Investigating an E-commerce business model to act as a bridge between the Australian beef industry and the Chinese market

Abstract

It is forecast by Meat & Livestock Australia (MLA) that e-commerce channels will be one of the fastest-growing marketing strategies underpinning the growth of beef consumption in the coming years (MLA 2016). The boom of e-commerce in retail has progressively induced traditional retailers to initiate new strategies, such as adding online marketing channels to meet the challenges brought out by the success of e-commerce. The new development has been built up by practitioners from both traditional retailers and pure-play e-commerce businesses that have migrated into omni-channel (OC) retailing, which is where their physical stores and online channels have been integrated to the extent that the distinction between offline and online is vanishing. In an OC system, the customer is expected to have a seamless shopping experience between different channels, which requires higher levels of logistics service, and more agile and dynamic omni-channel supply chains. With China having the most internet users in the world, it has the largest, fastest-growing and most innovative retail e-commerce market in the world, and Chinese consumers are world leaders in online shopping generally and online grocery shopping specifically.This project investigated how Australian beef could be sold into the Chinese market via e-commerce and how this avenue could play an increasingly important role for the marketing of beef. Thus, this study aimed to explore current Australia-China beef e-commerce supply chains (ACBESCs) that are used to distribute Australian imported beef products into China’s markets, as well as Chinese consumer reactions towards Australian beef products selling via the different ACBESCs. The study focused on three main issues: 1) the structures and strategies used by current ACBESCs; 2) Chinese consumer preferences and willingness to pay for different ACBESCs attributes; and 3) Chinese consumers’ shopping behaviour and attitudes toward Australian beef products.In order to understand the structures and strategies used by different ACBESC stakeholders, semi-structured interviews were employed with actors in the supply chains to investigate current online and offline configurations, distribution network design, fulfilment strategy, delivery service, return management, assortment issues, and traceability issues. Qualitative data analysis methods were used to analyse the interview data and to determine the themes. The result of the qualitative data analysis showed that there are four types of ACBESC: two pure-play e-commerce supply chains, and two omni-channel supply chains. Within each type, the online and offline configuration, distribution network design, assortment issue, traceability issues and ACBESC fulfilment strategies applied by the actors were described.The consumer study consisted of two parts. The first part employed a discrete choice experiment (DCE) method to investigate Chinese consumer preferences and their willingness to pay (WTP) for certain ACBESC attributes. A DCE questionnaire survey was conducted in four first-tier cities of China (Beijing, Shanghai, Guangzhou and Shenzhen). A total of 1003 questionnaires was collected from four cities; 872 valid questionnaires were extracted and analysed using the multinomial logit model (MNL), random parameter logit model (RPL), and latent class model (LCM). The analysis revealed that consumers in China’s first-tier cities mostly prefer to purchase Australian beef products via omni-channel offline shops. This preference was followed by the omni-channel phone app, and self-operated pure-play e-commerce retail shops (conventional e-commerce businesses that only have online channels).Regarding the back-end supply chain, Chinese consumers mostly prefer the product to be originally cut and packaged in Australia with an Australian brand. Regarding traceability information, products with either the MLA True Aussie Beef logo or QR code providing traceability information are much preferred than products without. The MLA True Aussie Beef logo is preferred over the QR code. Chinese consumers in first-tier cities are ready to pay a premium for product selling via omni-channel offline stores and phone apps, and via self-operated e-commerce retailers. They are also willing to pay a premium for the product with an Australian brand that is originally produced and packaged in Australia, as well as products with QR code and MLA True Aussie beef logo providing traceability information.The second part of the consumer study investigated Chinese consumer preferences for beef product-related attributes, including their preferred beef-producing methods, cooking methods, country of origin, shopping channels and trust of different e-commerce-related channels. This part’s questionnaire was combined with the DCE questionnaire to create a single questionnaire, from which 819 valid questionnaires out of 1003 were extracted. Also, online consumers’ comments from several large e-commerce platforms were collected and analysed. The main themes and concepts in the comments were identified.Overall, these integrated findings from the ACBESCs actors and the Chinese consumers provide a reference for and enhanced understanding of the current fresh produce e-commerce and omni-channel landscape in China. Finally, the findings enable recommendations to be made to the Australian beef industry as to how to move forward in terms of providing a better service and added value for Chinese consumers.