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[Made in China]: What Founder Jean-Yves Lü Thinks Made Epermarket A Success

Founder Jean-Yves Lü explains the principles guiding his ten year old grocery delivery company.
2021-01-22 15:00:00
Photos: Brandon McGhee
What does it take to make a business work in China? We speak to those who seem to have pulled it off in case they have any good tips, tricks or anecdotes.

If you've lived in Shanghai long enough, the Epermarket man has probably knocked on your door from time to time. Since 2011, this homegrown online grocer has been delivering anything from imported beef and fine wines to artisan cheeses and all manner of fresh produce. Ten years in a market as hypercompetitive as Shanghai, that kind of longevity is no small feat.

Epermarket has recently started expanding its footprint with two new concepts. The first one, launched in early November, is a brick-and-mortar shop with a quick short-distance delivery service called Dailies. Just weeks after that, they launched EperKitchen, a ready-made meal service specializing in homestyle comfort food like beef bourguignon and duck confit as well as salads, soups, dips and sauces.

We sat down with Epermarket CEO Jean Yves Lu to get some insight into what it takes to build a successful business in China. Here's what he shared with us.

First a little history

"Well, as you can see, I am Chinese. I left China when I was 17 years old. I went to a commercial and political school in Paris living there for 4 years. After I graduated, I joined a French industrial company. It's not famous. I was in charge of all operations in Asia, including four factoties in Philippines, Indonesia, and two in China. At 40 years old, that was 10 years ago, I decided to create Epermarket based on my concern with food safety and price in China. I was a consumer for CityShop, and CitySuper, but the prices were so high. Epermarket was to satisfy what I missed about living in France for 23 years. It isn't by accident that we have over 200 kinds of imported cheese.

Be thorough, and be patient

"It took us an entire year to get Epermarket off the ground. A lot of companies will throw up a platform in a matter of days, but I wanted to build a strong foundation of systems and procedures, leaving as little to chance as possible. We were thorough and meticulous, developing an ERP (enterprise resource planning) system with 276 internal procedures.

We also sought ISO 9001 certification, an international standard that lays out specific requirements for quality management. I was surprised to learn that we were the first company of our kind to get this certification."

Respect your suppliers

"We make it a point to maintain a strong relationship with our suppliers. Our team visits them to make sure they take good care of the product and are doing things up to our standards, of course, but we also invite them — event the fieldworkers — to visit our warehouse and see what we are about. It helps our suppliers better understand how to meet our needs, but it also puts a human face on our respective organizations. It's a way of reminding both parties involved that we are people doing business together.

When we negotiate with smaller farms and importers, we offer to buy their entire output, and we pay for several months in advance. This is a mutually beneficial arrangement. It helps the farmers because we end up absorbing the risks they would otherwise assume. They don't have to worry about dealing with storage or unloading surplus product at a crippling discount. Then, for taking all of their product off their hands, we usually get a more competitive price, which we can pass on to the customer. So, ultimately, everybody wins.

We also have a unique payment relationship with most of the farms we work with. This is something that I learned from all of my years in France. 60% of what we pay for the product goes directly to the staff. The other 40% goes to the boss. It builds a strong relationship with all stakeholders involved. One little fringe benefit: the workers save the best product for us."

Respect your product

"In my previous life, I worked for a major French company that dealt in food packaging. My career got me a behind-the-scenes look at how a lot of supermarkets operating here, and it was sobering. They didn't respect the product. They paid little regard to expiration dates, even on perishable items like yogurt. By the time I turned 40, I was living in Shanghai. I had two young daughters, and I wanted them to be able to eat safely. This was one of the main reasons I wanted to start this company.

Respecting your product starts with sourcing. We are selective about who we source products from, and we detailed about how the products get to us. We monitor the temperature conditions through the entire logistics chain, in the trucks that ship the product to us. But even more important than that is how you treat the product once it's in your hands. Our reception team conducts a thorough quality check of the goods that arrive, making sure packaging is intact and that the product is the proper temperature.

Once it gets into the warehouse, it's critical to keep everything at the right temperature. Your standard grocery warehouse has three temperature zones: room temperature, 0–3 degrees, and -18 degrees. But those three categories don't ensure the best possible quality of a lot of the things we sell. So we have five temperature zones. In addition to the industry standard, we keep one part of the warehouse at 12-15 degrees. That's cellar temperature — ideal for storing wines and fine chocolates. A lot of tropical fruits fare better at 5-8 degrees, so we keep another part of our warehouse in that temperature range.

We're also very conscientious about shelflife and expiration dates. Sometimes a supplier sends us a shipment of product that has a shorter shelflife than the same product we received from them the week before. We have a system that enables us to sort these products out. Once a product gets close its expiration date (it's still perfectly safe for consumption, of course) it gets automatically repriced for clearance. Lower prices for the customer, less waste for all of us — another win-win.

The final link in this chain is how the product is treated as it gets to the customer. We conduct a battery of more than 70 internal tests to ensure that we maintain the quality of our product. We use special insulation and other temperature control techniques, and we won't let the temperature of products change more than two degrees. This is the main reason we deliver via truck rather than a scooter."

Respect your customers

"Of course, respecting the product is part and parcel of respecting the customer, but there is more to it than that. It's also about anticipating their needs. Our inventory management system also serves as a powerful tool in this capacity. It helps us monitor purchasing habits, tastes, preferences, etc., which in turn help us learn more about what our customers want. So, for instance, if we see an uptick in demand for halal, kosher, organic, gluten-free, vegan or vegetarian food, or anything else, we can act on it, and create more SKUs (stock-keeping unit).

We also put a lot of effort into educating our customers. Given the diversity of nationalities that we serve, this can be a challenge. So we tailor our efforts to the customer's demographics. Westerners, for instance, are usually more interested in taste, so we tailor the brand experience accordingly. Chinese consumers, however, want a deeper story. They want to know about the product's origins and the brand behind it. A lot of our products are imported, so they might not be as familiar with how to prepare them. We make sure to fill that gap as well, and we have two dedicated marketing and sourcing teams to do it — one for our Chinese customers, one for our Western customers."

Respect your competition

"Fields started two years before us. Why did we enter the market when Fields was first? Well because there were no online shops that specialized in imported goods. We have competitors out there who can deliver goods to customers in under 30 minutes. That's a fantastic service. If they can do that to make a better service, good for them. It no doubt brings a lot of value to the customer. Is it a sustainable business model? I'm not so sure.

We wanted to enter the market to focus on lower prices for imported goods."

The future

"Where are we going for the future? I never would have thought that we'd be here 9 years later. We went from a dozen employees 9 years ago, to 300 today. Started in Shanghai, now we have our own trucks that go out to 6 cities, and we've just started nationwide delivery. From the very first days of 1,000 products, to now over 7,000.

Even more exciting for us, we just expanded to Shenzhen through an acquisition. As well as opened two brick & mortar stores in Shanghai. brasserie in Qingpu serves a lot of international families in the area, including the WISS community. "