Food delivery businesses in China outshine as coronavirus continued to progress

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More people at China are stuck at home as they are experiencing the coronavirus outbreak, giving some delivery and e-commerce businesses an opportunity, even as they try to manage the hazard of the disease.

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Prior, on a normal day, a courier for Beijing’s JD.com would deliver around 140 to 150 packages per apartment, according to Langsong Sun, the company’s delivery station head in Yizhuang.
Now, that’s gone up to over 200 orders a day, Sun told on Tuesday to CNBC.

Over half of China is currently shut down as authorities strive to contain the spread of a new virus that emerged in late December in the Chinese city of Wuhan. Up to now, it has killed more than 500 people – generally in Wuhan – and infected more 20,000 throughout the country.

Businesses in at least 24 provinces, municipalities and other regions of China have been told to not to resume work before Monday in an effort to prevent the virus from spreading.

Beijing’s authorities have strongly asserted that companies must let employees work remotely until the coming Monday. Most of the schools across China are also shut until mid-February or ahead.

 A surge in grocery delivery 

As more and more people tried to stay at home, they’ve turned to order groceries from online companies that known to boast one or two-hour delivery during regular operating times. As anticipated, orders for disinfectants and face masks have also rippled.

For instance, JD’s affiliate – the delivery company for Walmart and regional grocery chains – described their sales almost doubled from a year ago during the ten days holiday of the Lunar New Year that ended past Sunday. In the same period – according to JD – its sales of fresh items surged more than three times compares with the previous year.

The company also said it sold nearly 15,000 tons of fresh products during the days of holiday.

In Beijing, while workers make their way back to work, the customer demand is so huge that orders likely to take hours longer than scheduled to arrive. And rather than extending into the evening, available delivery slots are often canceled.

Demand remains high, particularly in the meal delivery. A Beijing city official disclosed on Wednesday that more or less than 20,000 delivery people were handling an average of over 400,000 orders per day from takeout platforms Elema, Meituan, according to state media.
Delivery people all over the country are asked to wear face masks and do temperature tests.

Coronavirus Challenges for Delivery Companies in China

The new virus from Wuhan has escalated several logistics challenges for delivery, mainly food.

Coronavirus outbreak imposes logistics challenges to food delivery businesses in China
Meiutan’s delivery workers carrying food to deliver as number of home delivery orders surged due to coronavirus outbreak

In many Chinese areas, couriers may be no longer able to send packages to the door. Rather, they have to call customers to receive parcels from the entrance gate of an apartment complex, which can often be a several minute remoteness from the customer’s unit.
“It definitely lower efficiency,” Ruichuang Chen – a JD.com courier, said.

Hence, for saving the time that a walk away from the customer usually takes takes Hema, Meituan and Dada have publicized an in-app feature, which is an option for contactless delivery, enabling the courier to leave an order in an appropriate spot for the customer to collect, without any need to interact.

Pizza Hut and Kentucky Fried Chicken have also introduced a similar kind of facility for delivery. Their Parent company Yum China announced in a statement that these brands are checking out a feature in China for order online, and picking up in-store without contact. Meituan stated it’s also doing something similar.

Overall, analysts and industry representatives passed mostly positive remarks over logistics companies’ relatively normal operations outside of areas such as Hubei, the province that remains primary spot for the virus.

Many businesses have contributed to fostering supply of drugs and other necessities to the people of Hubei and Wuhan through selective channels.

For most of China, it may take a few days or possibly weeks for orders to arrive, given the delayed re-opening of various businesses and quarantined cities. Early during this week, some cities like Hangzhou – where Alibaba’s headquarters is situated – also performed inner-city highway closures, and said households should not send more than one person out to get goods every two days.

It “will deploy the workforce as per the specifics of government plan on returning to work,” Alibaba’s logistics affiliate Cainiao said.

Impact on economy

At the time, it’s pretty unclear what the final economic impact this year will be. That shutdown in China is importantly an extension of the Lunar New Year Holiday, which started on Jan. 24, 2020.
Charlie Chen, the director and head of the consumer team at China Renaissance expects these climbs in-home deliveries to be one-time purchases, and that after the risk of the virus dies down, many consumers will bounce back to their habit of going outside for fresh produce markets.