Fruit Day confident it can hit sweet spot

Fruit Day workers process oranges in a workshop in Yunnan province. The company can grade the sweetness of individual oranges at its newly-opened packing plant in Yunnan.[Provided to China Daily]

A $10 million production line to gauge the sweetness of oranges is the latest move by Fruit Day Co Ltd to entice customers and increase its market share.

The e-commerce fresh fruit platform, which is part-owned by online giant JD.com Inc, plans to use the new technology to grade apples and pears in the near future.

"Providing standardized, high-quality fruit to consumers will help us retain their loyalty," Chen Jiajie, vice-president at the company, said.

Using light spectrum technology, Fruit Day can grade the sweetness of individual oranges at its new packing plant, which opened last month, in southwest China's Yunnan province.

After going through the state-of-the-art CompacInVision fruit screening process, which was brought in from New Zealand, the oranges are then labeled, so consumers know how sweet they are before buying them online.

Back in May, Fruit Day signed contracts with orange growers from Yunnan province to sell their produce on its site.

"Our decision to bring in this technology will exert more pressure on the growers to adopt standard cultivation techniques," Chen said. "This in turn will produce better oranges." The first batch graded and labeled on their "sweetness" will also be sold on China's leading e-commerce platform JD.com, which has pumped millions of dollars into the fresh fruit company.

Since it was launched in 2009, Fruit Day has expanded rapidly by building up a cold storage and logistics network in China.

Key to that plan is to deliver fresh produce to customers within two hours of being ordered online in major areas of first tier cities such as Beijing and Shanghai.

So far, the company has reported a 99.2 percent success rate. But the ultimate goal is make Fruit Day a major e-commerce player in the mold of key investor JD.com.

"We hope we will become an open platform in the future," Chen said. "We would like to open our supply chain and probably introduce other retailers on to our site as long as they stick to our standards.

"In this way, we will grow into an eco-system rather than simply being an e-retailer," he added.

Fruit Day's aggressive growth strategy has seen it expand into traditional retailing after opening 50 bricks-and-mortar stores in Beijing and Shanghai, where it sells fruit products.

This has been made possible after the company completed three rounds of funding with the latest one raising $70 million.

Already Fruit Day has carved out a crucial niche in the online market, according to Chen.

"We have become the No1 in the industry, with a strong team and reliable IT system that hardly any other similar company can copy," he said.

A break down of the numbers showed that China's fresh food industry is expected to top 2.5 trillion yuan ($391.3 billion) by the end of this year.

While the online fresh fruit market is still in its infancy, it has expanded at a breakneck pace from only 50 million yuan in 2009 to a projected 50 billion yuan this year.

Naturally this growth in the sector will help boost Fruit Day's sales revenue, which is expected to reach 1 billion yuan in 2015, Chen pointed out.

"The low penetration rate of fresh food e-commerce (which is 2 percent) is small compared to that of car-hailing applications," he said. "But we believe that within the next three to five years, there will be an e-retailer seeking a market penetration rate of nearly 5 percent.

"Hopefully, that will be Fruit Day. The plan eventually is to take the company public," Chen added, without going into further details.