- Nestle is making a major e-commerce push in China as it attempts to turn around slowing sales in the country.
- The company is selling 67 brands that are not available in stores and have never before sold in China on Alibaba’s Tmall.com portal. The move is part of a 150th anniversary e-commerce fair where Nestle is offering steep discounts on more than 150 products sold on Tmall.com for an initial six-month period.
- Nestle is capitalizing on the online shopping surge in China, where e-commerce sales will exceed the U.S. and Europe combined by 2018, Wan Ling Martello, head of Nestle’s Asian and African businesses, told Bloomberg.
If Nestle is looking for a market hungry for its products, China is a prime target with its host of domestic food safety scares and a huge population that's taken an increased interest in exported goods, including food and beverage. While the industry has been slower on the uptake than others in taking advantage of the e-commerce channel, Alibaba says food is the most popular product category on Tmall.
Other companies have taken a similar approach. Mondelez recently announced a partnership with Alibaba to launch its own Tmall store, which will include exclusive products like Oreo Colorfilled, which performed well in the U.S. but has not yet debuted in China. Campbell also noted China would be a key focus in the e-commerce portion of the company's digital strategy.
E-commerce remains strong and a powerful sales driver for China. If manufacturers want to better tap the Chinese market, e-commerce may be the most strategic avenue to do that with the potential for a higher return than through traditional brick-and-mortar retail channels.
China is also a key market for companies to test out e-commerce strategies because Chinese consumers already more readily buy their groceries online — 40% of Chinese consumers versus only 10% of Americans. Also, foreign brands tend to hold a stronger reputation than domestic brands in China, due mainly to food safety and quality concerns. China offers manufacturers a place to test-run e-commerce initiatives that they can adapt to American food and beverage interests and marketing styles later.
China as a marketplace presents its own hurdles. Chinese regulators recently announced a campaign to tackle issues surrounding e-commerce in the country, such as trademark violations, counterfeit and low-quality products, and fake transactions used to improve a merchant's online rankings, according to the official People's Daily. Meanwhile, the SEC is looking into Alibaba's accounting work and possible federal law breaking.