Chinese consumers can buy fresh Washington State Sweet Bing Cherries on Alibaba’s consumer website Tail.com for $6.56 a pound. It costs an American eComerce consumer $14.42 a pound on Packitrite.com. Unbelievable, but it is happening and here is how it works. For a small deposit, Chinese consumer can place a TMail order at a place marker price. Depending on the volume of order, this price is reduced. The opening price on Washington Bing cherries was $13.12 a pound. Chinese customers placed 19,000 orders, and the price dropped to $6.56 a pound.
TMail aggregates the total orders for future delivery over a short time period and places the total volume order their direct Washington State cherry producer. The bulk order is air freighted to TMail , which in turns package the customer order volumes and sends to the purchasers. This is a clever business model innovation using the advanced information technology and logistics that China and the U.S. share.
The menu of U.S. items for Chinese ecommerce consumers will expand to Boston lobsters, Alaskan wild salmon, Sun-Maid raisins and other fresh food products, under an Alibaba Group cooperative program with the U.S. Department of Agriculture Trade office in Shanghai, China.
U.S agricultural export to China reached $546 billion in 2012, up 34% from 2011. Most of this export is B2B exchange between large U.S. grain and soybean exporters to large Chinese food importers. Some vegetables are also exchanged. Electronic grade between direct U.S. growers and direct Chinese eCommerce consumers is an entirely new business model. Alibaba finds the grower and the consumers and links them directly, bypassing many distribution intermediaries and their associated costs.
The direct Chinese consumer eCommerce market for fresh U.S. produce will grow immensely as this experiment rolls out. It will meet many needs. Chinese consumers are very suspicious about the safety of their food products. While their government is making great efforts to improve food safety, it will rake years to reach the level of U.S. food safety. In the meaning the Chinese health conscious middle class is growing by leaps and bounds, and is the most computer literate population in the world. This will also help boost U.S. exports.
Alibaba has had years of experience in Sino-U.S. B2B electronic trade. Its move into B2C electronic trade is rapidly growing. This particular trial with Washington State sweet Bing cherries, is a major test of extending Sino-U.S. consumer electronic trade from durable to perishable items at an affordable price.
Chinese consumers are buying the same fresh Washington State sweet Bing cherries for almost the same price that I am paying for them at my local Whole Foods market in Washington, D.C.!