Miller Magazine Issue: 140 August 2021

57 COVER STORY MILLER / august 2021 2020, and China’s JD.com buying Yonghui Superstores in 2015. Conversely, Walmart-India acquired Flipkart, a large e-commerce firm, in 2018; and Reliance, a su- permarket chain in India, founded Jiomart as a grocery e-commerce subsidiary in 2019. With COVID-19, these combinations of e-commerce and physical stores have expanded exponentially. Businesses unable to follow this strategy faltered, as exemplified by the case of Fu- ture Retail in India, which was brought to the brink of bankruptcy and then taken over by Reliance. • Food retailers leveraging e-commerce to integrate their supply chains. Before the pandemic, supermar- ket chains in developing countries had begun to offer online ordering and home delivery. In response to the lockdowns and social distancing, leading retail and fast-food chains greatly expanded home delivery and curbside pickup. For example, in India, Walmart-Flipkart drew on the services of its own Ekart Logistics, both to make its own deliveries and to sell logistics services to other e-commerce and brick-and-mortar retail firms. In some cases, e-commerce intermediaries obtained in- vestment financing from retailers to expand their oper- ations. For example, India’s Walmart-Flipkart invested in the logistics startup Shadowfax, an e-platform that links small and medium enterprises (SMEs) to e-commerce companies. • Proliferation of new delivery intermediaries “co-piv- oting” to facilitate e-commerce in food supply chains. Rapido is an e-intermediary, providing an app consum- ers use to select products from a list of subscribed re- tailers, and a delivery intermediary, employing electric bicyclists to deliver products. Rappi in Latin America and Swiggy in India are examples of large-scale food delivery services that expanded rapidly during the 2010s by adding e-commerce to their operations, and, in 2020, expanded further as a crucial business adjust- ment to the pandemic. • SME retailers and food service pivot to e-commerce with delivery. In much of lower-income Asia, Africa, and Latin America, SMEs still dominate food retail and ser- vices. During the pandemic, as small shops and restau- rants were severely affected by mobility restrictions and consumer fears, these businesses pivoted to de- liver food products and meals using online platforms. In Thailand, SME retailers began selling food directly to consumers via Facebook, cellphone networks, and local SME delivery apps. SME retailers in India estab- lished e-commerce activities using Reliance, Jiopay (e-payments), and its e-commerce division, Jiomart (e-commerce). These changes started before COVID-19 but rapidly expanded in 2020, providing new business opportunities for small and medium food businesses and delivery intermediaries. E-commerce is also leveraging direct sales by farm- ers to consumers. In some cases, this involves large e-commerce firms supplanting traditional intermedia- tion, like China’s Pinduoduo (the second-ranked Chi- nese e-commerce company after Alibaba in terms of number of customers), which aggregates produce over farmers “teams” and arranges pickup and delivery to consumers. Alongside, however, smallholder farms and cooperatives in China (and elsewhere) have also set up their own online stores through third-party e-commerce platforms and advertising through social-media groups, bypassing middlemen and selling directly to consum- ers. This model appears to work well, especially in ar- eas with special agricultural products, convenient infra- structure, and logistics. These developments have important implications for the UNFSS. The food system innovations we have de- scribed have been almost entirely market-driven and introduced by private sector actors, but their ability to innovate heavily depended on the availability of ade- quate basic infrastructure, mobile information and com- munications technology (ICT) networks, and regulation put in place by past public investment and policies. This type of public support is essential for market integra- tion and lowering transaction costs along supply chains, allowing both food and non-food businesses to lever- age digital platforms and pivot their operations. Gov- ernments would be ill-advised to organize supply chain integration directly, but rather should focus on this role as facilitators and target support to provide access to affordable mobile services, ease market entry for SMEs to ensure that businesses’ pivoting and changing prac- tices do not lead to increased concentration of food markets. With this support, food supply chain modern- ization and innovation can contribute to improving live- lihoods and decent job creation along supply chains, while enhancing resilience to the impacts of future shocks and disruptions—thus playing a crucial role in the transformation of food systems. *This article was first published on IFPRI website. *Thomas Reardon is a Professor at Michigan State Uni- versity; Johan Swinnen is Director General of IFPRI and co-lead of the UNFSS Finance Lever; Rob Vos is Director of IFPRI's Markets, Trade, and Institutions Division; David Zilberman is a Professor at the University of California at Berkeley and member of the UNFSS Scientific Group.