(Australian Associated Press)
Struggling supermarket giant Woolworths plans to tap into China’s insatiable demand for Australian food and grocery products.
Australia’s largest supermarket chain has engaged China-based eCargo Holdings to build and manage a Woolworths storefront on Alibaba’s Tmall business-to-consumer online marketplace.
ASX-listed eCargo will also coordinate Woolworths’ inventory, packing and distribution requirements, advise on brand entry strategy and undertake a wide-range of digital and social marketing activities for the retailer.
Woolworths already has a presence in the Chinese market after acquiring alcoholic drinks distributor Summergate last year for $US25 million.
Rising demand for high quality food and dairy products produced overseas, particularly from China’s affluent middle class has opened up a large market for Australian food and dairy products.
“We believe the food and groceries segment will experience huge growth in the coming years between Australia and China, as cross-border trade restrictions ease and the China Australia FTA takes effect,” eCargo Chairman John Lau said in a statement.
Woolworths online foray into China follows a similar move by smaller local rival Metcash, which set up shop on Tmall earlier this year to sell products such as Weet-Bix, Tim Tams, long-life milk and infant formula.
In recent months, several popular global brands including Amazon, Macy’s and Germany’s Metro have set up shop over online market platforms run by Alibaba and rival JD.com, in an effort to cater to China’s growing appetite for imported consumer products.
The Chinese e-commerce market is forecast to more than double over the next three years to $US1.5 trillion, according to New York based research firm eMarketer.
Woolworths has struggled in the local market over the past year after taking a massive profit hit from its price war with rival supermarket giant Coles and German discounter Aldi.