Consider The Lobster

The coming tech revolution in global food markets.


Food is the biggest industry in the world, worth an estimated $7 trillion annually, and one Chinese startup is leading the charge to disrupt it.

Consider the lobster. There he is on your plate, at a high quality seafood restaurant in Shenzhen, China. But what did it take to get him there?

Thirty minutes ago you chose him from a dozen in the restaurant’s seafood display tank. 48 hours before that he was pulled out of the sea near the Pacific coast of America. This is the story of the journey between those two points.

It’s a story about technology. Not just the modern technologies that are disrupting so many industries today — smartphones, the internet, online payment systems and many more — but the story of one of humankind’s oldest technologies; the market.

The place where people with something to sell, meet people ready to buy. And how the global market for food, worth an estimated $7 trillion, is facing high speed tech disruption.

“Today on Seafood Street you can find lobsters from Maine, the Canadian coast, the British channel and Argentina, much of it sold through the fresh-food markets.”

It’s just after dawn on a beautiful October morning, the rising sun makes a multihued rainbow of the waters of San Diego bay, and an intrepid hunter just hauled a lobster up out of the waves.

San Diego’s lobster hunting season runs October to March, to protect the creatures during breeding season. Hunters must be “bare handed,” using no spears or nets. Hauling a 12 pound spiny lobster up from the sea bed with your own hands is a notably risky undertaking.

But at an average market value of $20 a pound, with a maximum daily take of seven lobsters, skilled hunters can land $1600 a day, which most consider worth getting a few nipped fingers.

Fishing is an ancient industry. Many fishing businesses are small, family operations. The job of fisherman is handed down from one generation to the next. Dad was a fisherman, and his dad was a fisherman, and his dad was and so it goes. Millennials with top level technical qualifications are not chomping at the bit to get into the seafood industry.

Much of the business side of seafood is untouched by technology, with deals still made and recorded on paper.

Traditionally, San Diego’s lobster hunters have taken their hauls to seafood brokers. In the past a lobster would have entered an ad-hoc network of seafood marketplaces, shipped from one location to the next as regional traders bargain new deals over this valuable carapace.

At each new location our lobster is “retanked,” moved into a new saltwater tank. A “fresh” lobster can have been on this trail for days or even weeks, and retanked up to 6 times.

There’s a high level of wastage, and the food that comes out of this system is far from fresh.

A smarter marketplace for seafood.

A beautiful Chinese startup with a mission to make a better global market for seafood, and leveraging an array of technologies on the way. It was spun out of global logistics business Regs Group in 2014, and high level logistics solutions remain key to this company work.

In a little more than 2 years the company, Gfresh, has processed over $250M in seafood orders, and attracted Series-A funding of $20M from Riverhill Fund, Alibaba’s investment arm, and Legend Capital.

This marketplace allows seafood providers both big and small from around the world to sell direct to China, a nation with a fifth of the world’s population and an insatiable appetite for seafood. Vendors can sell seafood in small amounts, automatically bundled by Gfresh into single shipments, and then broken apart again and distributed to individual buyers in China.

It’s a huge innovation in logistics, made possible with mobile and smartphone technology. Our lobster is sold, literally within minutes of being advertised, to a buyer in Shenzhen, and his journey begins.

It’s essential to the marketplaces that live seafood is kept healthy and fresh. By cutting middlemen out of the delivery chain the entire operation, and ensure optimal conditions.

Lobster travels in first class for seafood, housed in roomy styrofoam boxes with two or three other crustaceans, stored in temperature controlled containers, and flown into destinations across China.

There is a lobster is video recorded by smartphone on arrival at his final destination. The old system of seafood distributors meant a high level of wastage, and frequent disputes between buyers and sellers about poor quality produce.

It’s important for a much higher proportion of seafood arrives in good health, and any remaining wastage is automatically calculated and compensated for before payment is released to the seller.

I like to purchase seafood at a lower price than traditional distributors.” Eric Young is our lobster’s buyer, and a loyal Gfresh customer. He sells seafood to the restaurants of Shenzhen’s Leyuan Road, known locally as Seafood Street. “In future I hope Gfresh will provide an even wider range of seafood products.”

Seafood Street, with its bustling nighttime crowds seeking high-end dining experiences, is where our lobster ends his journey.

On any given evening visitors to Seafood Street can find lobsters from Maine, the Canadian coast, the British channel and Argentina. But lobster is only the first step in the disruption of food.

A tech revolution in global food markets.

The purchase by Amazon of Whole Foods in July 2017, for $13.7 billion, indicates more than just another acquisition for Jeff Bezos’ business empire.

Amazon is the reigning champion of disruptive technology, starting with book publishing and growing over two decades to dominate global retail. Now tech disruption is coming to food, and the race is on for ownership of the world’s biggest industry, the $7 trillion global market for food.

Whole Foods isn’t Amazon’s first attempt to corner the market for food. But as Amazon’s mixed results show, global food markets have been protected from tech disruption by a complex knot of issues.

The logistical challenges of shipping perishable goods worldwide, the complex customs and regulatory arrangements between nations, and powerful established players at national, regional and local levels, all make food markets a tough challenge for innovative new technology.

“An individual consumer in Beijing can fill their online shopping basket with fresh foodstuffs from every corner of the world, ordered direct from the producer.”

While the giants of tech disruption struggle to crack the food market. Food companies already are working quickly on operational solutions.

Anthony Wan, CEO and co-founder believes his company is ready for much more. “Gfresh’ cold-chain logistics system was designed for live seafood, with a shelf life of less than 24 hours, by far the hardest product category to fulfill. It enables us to scale to other, less fragile industries including fresh meat, dairy, flowers, and groceries.”

Looking at the Gfresh marketplace, it’s easy to see how a truly global market for food is already taking shape. It’s a marketplace that Anthony Wan argues won’t be limited by the existing relationships between wholesalers and retailers.

“This company has already partnered with and Alibaba’s Tmall, China’s largest 2 online retailers, to offer products from global seafood companies directly to individual consumers.”

The size of China’s population and the adoption of mobile technology means that ideas that wouldn’t have worked in the US are thriving in China. A good example is Mobike and the billion dollar bike sharing industry.”

This Chinese startup gives it a unique advantage when it comes to cracking the global market for food. Chinese consumers are now the most sophisticated in the world, shopping in ways that other nations will soon imitate.

“The most obvious sign of China’s adoption of mobile e-commerce technology can be felt when buying streetside snacks — almost everyone uses their mobiles to pay. Cash is dead.”

Many parts of the world are watching the Chinese consumer market and realizing that food is an untapped unicorn space. Those companies that get in this market early will be able to move and extend to meet the new demand.

Just around the corner is a global food market, enabled by the new technologies. An individual consumer in Beijing can fill their online shopping basket with fresh foodstuffs from every corner of the world, ordered direct from the producer, and have them delivered the next day.

It’s a future Anthony Wan is already privileged to have a taste of. “I am spoiled for great seafood choices and you can’t go wrong with Alaskan King Crab, of which Gfresh recently completed the first ever direct shipment from Alaska to Shanghai.”

Shipping crab from Alaska to Shanghai, or lobster from San Diego to Shenzhen, is a foretaste of the technology driven global food market of tomorrow.

There’s no doubt that market will offer an unparalleled range of choice and speed of delivery to consumers. The only real question is whether slow moving tech giants will corner the market, or if quick moving startups will get there first.