How China’s food delivery industry became backbone of coronavirus fight
8-April-2020 By Jane Cai
The Chinese food delivery infrastructure had been well developed prior to the coronavirus. The public health crisis showed what it could do at peak demand.
When Liu Yilin, a retired middle school teacher in Wuhan, first heard rumors of a highly contagious disease spreading in the central Chinese city, he started to stock up on supplies such as rice, oil, noodles and dried fish.
These preparations spared the 66-year-old from some of the early panic when the city went into lockdown in late January and shoppers flooded to the markets and malls to snap up supplies.
But as time went on, and with residents banned from leaving their homes, he became increasingly concerned about getting hold of fresh supplies of vegetables, fruit and meat.
Thankfully, the nation’s vast network of delivery drivers came to the rescue.
“It was such a relief that several necessity purchasing groups organized by community workers and volunteers suddenly emerged on WeChat days after the lockdown,” Liu said, referring to the popular all-in-one messaging app.
Hu Xingdou, a Beijing-based independent political economist said, “To some extent, [home delivery] prevented people from starving, especially in cases when local governments took extreme measures to isolate people.”
According to Liu, people in Wuhan during the lockdown had to stay within their residential communities, with community workers guarding the exits.
Human contact was limited to the internet. Residents placed orders online with farmers, small merchants or supermarkets to buy daily necessities, and community workers helped distribute the goods.
Every morning, Liu passed a piece of paper with his name, phone number and order number to a community worker who would collect the items from a delivery person at the gate of the residential area.
China has built a well-developed home delivery network thanks to a high population density in urban areas, an affluent labor force and people’s openness to digital life.
Mark Greeven, a professor of innovation and strategy at IMD Business School in Lausanne, Switzerland, said, “Whether it is delivery of products, air parcels or fresh food, or even medicine or materials for medical use, China has a very well developed system. Much better developed than I think almost any other place in the world.”
He pointed out that China had already started to embrace a daily life that relied heavily on digital technology long before the virus outbreak.
Greeven pointed to consumption, business, government and smart cities as industries that had been well developed before the coronavirus pandemic.
“All of these things have been in place for a long time and the crisis tested its agility and capability to deal with peak demand,” he said.
According to e-commerce giant JD.com, demand for e-commerce and delivery services spiked during the outbreak of Covid-19, the illness caused by the new coronavirus.
The company sold around 220 million items between January 20 and February 28, mainly grains and dairy products.
Meituan Dianping, a leading e-commerce platform, said its grocery retail service Meituan Instashopping reported a 400% growth in sales from a year ago in February from local supermarkets.
The most popular items ordered between January 26 and February 8 were face masks, disinfectant, tangerines, packed fresh-cut fruits and potatoes.
E-commerce providers used the opportunity to show goodwill and improve their relationship with customers and partners, analysts say.
Sofya Bakhta, marketing strategy analyst at the Shanghai-based Daxue Consulting, said the food delivery sector had made significant headway in reducing physical contact during the outbreak.
Delivery staff left orders in front of buildings, in lifts or temporary shelters as instructed by the clients as most properties no longer allowed them inside.
Some companies also adopted more hi-tech strategies.
In Beijing, Meituan used self-driving vehicles to deliver meals to contactless pickup stations. It also offered cardboard boxes to be used as shields aimed at preventing the spread of droplets among its clients while they ate in their workplaces.
In Shanghai, the food delivery company Ele.me employed delivery drones to serve people under quarantine in the most affected regions. Ele.me is owned by Alibaba, the parent company of Inkstone.
Demand became so high that food delivery companies faced a manpower shortage.
Employees from restaurants, general retail and other service businesses were “loaned” to deliver food, according to Sandy Shen, senior research director at global consultancy Gartner.
“These arrangements not only ensured the continuity of the delivery service but also helped businesses to retain employees during the shutdown,” she said.
The delivery system has been improved by an effective combination of private sector innovation and public sector coordination, said Li Chen, assistant professor at the Center for China Studies at Chinese University of Hong Kong.
“[In China,] government units and the Communist Party grass roots organizations have maintained fairly strong mobilization capabilities to cope with emergencies, which has worked well in the crisis,” he said.
However, Liu, the Wuhan resident, said prices had gone up and vegetables were three times more expensive than they had been over Lunar New Year in 2019.
“There were few varieties that we could choose from, apart from potatoes, cabbage and carrots,” he said.
“But I’m not complaining. It’s good we can still get fresh vegetables at a difficult time. Isn’t it? After all, we are just ordinary people,” he said.