TOKYO -- Japan's Aeon will launch its own online grocery business in China as early as 2020 to amass and analyze customer data for developing new products and services, with hopes of eventually bringing know-how back home.
Customers will order groceries via a smartphone app developed by Aeon, with the items to be delivered from roughly 70 of its stores nationwide. It will initially deliver items within a 3 km radius in as little as an hour but could expand operations later.
China is already ahead in customer data analysis using artificial intelligence. By rolling out its own delivery service there, Aeon hopes to develop capabilities in utilizing such information, such as providing tailored recommendations based on customer preferences.
Aeon set up a research and development hub for digital technology in China this April. The online grocery service is the first customer-oriented service to come out of this hub. Doing this in Japan is difficult given the country's regulatory barriers and limited talent pool.
Aeon currently sells groceries online in China via rival sites, such as one operated by e-commerce giant JD.com. Local Aeon store staffers select items ordered online and deliver them to customers. But relying on established players has kept Aeon from collecting detailed customer data, such as their tastes and preferences.
Going forward, the Japanese retailer does not plan to form full partnerships with top e-commerce companies that already hold massive amounts of customer information. Aeon will face some uncertainty by trying to build an internet business model on its own in China.
Competition is intense in the Chinese e-commerce sector, with top player Alibaba Group Holding offering the shortest delivery time of within 30 minutes for certain orders.
China's e-commerce market exceeded $1.52 trillion in 2018, according to the Ministry of Economy, Trade and Industry here -- more than 10 times the size of Japan's.
Amazon.com also sells fresh food online in Japan. So does Rakuten Seiyu Netsuper, a joint service of virtual mall operator Rakuten and Walmart unit Seiyu.