Cherries being packed for express delivery at an orchard in Longnan county, Gansu province.(Photo provided to China Daily)
Fruit Day in January racked up 100 million yuan sales on the largest fresh fruit platform
Fruit Day Co Ltd is proving that clicks mean cash after racking up sales worth 100 million yuan ($16.1 million) in the first month of this year.
The largest fresh fruit e-commerce site smashed through that barrier in January with the company's co-founder Zhao Guozhang hailing the figures as a "milestone".
Launched in 2009, Fruit Day has taken advantage of the new regulations governing the China (Shanghai) Pilot Free Trade Zone. During the Chinese New Year in February, the company brought in its first batch of Tasmanian cherries and sold them directly to consumers online at duty-free prices.
Normally, there would have been a 25 percent tariff and valued-added tax on imported cherries, but Fruit Day was able to sell them for 328 yuan-a-box. This was nearly half the price of 600 yuan-a-box being charged by traditional suppliers.
Fruit Day literally cleaned up. "We worked closely with the customs, inspection and quarantine department, as well as the administrative body of the FTZ, to make things happen," Zhao said.
"This was the first experiment for Fruit Day and the government departments under the new FTZ policies. The success of the experiment has helped provide a standard working procedure for other industry players, which will boost the sector and help consumers," Zhao added.
Last year, Fruit Day reported sales of 500 million yuan, up 150 percent compared to 2013, while the number of customers is expected to reach 10 million in 2015.
But success has not come easy. Since the site was rolled out, Zhao and his 700-strong workforce have focused on selling fruit that cannot be found on other websites.
Before 2014, it was impossible to buy Mexican blackberries in China. Fruit Day changed that and introduced Mexican blackberries to consumers here. This adventurous approach has helped the company stand out from the online crowd as it carved out a profitable niche in the market.
"If we sell the same products as everybody else, we will easily fall into a price war," Zhao said. "We are still in the early stages of what we hope to achieve."
Zhao is also bullish about the future even though major Internet players, such as Alibaba Group Holding Ltd, are moving into the e-commerce fresh food market.
"The management team of Fruit Day has devoted 100 percent of their time and energy on fresh fruits," he said. "But the key players in the industry have many things to worry about. They cannot be as focused as we are. Therefore, the result will be quite different."
Even so, Fruit Day is not waiting for the "big boys" to eat into its market share. Zhao has expanded the staff and his workforce is expected to number 1,000 employees by the end of the year.
He also has six warehouses based in Shanghai, Beijing, Shenzhen, Guangzhou, Han-gzhou, and Chengdu.
During the past six years, Fruit Day managed to maintain a compound average annual growth rate of 160 percent. So far, the company has received three rounds of financing, the latest of which initiated by JD.com Inc and followed by some other investors worth $70 million－the largest in the fresh food e-commerce industry.
It has also attracted big name investors such as ClearVue Partners, a private equity fund that focuses on the fast growing and dynamic consumer sector in China.
Fueled by investment and profit, Fruit Day has pumped more than 100 million yuan into a cold storage system, which is crucial in the logistics supply chain. "Our investment is three times that of other companies," Zhao said.
"The result is that the fruit that we provide is 15 percent to 20 percent better than others. This difference helps us to stand out." The company also has around five million regular customers.
They are mainly young, as well as professional, and tend to be married women with at least one child at home.
"Our customers are always ready to try whatever new fruits we introduce to them," he said.
Crowned a "fruit ambassador", Zhao travels to various countries to taste the products before importing them to China. He pointed out that Chinese farmers and companies still have a great deal to learn from the West when it comes to plantation husbandry, preserving products and packaging.
"China's agricultural sector is still underdeveloped in many areas," he said.
"That is why we have turned to a company from the United States to design our warehousing system. We hope that Fruit Day will introduce a healthier life-style to Chinese consumers," he added.