Rural E-Commerce Development Still Needs Model Innovation

For e-commerce, rural areas are the last market, and also the one with the richest resources. Faced with such a booming e-commerce landscape, whoever can successfully integrate the upward and downward flows of rural goods, and whoever can build a solid rural industry chain, will be able to seize the initiative in rural e-commerce.

Rural e-commerce has developed very rapidly over the past two years, especially after Alibaba announced its rural strategy in October 2014, when all the major e-commerce platforms followed suit one after another, and it is currently presenting a very lively scene. In addition to the “Romance of the Three Kingdoms” of Alibaba, JD.com and Suning, the postal system has also entered the field of rural e-commerce, advancing at a rapid pace, and in some pilot provinces it has already established a presence in more than 10,000 villages, while the e-commerce of the supply and marketing cooperatives is still gathering momentum. Dozens of local platforms have already appeared, and new platforms are added almost every day, so it is fair to say that everyone is sparing no effort in the field of rural e-commerce.

Why has the current situation come about? I think there are the following points: First, the prospects of the rural e-commerce market are indeed very attractive. Alibaba and the commerce department once carried out a calculation showing that the national rural e-commerce market was roughly 180 billion in scale in 2014, and it is estimated to reach 460 billion by 2016; second, from the current actual situation, farmers' living standards are improving, and they need, like city dwellers, to solve some problems in the area of everyday e-commerce, such as conveniently paying telephone bills and utility bills, and to be able to offer some genuinely good goods that satisfy consumer demand in the rural market; third, the market prospects of rural consumption upgrading are very attractive. In the cities, imitation-style and wave-style consumption is nearing its end, while in the countryside it has only just begun. In particular, the white goods, flat-screen televisions and computers that are already widespread in our cities are accelerating their entry into the countryside, and this is a scene that all the players have noticed in common. There is also the e-commerce market for agricultural products, with a total transaction scale of more than 4 trillion, where the current e-commerce penetration rate is only about 2.5%, so the prospects are very attractive.

What problems have emerged in the course of pushing this forward?

First, the current models are all relatively simple. After Alibaba announced the four major sectors of rural e-commerce, the rural e-commerce businesses launched by the various players are basically just these four sectors, with no other innovation or breakthrough. Everyone is repeating one model, which in common shows up as a very large upfront investment, relatively small output at a single point, and very unpromising early profitability, requiring capital to carry it for a period before the after-effects can be observed.

Second, among the current four major sectors, what people are keen on is e-commerce going to the countryside, that is, the downward flow of products is done relatively well, but the upward flow of agricultural products is currently done relatively poorly. This is because the entire industry chain and supply chain of agricultural product e-commerce are not yet mature, so this model still needs to be explored.

Third, in the current process of e-commerce development, there is indeed a shortage of talent. The current state of talent able to understand e-commerce, know how to do e-commerce, and be able to do e-commerce well has not been reached, so this is also a place that gives the various e-commerce platforms a headache, and in the short term it should be said that this situation cannot be changed.

Therefore, to advance the development of rural e-commerce, it is still necessary to further study rural realities, further innovate models, make the measures for implementation more feasible, and turn the beautiful market prospects into a truly beautiful market.