Investors cannot get enough of Chinese e-grocers

WET MARKETSJDJD in China have suffered more than most businesses in the pandemic. After one in Wuhan was blamed as the source of covid-19, officials ordered others to shut. Shoppers have been reluctant to frequent bustling outdoor stalls selling fresh meat and vegetables. Many may never reopen—not least because they are being rapidly displaced by online rivals. The value of online sales of fresh produce in China, which amounted to 293bn yuan ($45bn) in 2019, before the pandemic, may rise to 570bn yuan by the end of 2021 (see chart). That would put e-grocers’ share of fresh-food spending at 11%, double what it was before covid-19. It could hit 18% by the middle of the decade.Until recently e-grocery was a small add-on to other e-commerce offerings of giants such as Alibaba or .com, rather than a big business in its own right. No longer. .com is busily adapting its logistics network, China’s most sophisticated, to handle fresh produce. Last year Alibaba spent $3.6bn on a grocery-store chain, and it has been building a network of supermarkets that can be used to get groceries to online shoppers. Pinduoduo, another big e-merchant, raised $6bn in 2020 to boost its grocery operations. It ferries produce to neighbourhood shops where buyers can pick up orders, overcoming the problem of the costly last mile, says David Liu, the company’s vice-president of strategy.