Canadian processors strangely quiet on online grocery opportunities

It appears consumers around the world are increasingly turning to online venues to do their shopping.

The headlines out of the United States about the big Black Friday retail push this past weekend emphasized the growing market share of online retail.

Groceries are not excluded from this trend, and major food companies are starting to gear up to sell more online at home and abroad.

Giant Chinese online retailers are at the forefront of the trend. Online sales in China top $800 billion a year, and that is expected to rise rapidly.

There are more than 500 million active e-commerce users in the country, which is more than the combined population of Canada and the United States.

The biggest online retailer in China is Alibaba.

This summer, the huge European pork producer Danish Crown signed an agreement to sell its pork on one of Alibaba’s e-commerce sites.

Danish Crown is planning on increasing its sales of pork in China, the world’s largest pork consumer, by building a processing plant near Shanghai to supply the pork it sells through Alibaba.

Alibaba’s rival in China is JD.com.

The Montana Stockgrowers Association this fall signed an agreement with JD.com and the Bank of China that will see JD.com buying US$200 million of Montana beef, the equivalent of about 90,000 head, over the next three years.

The deal is fairly small, but proponents hope it will lead to bigger things in the future, including a beef slaughter facility in the state.

U.S. Smithfield Foods, which was bought by China-based WH Group in 2013, also said this fall it will start selling pork products in China through JD.com.

In the first half of 2017, gross merchandise volume from direct sales of meats on JD increased more than 780 percent year-on-year, according to the news release announcing the Smith-field deal.

Alibaba held a big educational day in Toronto in September this year to promote its platforms to Canadian companies.

A key sector that Alibaba targeted was Canadian agribusiness.

You might have heard of one success from a few years ago when 90,000 Canadian lobsters were sold through Alibaba in a single day during one of its big annual promotions.

Those annual promotions are amazing. Its Singles Day sale on Nov. 11 this year, a sort of anti-Valentines Day that celebrates singles in China, generated $32 billion in sales in 24 hours.

Here in North America, online food retailing is also a growing business. Amazon bought the Whole Foods grocery chain this summer, underlining its commitment to building its market share in food retailing.

Online grocery shopping is a pretty small category in Canada with sales around $2 billion a year focused mainly in the Toronto and Vancouver markets.

Offerings will likely grow with Walmart saying it plans to expand its home delivery service as well as Loblaw, but it could be a slow roll-out because Canadians have been less quick to adopt online shopping than Americans.

However, just because online groceries are not top of mind here does not mean Canada’s food processors can ignore the trend, particularly in China.

There will be hurdles to overcome. Designing a supply pipeline for fresh, chilled food to get from Canada directly to Chinese homes will be part of it, but Alibaba and JD say they are prepared to help make it happen.

It is a massive market opportunity, one that Canada can’t afford to miss.

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