with many e-commerce brands,which greatly affects the establishment of fresh agricultural product e-commerce brands.

2.3 The Production of Fresh Agricultural Products is Geographically Dispersed,and There is a Lack of E-commerce Professionals

The rural geographic environment directly affects the production and operation of agricultural products.Due to the uneven distribution of land resources and natural resources,the current operation of agricultural products in China is mainly decentralized,mainly used for family production,small in scale,and exhibits obvious regional characteristics.Decentralized management and information asymmetry have caused farmers to be in a inferior position in the value chain,and it is difficult to obtain better returns in transactions,thus affecting production enthusiasm.Due to the fact that the origin of fresh agricultural products in rural my country has not established a complete information-based fresh agricultural product management mechanism,the service network and branches of the e-commerce platform are relatively small,which limits the development of China's fresh agricultural product e-commerce.The marketing and promotion of fresh agricultural product e-commerce and even the construction of network infrastructure require technical talents.Therefore,the lack of fresh food e-commerce professionals at this stage has become a hindering factor in the development of fresh food e-commerce.

2.4 Insufficient Channel Integration

According to a report by McKinsey Global Institute,up to 85%of Chinese consumers have become omni-channel consumers.More and more companies are adopting the omni-channel retail model to meet consumers' free and casual consumption needs.Alibaba established Hema Xiansheng,an omni-channel fresh food retail company,through the combination of offline stores and e-commerce platforms.The new retail revolution of fresh agricultural products has been opened.More and more companies are following suit,making the traditional offline physical fresh food supermarkets and online fresh food e-commerce competition mode gradually shifted to the integration mode of online and offline channels.For consumers of fresh agricultural products,the omni-channel retail model provides a more convenient and cbetter experience and enhances consumers'perceived value.Whether consumers perceive these values is key to consumers’ acceptance of products and services.

However,in recent years,the effect of omni-channel transformation and upgrading of fresh food e-commerce has not been satisfactory.Well-known companies such as Hema Xiansheng have closed stores,not to mention other small and medium-sized fresh food companies.By proposing improvement measures under different channels,it is of great significance to the transformation and upgrading of fresh food e-commerce enterprises.

3 Measures for E‑commerce Development of Fresh Agricultural Products

3.1 Strengthen the Construction of Cold Chain Logistics and Open up the“Last Mile”of E-commerce

The development and utilization of Internet technology has created favorable conditions for the development of China's fresh agricultural product e-commerce.The government guides and supports the acceleration of cold chain logistics infrastructure construction,and formulates a series of fresh food e-commerce development preferential policies,encourages fresh food e-commerce enterprises to invest in the construction of cold storage equipment according to their share,and promote the sharing of logistics information and logistics resources between enterprises.Fresh food e-commerce companies need to focus on strengthening terminal distribution,that is,“last mile”distribution,and rationally choose self-built logistics and third-party logistics methods based on their actual conditions.At the same time,it is necessary to optimize the equipment for the last“one mile”distribution,the packaging of fresh products,and the professional training of distribution personnel to complete the whole process of fresh products from the source to the distribution.Continuously improve its own cold chain logistics network to reduce the operating costs of fresh agricultural products[4].

3.2 Promote the Development of E-commerce Brand of Fresh Agricultural Products and Increase Brand Awareness

To achieve long-term development,an enterprise needs to establish brand awareness.Brand building is very important to an enterprise and determines the survival of the enterprise to a certain extent.Both government support and corporate financing exert a brand tilt effect.The creation of e-commerce brands for fresh agricultural products is conducive to the regulation of product sales,advertising,quality control,etc.,and it is conducive to improve the trust and recognition of consumers to the e-commerce platform of fresh agricultural products.Through brand building,the product quality,corporate image and commercial credit have been promoted.And establish and perfect various internal management mechanisms to cultivate long-term stable consumer groups.Eventually,consumers will become dependent on fresh agricultural products on their own platforms,increasing their stickiness to products,so that e-commerce companies can obtain stable profits.At the same time,the issue of product homogeneity can be solved to a certain extent.

3.3 Accelerate the Pace of Channel Integration and Help the Transformation and Upgrading of Fresh Food E-commerce

Fresh food e-commerce enterprises should,based on their channel advantages,turn traditional e-commerce merchants and retail companies from enemies into friends,allowing consumers to choose the channels they favor in the most convenient way,providing consumers with more choices.It also allows consumers to smoothly and seamlessly shuttle through online to offline channels,save shopping time,improve shopping efficiency,increase the perceived usefulness and ease of use of consumer channels,and provide consumers with higher added valueso that it can set a firm foothold in the fierce competition and win more opportunities.