No More Hustleporn: Reinventing Food Distribution in Shanghai


Tweet by David Fishman

https://twitter.com/pretentiouswhat

Electricity and China. Economics & policy for solar, wind, nuclear, storage, UHV grid.
@LantauGroup
@HopkinsNanjing alum
10-year migrant, currently SH


So it's CRAZY that we have to do this, it's also incredibly fascinating from a supply chain/logistics/economics perspective.

We are in the process of re-inventing the food distribution network in Shanghai.

It's all based on the newly prevalent concept of Group-Buying. Nerdy🧡

So Group Buying has of course been around in China for a long time, including for food, but it usually only made sense for a handful of food items....exotic things that required bulk orders to make the shipping worthwhile, like Maine lobsters or Inner Mongolian Beef. Not staples.

In the last 2 days, I've joined group buys for vegetables, beef, and milk. I've personally organized a group buy for bread and am currently navigating my largest one yet: a large bulk buy for pork. The bread came to nearly 900 USD. The pork will probably be double that.

Basically, you go searching online and in groups, looking for distributors with food in the SH suburbs

There's tons of food in warehouses in Chongming and Songjiang and Jinxian. If you find it and make a large enough order, the distributor can run a truck down to the city.

Right now, SH food demand is the same as it was a week ago. It's not like the population size has changed.

And supply is the same as it ever was...or even higher, with all the support supplies arriving from around the country.

So why are we struggling to get food? 2 reasons:

1. All the consumption is at home. We used to consume at home AND in restaurants, buying through a dozen channels, which themslves had a dozen supply channels. Now everything is bottlenecked through a handful of designated grocery distributors like Meituan Delivery.

2. A significant # of food supply chain workers are locked down at home. This includes both freight handling to receive food from outside the city and shipping it into the city, not to mention the "final mile" delivery drivers. This workforce is greatly reduced.

By shifting our consumption to "Group Buying" we are reforming a distributed supply network. Instead of warehouses delivering to a neighborhood distribution node where delivery drivers take it the final mile, the entrance to my apartment building IS the final distribution node.

Is this efficient? Of course not. This is why the goods cost more via group buying, and they take longer to arrive.

The previous distribution economy had already realized HIGH system efficiency. Now we're trying to hack together some barely functional ersatz version of that.

Give me a week and I'll be group buying for the building next to mine too. In two weeks, I'll be group buying for the whole block. πŸ˜‰

Then I'll hire my own drivers, negotiate better prices with my vendors, start earning margin on my transactions, develop an app with a nice UX...

I'm joking of course. I'm not earning any margin from my neighbors. I'm just happy that we're amply-supplied with meat and veg via the group buy channels, since the original delivery channels are strained to the breaking point. I got NOTHING via Meituan this morning.

Group Buying isn't going to work for everyone of course. You need a big group. We have 184 people in our apartment group, so we have decent buying power, and can easily satisfy most minimum volume requirements. This is impossible for smaller buildings.

And of course it's predicated on everyone being able to easily communicate in the Wechat groups to sign up and pay for Group Buys.

This doesn't work for the elderly in our building. They have to have neighbors who volunteer to check if they need to buy anything and sign them up.

Obviously all of this would have been avoided if there had been better planning at the municipal level, for more distribution and delivery strength, for longer periods of lockdowns.

We shouldn't HAVE to do this.

But now that we are, it's kind of fun.

And my fridge is full. 😎 CC: @pajolicoe @JaredTNelson @danwwang @crushspread @gonglei89 @EP_Lawrence @Jyves1994 @justinaforever

Addendum/correction:

Group Buying has become a booming industy in China in recent years certainly aided by/thanks to the pandemic, and was already widely being used for vegetables and other staples even before Shanghai 2022:

er...just for the record, I don't actually professionally write about Chinese tech or food supply or anything like that. I'm a strategic consultant in the Chinese power sector. So if you follow me after reading this, just be warned that's what I usually tweet about. 😎

We managed to put in another massive group buy this morning. The vendor had pork, chicken, vegetables, rice, oil, strawberrries, oranges, MANGOES, you know, that good good.

Our order is supposed to arrive on the 10th. I'll be sure to take pictures when it arrives.

Beef package arrived yesterday. Here's what that looked like. It was 30px minimum, 168 per person (26 USD).

Image

By the way - if you're in Shanghai right now and want to learn how to do this group buying for yourself or access any of the deals I've found, send me a DM - I'm happy to send you some links or any info you need.

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