China to become world’s second largest wine market, thanks to e-commerce
August 14, 2018 Category E-commerce, Weekly
Premium delivery service JD Luxury Express, delivering wine in nine Chinese cities
China is set to outpace much of the rest of the world by 2020 and become the world’s second-largest wine market. A key driving force may be e-commerce, according to private bank Julius Baer’s Wealth Report: Asia Luxury Wine Feature, released in May. According to Deloitte China’s Luxury E-Commerce White Paper 2017, which looked at China’s luxury spending habits, the nation ranked as the world’s second-largest luxury market in 2016, just behind the United States, with a total sales volume of CNY498.3 billion. It also shed light on the booming success of e-commerce in China. The paper found 10% of total wine purchases in 2016 were made online. This is not surprising – China is home to online market giants JD.com, Tencent and Alibaba.
“It’s a fact that the brick-and-mortar wineshop infrastructure in China is at a much earlier phase of development than it is in other markets in the world,” says Hong Kong-based master of wine Sarah Heller. “The U.S., for example, has both a very well-developed visible retail market and also very strict interstate shipping laws that make e-commerce challenging,” which is not an issue in China. “The online scene or the structure of the market is conducive to rapid growth because it is basically centered on a few really large players – Alibaba, JD.com, and to a lesser extent now Tencent with WeChat trying to enter the e-commerce space,” Heller explains. “The nature of the regulatory environment where it is easy for wine to cross borders once it is in the country and the lack of development in the physical retail infrastructure are all reasons why online has become such a big portion of the market in China.”
JD.com, one of the largest online retailers for wine in China, is set to take a bigger piece of the online wine market by making the e-commerce experience seamless on the supply and demand sides. “The business model we use allows us to fly directly to the vineyards for wine tastings and they don’t have to worry about the customs declaration or international shipping,” says Max Cao, General Manager of global procurement, JD Worldwide. “By utilising JD.com’s comprehensive international supply chain system, we can ship the wine from the vineyard to our customers directly.”
The company employs an in-house team of buyers who purchase wine directly from 15 countries including France, Australia, Spain and the U.S. Last year, it offered roughly 8,000 brands and sold 40 million bottles of wine. JD.com’s most expensive bottle retails at around CNY60,000. Late last year, JD.com also rolled out a new premium delivery service, JD Luxury Express, whose white-glove service is available in nine cities in China, the South China Morning Post reports
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