Alibaba’s Freshippo Faces Low-Supply amid Online Demand Surge in China

The nationwide lockdown in China due to coronavirus outbreak has forced people to stay indoors since late January 2020, which ultimately led to a surge in demand for online shopping especially the essential and daily used items.

Alibaba’s supermarket chain, Freshippo, that supplies online products especially fruits, is currently struggling since the online demand for fruits in China rises sharply but the startup has less supply to meet such large demands.

High Demand but Low-Supply

The startup has directed its workers to open up the stock-up bulky fruit boxes, which are primarily reserved for the festivals of Lunar New Year gift, and start selling the products to fulfill the needs and demands from the customers, who stayed indoors. Freshippo, which currently has about 200 stores across the country and is also known as Hema in Chinese, had also launched a group-buying scheme for a locked-down province in Wuhan – the epicenter of the outbreak.

The company would deliver the online ordered goods and products via the state-commissioned buses instead of using its bike-riding couriers that used to provide delivery of bags of groceries. Freshippo’s new measures have imparted some lessons to retailers in European countries and the US as they were facing a serious crisis due to panic-buying by the customers which left supermarkets without any staples and essential items.

Considering the present situation of demand surge, Hou Yi, the president of Freshippo said in an interview with Reuters, “Nobody saw this coming… A whole ton of challenges surfaced.” However, Hou claimed that US supermarkets might face more difficulties because the stores in the US were less equipped to deal with large numbers of online orders as compared with their counterparts in China.

Biggest challenges

One of the biggest challenges for the five-year-old, Freshippo, was the delivery of its products in Wuhan and its province of Hubei. To access to Wuhan makes more difficult for the startup due to the new policies of the government including roadblocks and travel restrictions in these core provinces of China.

In addition to that, Freshippo needed a special permit and many volunteers within its staff to drive trucks to be working in these areas. Hou described that the entry and exit from the disease-ridden provinces, Hubei meant that they had to face a mandatory 14-days quarantine after returning from these places.

The company plans to hire thousands of people, who were unemployed due to urgent shutdown of various factories, as a measure to address the low-staffs issues. Hou explained in-store training, “We simplified our procedures to make everything easier to understand,” adding that, “Usually after two hours of instruction, they could hit the ground running.”

Outside Hubei, Freshippo services resumed its normal work since the early week of March but many of its stores in Wuhan started only delivery services. Hubei was the last province that has only been started lifting the restrictions of the government and many markets outside Hubei restored the normalcy of their operations.

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

You can reach out to me at: [email protected]

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