E-commerce Reaches Rural Areas, Unlocking New Consumer Potential in the Countryside
Wuhan--Feng Binglan, a woman over 60 years old in the mountainous area of western Hubei, received a 32-inch LCD TV set purchased online by her daughter without leaving home. Her village is a 2-hour drive from the city, with rugged mountain roads, and traditional home appliance dealers charge an extra 200 yuan for door-to-door delivery, while e-commerce offers free door-to-door delivery, letting her personally experience the convenience brought by "Internet Plus Circulation."
JD.com recently launched a service platform for the rural market -- the "JD Help" service store opened in Lichuan City, Enshi Tujia and Miao Autonomous Prefecture, Hubei Province. That day, many people gathered around the service store staff to learn in detail about the online shopping process and various discounts. Upon hearing that delivery was free to the door no matter how far, some placed orders on the spot.
"I think the rural market has great potential. Although delivering to remote places currently incurs losses, as the market expands and order volume increases, this situation will change," said Huang Bo, head of the JD Help Lichuan service store. The day before opening, Huang Bo and two other staff members braved heavy rain to deliver a TV set to Feng Binglan's home in Yaozi Chi Village, Wangying Town, Lichuan City, and installed and tuned it on site.
The "Internet Plus Circulation" action plan issued by the Ministry of Commerce proposes that in the next 1-2 years, 200 comprehensive demonstration counties for e-commerce entering rural areas will be cultivated, 60 national-level e-commerce demonstration bases will be created, 150 national-level e-commerce demonstration enterprises will be cultivated, the construction of 100 overseas e-commerce warehouses will be promoted, and local authorities will be guided to build 50 e-commerce talent training bases.
In fact, China's e-commerce giants began laying out their rural market strategies long ago. In 2014, Alibaba announced it would invest 10 billion yuan within 3-5 years to establish 1,000 county-level operation centers and 100,000 village-level service stations; Suning Commerce planned to build 10,000 Suning.com service stations within 5 years, covering a quarter of the country's townships.
As of now, JD.com has provided large-item delivery services including major home appliances to 31 provincial capital cities, 273 prefecture-level cities, 1,251 county-level cities, and 2,045 districts and counties in the mainland, and supports cash on delivery, POS card payment, and door-to-door after-sales service.
"As a county-level city in western Hubei with abundant mineral resources and a developed tourism industry, the Lichuan area has strong consumer spending power for major home appliances and a large consumer market," said the relevant head of JD Help Central China.
"Compared with traditional home appliance dealers, our advantages lie in price and service," said Liu Dong, head of the JD Help Daye service store.
In addition to Lichuan City, Laifeng County and Xuan'en County in Enshi Prefecture have also opened JD Help service stores. The relevant head of JD Help Central China stated that Enshi Prefecture is mainly mountainous, with a scattered population, making door-to-door delivery logistics costs relatively high. According to estimates, for rural township delivery within 30 km, the logistics cost is 3 times that of urban areas, and at 60 km it becomes 5 times. To address this, JD.com and shipping manufacturers provide corresponding subsidies for transportation, installation, and maintenance, along with certain commissions, to offset losses from rural delivery.
The "Rural E-commerce Consumption Report" released by the AliResearch Institute shows that Taobao's rural consumption share has been steadily increasing, rising from 7.11% in the second quarter of 2012 to 9.11% in the first quarter of 2014. It is predicted that the total national rural online shopping market may exceed 460 billion yuan in 2016.
Liu Dong believes that the current development of rural e-commerce faces two problems: first, information channels are not smooth and internet access is inconvenient; second, people's thinking is conservative and cannot keep up with the new situation. "If these two problems are solved well, rural e-commerce has great prospects."
To this end, JD.com "casts a wide net," allowing consumers to shop through websites, WeChat, mobile clients, and more; at the same time, it selects relatively strong merchants for cooperation to ensure that subsequent promotion "does not lag behind."
On the opening day of the JD Help Lichuan service store, some rural residents carrying bamboo baskets to market in the city lingered outside the store, their eyes filled with both curiosity and confusion, with people occasionally asking "What is this place for?" Ye Qing, deputy director of the Hubei Provincial Bureau of Statistics, suggested training a group of rural e-commerce hands to solve the problem of online shopping being difficult for rural residents to learn about and accept.