With supply lines that reach around the world, Flinders graduate Mr Junling Liu is running one of the largest online supermarkets in the world’s largest market.
The CEO and co-founder of Chinese company YiHaoDian visited Flinders recently to meet Vice-Chancellor Professor Michael Barber and other senior staff, and to catch up with his former lecturers.
Founded in 2008 and identified in 2011 by Deloitte’s as the Asia Pacific’s fastest growing business, YiHaoDian – the English translation is ‘Number One Store’ – has had an astonishing trajectory, as Mr Liu attests.
“Three months into the business I was cursing because less than a third of our warehouse space was being utilised – we were paying vast rents for space that was doing nothing,” Mr Liu said.
“Six months later I was cursing again because we just couldn’t find enough space.”
The company’s holding of warehouse space has now reached 170,000 square metres in Shanghai alone (it has four other distribution centres across China), while the number of subscribers is close to 30 million.
Mr Liu said China’s huge population is ideal for the e-commerce model: “If you don’t have scale, then the operational cost is going to be too high.”
While the front end of the business may be online, the virtual cloud is backed by a massive supply and distribution operation dealing mostly in fast-moving consumable goods, or FMCGs.
Mr Liu said that creating supply chains represents a major challenge: “It’s very capital intensive and very labour intensive.”
Logistics are demanding too: the products are highly variable in shape and size and are often perishable, and orders typically exceed 13 items.
“We have over a million products to manage, so we are only as good as our systems,” Mr Liu said.
Winning customer loyalty is vital in a very fickle market, Mr Liu said, and a very strong emphasis is placed right across the company on improving customer experience.
“You’ve got to have the most efficient supply chain in order to offer lower prices and a good assortment and deliver it on time, because in urban China, life gets tougher and tougher,” he said.
Further growth has been fuelled by investment from US firm Walmart, which last year took a 51 per cent share of the company’s equity. To supplement online and mobile phone access by its customers, YiHaoDian recently opened more than 400 “virtual stores”, locations where customers can select and order their goods from display screens.
The success of YiHaoDian is creating opportunities for overseas suppliers, including Australia, particularly as the company’s fastest growing category is imported food. Mr Liu said that sales of imported milk, for example, have gone from a container-load a month in April 2011 to four containers a day.
Prior to his business studies, Mr Liu completed a teaching degree at Flinders, and for a time taught Chinese in South Australian schools.
But the idea of running a company, he said, had always been “in his blood”. Studying for a Masters of International Business Administration in the Flinders Business School helped to crystallise that ambition, and a topic on change management that incorporated a personal change plan proved especially significant.
“That assignment really helped me to develop a career path for myself. It produced a 3,500 word document which I’m still committed to,” Mr Liu said.
Mr Liu worked for international companies in Singapore and Hong Kong before moving to his current base in Shanghai in 2003. Last year he was the recipient of the Austrade Australia China Alumni Award for Entrepreneurship.