The teeming infant formula market in China has found a promising battleground in e-commerce websites. The infant formula market in China has been facing headwinds in the form of health and safety concerns and the resultant regulatory pressure. These factors have brought about a wave of migration from conventional retailing channels to e-commerce websites, so as to keep up with the shifting purchasing patterns of new parents.
According to a recent research report, sales of online packaged foods in China have soared in the last three years, reaching US$7.26 billion in 2014 from US$2.83 billion in 2012. Within the packaged foods market in China, infant formula accounts for a sizeable portion. Corroborating this trend is Dunnhumby, a specialist in digital market insights, who says that the baby food segment takes precedence over all other types of products for new e-consumers.
The e-commerce channel is being embraced rapidly by consumers because of the sheer convenience and variety it offers. These reasons also continue to draw in new consumers at a very promising rate.
Market research experts peg the total baby products market in China at about US$5.43 billion according to data collated from the 27 largest cities in the country. This data was collected between the August of 2013 and 2014.
Makers of infant formula in China were reeling under regulatory pressures after the Chinese government imposed massive antitrust fines on companies following lapses in quality. The negative publicity pushed prices down, putting infant formula companies in a predicament.
E-commerce has now become a much sought after retailing channel for major companies in the baby food market, including Danone, Mead Johnson, and Nestle.