Spirited into the world of e-commerce

Liquor makers look online for the next bonanza in sales

While several well-known Chinese liquor manufacturers bicker about which is the No 1 "State-banquet spirit" in China, the 61-year-old Kweichow Moutai Co has something else on its mind.

Instead of just courting its traditional customers in government and business circles, Kweichow Moutai, headquartered in Southwest China's Guizhou province, is taking a more down-to-earth attitude toward its business, planning to try its luck in the decade-old Chinese e-commerce market, taking the view it is never too old to learn.

Moutai Co put up a notice on its official website on July 23 saying the company will set up a wholly-owned subsidiary to be fully responsible for the new online Moutai shop.

"Prices for each type of the liquor have not been released on the website at present because some details are being ironed out. The website will be targeting individual buyers, thus group-buying dealers will not be affected," said Ou Guangliang, one of the directors of Moutai's online outlet.

Moutai tested the waters of e-commerce as early as 2010 but sales were poor due to logistical problems. However, the company is now determined to enter this new territory, hoping to be fully online in August.

"It is very hard to say whether liquor dealers' entry into e-commerce will stabilize the ultimate price of spirits. As far as I can see, the impact will be very limited as the liquor e-commerce market in China is still in embryonic form. Compared with mature online industries such as garments, the newly emerged business is quite unstable and of a fairly small scale," said Mo Daiqing, an analyst with Hangzhou-based China E-commerce Research Center.

But Mo said distributors of traditional channels should not feel threatened by the e-commerce dealers because the former have accumulated a stable supply of customers over the years. The two will also differentiate from each other in terms of the supply chain.

"There are some aspects that online liquor dealers should take into account, including delivery, storage and temperature, which will all greatly affect the quality of liquors or wines. And all these will add to their costs," said Mo.

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