E-commerce aims at the rural market

At 7:30 in the morning, Pang Weidong will begin his delivery journey at a distribution center belonging to Alibaba Group in the Northeast Plain of China. His pickup trucks traveled on bumpy roads and delivered goods such as toilet paper and weightlifting equipment.

Pang Weidong, 35, said that it takes about 9 hours to deliver about 200 packages a day, because he must keep the speed below 40 miles per hour (about 64 kilometers) to avoid accidents or damage to goods, and sometimes Avoid poultry and livestock on the road.

Pang Weidong is a member of a large number of drivers who are employed by Alibaba's logistics partners and their major competitor JD.com. In the US$440 billion retail e-commerce market in China, the two companies together accounted for 80% of the total share. They mainly rely on the advantage of selling to urban residents. They all hope that by the end of this decade, they will extend their tentacles to 100,000 villages.

Investors worry that slowing economic growth and turmoil in the stock market may curb consumer spending. In the three months to June, Alibaba’s revenue growth rate was the slowest in more than three years. Jingdong executives said earlier in August that they expect sales growth to slow later this year.

However, there is great hope in rural China. Although about 600 million rural residents are generally poorer, their income is growing faster than urban residents.

The number of e-commerce customers in rural China is only one-third of the city, but their status is rapidly rising. According to data from the China Internet Network Information Center, a government research institute, 77 million people in rural areas had shopped online last year, an increase of 41%, while the urban area increased by 17%.

Wang Xiaoxing, an e-commerce analyst at the research firm Analysys International, said that the scale of online shopping in rural areas is still lower than that of cities, so there is a huge space available for exploration and a huge market to win.

Alibaba, China’s largest e-commerce company, plans to invest 10 billion yuan in the next three to five years to build 1,000 county-level operation centers and 100,000 village-level service stations. As of June, the company had 63 county-level distribution centers and 1,803 village-level service stations.

Jingdong, headquartered in Beijing, adopted a different rural distribution strategy. The company has its own network of 166 regional warehouses and thousands of smaller local distribution stations. In remote areas, Jingdong is working with third-party logistics companies and pays for signing “brand promoters” who will receive the parcels and deliver them to customers.