Her hectic work schedule at a Shenzhen- based securities company often results in Dong Xue skipping lunch， but the young woman makes up for it by snacking. Buying snacks has become much more convenient today due to the mushrooming of online stores that offer more varieties and cheaper prices. It’s become routine for Dong to buy her favorite snacks thrice a month， spending about 100 yuan （$14.2） each time.
　　The phenomenon is helped along by the trend of online celebrities recommending snack brands in live streams and Dong recently bought potato chips in new fl avors recommended by Li Jiaqi， a popular livestreaming host in China.
　　“There are more fl avors online than in brick-and-mortar stores，” Dong told Beijing Review. “Also， you can get discount coupons， which is why I buy snacks online.”
　　With the rise of e-commerce platforms， buying snacks online has become a strong trend among Chinese consumers seeking leisure food. According to a report issued by the Ministry of Commerce in May， snacks accounted for nearly 30 percent of all online food sales.
　　The sector has become one of the most promising in China’s fast-moving consumer goods industry. According to the report， by 2020， the gross output value of China’s snack industry is expected to hit 3 trillion yuan （$426 billion）.

Millennials’ choice

　　The primary consumers of online snacks are millennials， whose buying decision is influenced more by flavors and package design compared to previous generations， Cui Lili， Executive Director of the Institute of E-Commerce at Shanghai University of Finance and Economics， told Beijing Review.
　　With consumer demand diversifying， online snack stores selling products ranging from pastries to trail mixes have become the new craze. As snack sellers fl ood the huge market， some names have emerged as the top market shareholders， such as Three Squirrels， which specializes in “forest food” such as nuts and tea； Bestore， whose products include sweets， biscuits and pastries； and Be & Cheery， which has a wide range from spicy beef tendons to walnuts.
　　Data from China-based research firm AskCI Corp. showed that Three Squirrels’sales in 2018 hit around 7 billion yuan （$992 million）， followed by Bestore with about 3.8 billion yuan （$538 million） and Be & Cheery at 3.1 billion yuan （$439 million）. In contrast， Laiyifen， a traditional offline snack brand offering an eclectic variety from meat and aquatic products to jellies， had only 500 million yuan （$70.8 million） in sales last year. 　　The online snack stores， unlike offline brands， have almost no self-owned factories or workers. Light in assets， they mainly focus on packaging and marketing products.
　　Over the years， the online snack giants have developed their own unique strengths.
　　Three Squirrels， based in Anhui Province in east China， was launched on Tmall， e-commerce giant Alibaba’s online marketplace， in 2012. Its original products were nuts. According to Yin Xiang， chief public relations offi cer of the company， its sales during the Double 11 online shopping bonanza on November 11 reached around 1 billion yuan （$142 million）， topping all domestic online snack sellers.

Growth strategies

　　To stand out in rising competition， online snack vendors are introducing innovative and high-end products and improving their brand popularity. Buyers today seek healthy and high-end leisure food for fitness， and whole-grain and sugar- and additive-free snacks. Last year， sales of Be & Cheery’s lightly baked and additive-free nuts rose nearly 190 percent.
　　To meet the new demand， Wang Jingyue， a co-founder of Be & Cheery， said the company will continue to produce more snacks with less or no sugar.
　　Three Squirrels launched its vegetable protein and dietary fiber drinks this year and there are many more such examples.
　　Since the package design is becoming increasingly important for customers， the brands are vying to introduce attractive packaging， including high-end gift boxes during festivals. In January， ahead of the Spring Festival， Be & Cheery sold 11 million gift boxes.
　　Many online snack sellers run vigorous sales promotions， such as getting celebrities to endorse their products. Singer Jackson Yee， a member of the popular band TFBoys who has become a sensation among young Chinese， was roped in by Be& Cheery this year. According to the company’s data， its sale of snacks such as cakes and dried fruit rose 200 percent after Yee’s endorsement was announced.
　　A highlight this year was live streaming. In October， Three Squirrels sold around 30，000 boxes of walnuts in 4 minutes when Li appeared on a live-streaming show.
　　Like the scene in many sectors， the rise of e-commerce in the snack industry has seen a fusion of online and offl ine sales as well for a larger market as well as sustainable development. Proposing the plan in 2017， Bestore today has over 2，000 brickand-mortar stores across the country.
　　“In five years， Three Squirrels plans to open 10，000 franchise outlets，” Yin told Beijing Review. 　　Be & Cheery is also returning to offl ine sales through the stores of its parent company Haoxiangni Health Food. Its fi rst brickand-mortar store opened in Hangzhou in east China in June.
　　On the other hand， Laiyifen and Qiaqia have begun e-commerce trials. Qiaqia， which mainly produces roasted and unroasted seeds， saw its sales on Tmall on November 11 surge 89 percent compared to the previous year.
　　Snack sellers are also gaining a global presence. According to Bestore， it sells over 100 kinds of snacks in more than 20 countries through offl ine stores and crossborder e-commerce platforms. Be & Cheery has exported dry fruits， roasted seeds and nuts to countries and regions such as the United States， Italy and Australia.
　　Qiaqia， whose products go to over 40 countries and regions， set up its first outbound factory in Thailand in July.
　　Its overseas sales contribute about 10 percent to its sales， and the figure is expected to grow to 30 to 40 percent， according to Vice President Wang Bin.

Meeting challenges

　　Despite the innovations， homogeneous competition and price wars are troubling sellers. According to Yin， the low access of the Chinese snack market has made competition in general categories fi erce.
　　Online snack sellers are forced to introduce various discount policies， which mean declining profi ts.
　　Reliance on suppliers and rising promotional costs are also eroding profi ts. Since many raw materials， especially nuts， are imported， the fi nal returns can be limited， Zhu Danpeng， a food industry analyst with Beijing-based China Brand Institute， said.
　　Although Three Squirrels’ turnover in the third quarter of the year was around 2.2 billion yuan （$312 million）， the net profit was 29.21 million yuan （$4.1 million）， drop- ping over 50 percent year on year.
　　Its sales expenses totaled around 1.4 billion yuan （$198 million）， a whopping 20.94 percent of the total costs over this period.
　　“Launching brick-and-mortar stores and attracting new customers online both call for large expenditures. Therefore， domestic online snack sellers need to find a way out by innovating products and providing customers with better experiences，”Cui said. 　　Some major sellers are resorting to different strategies. According to Zhang Liaoyuan， founder of Three Squirrels， the company is developing from an ecommerce company into a platform that is using big data， especially data about customer preferences， to improve products and create a digitalized supply chain.
　　Bestore is eyeing the high-end niche market. “Despite competition in the general categories， there aren’t many domestic snack brands with international competitiveness in the high-end market，”Yang Hongchun， founder and Chairman of the company， told China Daily. Bestore has introduced high-end products such as seafood snacks to stand out in the competition. Yang projects that more than 50 percent of the company’s products will be high-end food.
　　For customers， food safety is a prime concern. According to He Jihong， President of China Food Association， a major drawback is that there are no unifi ed standards in place for factories and online sellers.
　　To improve their brand image， online snack sellers need to select their suppliers with caution and formulate regulations on quality control， Cui said.