Interview with

eFood Interview with

Published on 13.04.2021 Philippe Mettler, Digital Commerce Consultant, Post CH Ltd

E-food has experienced a massive boost because of the coronavirus situation. For many customers, buying food online has become more commonplace. However, online food retail remains a big challenge. (in German) still took a chance on deep-frozen dim sum.

HongCore GmbH has been making high-quality Cantonese specialities for several years now. They predominantly supply hotels and restaurants. Last year, was also added to the mix: an online shop that sells dim sum to its end customers. Oliver Grob and Ronnie Yue give us an insight into how they managed to launch their products so successfully on the B2C market.

HongCore GmbH has been providing Swiss hotels and restaurants with dim sum for many years. Since last year, you’ve now been delivering to end customers directly through your online shop. What was the thinking behind this step? How did you go about it?

That’s right, we’ve been active in the food sector for around seven years with our SteamWok product line. Yet it was always clear to us that we wanted to develop strategically in order to avoid becoming dependent on restaurants and hotels. We carefully weighed up different options before deciding on a B2C online shop. But we could quite plausibly have gone in other directions as well, such as opening our own stores. We are now of the firm opinion that opening the YUM-CHA online shop was the right decision.

We knew that a key challenge would be logistics, and this very quickly raised the question of the profitability of such a business. With that in mind, we made sure we were prepared accordingly.

For instance, we invested a lot of time in coming up with the right shipping solution. Sustainability was very important to us. The first ideas we tested were disposable packaging solutions made of cardboard and insulating pads made of straw. However, these ideas generated too much waste and were criticized during the trials. And so we opted for reusable boxes that Swiss Post not only supplies, but recycles as well. Following some initial teething problems, this system is now working well.

Our dim sum products are delivered deep-frozen. To ensure we can deliver these products seamlessly even on hot summer days, we need very good thermal insulation. At the same time, though, we don’t want to produce a lot of waste.

The road to a fully-functioning online shop was long and bumpy. We underestimated how much time and money we needed to invest in order to meet all of our requirements. We have also gathered a lot of experience in the process and are still learning every day.

The decision to start a B2C business was made before the coronavirus crisis. What have been the key experiences/findings for you from the coronavirus crisis?

Looking back, we are of course very pleased we took the leap. As the vast majority of our products go to hotels and restaurants, we were heavily affected by the closures. Despite the fact that some hotels and takeaways were still operating, the setbacks were huge.

There is no doubt the coronavirus pandemic gave our online business a push. For one thing, the pressure on us to develop quickly increased. Secondly, consumer behaviour changed significantly as well. It seems to us that many people who hardly ever shopped for food online before coronavirus are now doing so regularly. Having to work from home also had a big impact on us.

Direct contact with our customers is something that was and remains new to us. That is one of our most important experiences. We have received lots of positive feedback from them across a range of media. We also had customers who recorded and posted videos with our YUM CHA dim sum products. Not only does this feedback really motivate us, it also helps raise the profile of our premium products. As a major dim sum specialist on the market, we’re proud that we’ve been able to raise the profile of these dumplings in Switzerland over the past seven years, and that of Cantonese cuisine as a whole.

Have you noticed any changes in consumer behaviour over the past year?

It’s still fairly early days for our B2C shop. This means we can’t really talk about long-term changes yet. Generally speaking, however, we have noticed that the order volume has increased. And what we are really pleased about is that we’ve been able to attract a large customer base.

Online food retail has some unique characteristics. Fresh products in particular are difficult to deal with. What have been your experiences in that regard?

Logistics is definitely a major challenge. You realize that even in Switzerland there still aren’t many e-food-specific solutions. Clothing or electronics don’t spoil if they spend an extra day in transit. This is not the case with frozen products. If, due to logistics problems, the products spend too long in transit during the last mile of the journey, then unfortunately the spoiled products have to be destroyed. This means we have to make absolutely sure that our deliveries reach our customers on time the next day, which is something we could not always guarantee, for instance over Christmas.

To do this, everything has to run smoothly: from receipt of the order to delivery to the customer’s front door. Trying to make this a reliable process was a big challenge for us, because the processes have to mesh seamlessly.

We also have to take seasonal differences into account. In other words, it’s harder to freeze our products in the summer than in the winter. But with our current solution, we are able to guarantee the perfect temperature for our products for 24 to 36 hours.

Was there anything that particularly surprised you about starting out in B2C retail? What were the highlights or the unexpected challenges?

We were definitely surprised by the sheer amount of effort required to develop an attractive online shop for deep-frozen dim sum and dried foods. Delivering deep-frozen goods in particular presented a significant challenge to us. We are really happy to be able to provide customers with a user-friendly shop.

A particular highlight is the feedback we get from our customers. This could be great social media posts and photos about how much they enjoy our tasty dim sums, cool suggestions or fair questions that form an important part of dialogue marketing.

A lot of people have got used to ordering more frequently online, including food. What changes do you foresee over the course of the next few years? What’s here to stay post-coronavirus, and what priorities do you see for yourselves?

Overall, we definitely expect to see a lot of change in the e-food sector in particular, with things going in a sustainable direction. This is because different lifestyle habits in a “new” post-coronavirus future will affect consumer behaviour. With that said, we do expect the shopping experience in physical food stores to continue to have good prospects in the future.

The logistics industry faces the challenge of offering solutions tailored to delivering food in general, especially deep-frozen products. Parcel distribution centers, for instance, could consider picking foods and deep-frozen products on reserved conveyor belts, or they could think about making them visually distinctive with specific e-food labelling. We could also offer more precise time frames for deliveries because, when it comes to deep-frozen products, we absolutely need them to reach the customer successfully the first time round. All in all, the costs of e-food logistics are still much too high. We hope that as demand increases and logistics processes become more efficient, more cost-effective solutions will emerge. We firmly believe that over the course of the next few years, we will experience a big change in this respect.

E-food with Swiss Post

Within the Industry Solutions business unit in Logistics Services, Swiss Post is working on industry-specific solutions and products that meet market requirements. Swiss Post is embracing the current massive influx of parcel orders during the coronavirus pandemic as an opportunity to create new industry solutions. In the e-food market, too, Swiss Post is always on the lookout to identify and develop measures for improvement and development.

Oliver Grob and Ronnie Yue

founders of and owners of HongCore GmbH

Philippe Mettler – Interviewer

Philippe Mettler, a Digital Commerce Consultant at Swiss Post, has many years of experience in consulting and project implementation, particularly in the fields of e-commerce, web and PIM. Using his knowledge of consumers, he helps our customers further develop and successfully operate in sphere of digital commerce.

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