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Taobao bets on fresh food produce

Is Alibaba's investment in online grocery shopping another food disaster waiting to happen?

09·25·2014

Taobao bets on fresh food produce

Is Alibaba's investment in online grocery shopping another food disaster waiting to happen?

09·25·2014

When buying food in China, there are some unwritten questions that many shoppers ask: Is it fresh? Is it real? Will it send me to the hospital? Sometimes all it takes is a look or a sniff to send us running to the hills, but more often than not, we’re consuming foods that we think are fine but are pumped full of enough chemicals to keep them looking fresh for the next thousand years.

But Alibaba Group’s newest investment could completely change how we choose and evaluate the food we buy in China. Just this weekend, Alibaba Group president Jin Jianhang pledged to reinvest the money earned from going public into the agricultural e-commerce section of Taobao, according to Want China Times.

Consider for a moment buying fresh food from Taobao. Terrifying, right? China’s version of Ebay can get you anything from quality masks and luxury goods to preserved human bodies and meth. Fake purses are one thing, but fake groceries create an entirely different category, and with the food quality in China sketchy to say the least, it could be a disaster waiting to happen.

So why would Alibaba even consider investing in online grocery?

First, for farmers, selling produce online provides a golden opportunity. Since Alibaba has promised to provide logistical and marketing support to farmers who sell their goods online, small-scale farmers from remote and rural areas could expand their markets to cities and beyond. Rural farmers are already expressing increased interest in creating online stores with Taobao as a way of increasing their profits outside of their immediate vicinity.

The benefits for consumers are large as well. The review-based marketplace on Taobao encourages quality and safety, as customers can complain and report poor quality goods. It will also ease the distribution of organic and specialty foods because farmers can broaden the distribution of their goods. Farmers that sell goods on Taobao are already able to receive a higher price for goods that meet requirements such as being additive-free and organic.

Alibaba has also promised product-tracing methods that will help consumers understand exactly where the food they buy comes from- a luxury that shoppers don’t get at traditional markets. This caters to the growing number of shoppers that fear China’s food quality regulations are too loose to trust, even with supermarket quality goods.

For shoppers in rural areas, this could also add variation to their diet by the ability to order foods not available at local markets. It also would lower food prices as increased distribution means a greater supply of basic goods, creating a cheaper market with greater variety.

However, while the benefits are great, there is a dark side. For the consumer, quality control and food-tracing may sound like quick fixes for food safety problems, but faked reviews and retouched pictures are part of the Taobao tradition. As Fan Zhihong, a nutritionist and food safety expert at China Agriculture University says, “Positive consumer feedback doesn’t guarantee food quality. Sellers have no obligation to provide evidence that supports their products’ description.”

Also,  increasing the distribution of certain foods across large distances could prove a disaster for the environment. By reducing the local consumption of food in China, transportation increases, as do the carbon emissions associated with trains, planes, and trucks needed to move them around the country. That increase in driving is  yet another environmental burden.

All in all, buying food online is only starting to gain momentum in the Western world with services such as Peapod and Amazon Fresh. But after breaking world IPO records and raking in the cash, Alibaba’s investment in agricultural e-commerce seems natural, and Taobao’s grocery section grew at an annual average of 112.15 percent from 2010 to 2013. For the brave, practice your Taobao skills and try ordering from one of the many stores in Taobao’s current food section. For the rest of us, well, we’ll just have to walk to the shops instead.