How can supply and marketing cooperatives respond to the e-commerce shock? Innovative development of online supply and marketing cooperatives

Supply and marketing cooperatives, regarded in the era of the planned economy as the main channel for one-supply-one-sale, two-way circulation, once occupied a "monopoly position" in China's rural retail. However, with the spread of e-commerce and the continuous improvement of the logistics system, farmers in remote areas can also "buy from the world and sell to the world" through the internet. So, will the supply and marketing cooperative retail outlets spread across the grassroots level simply die out?

Along with the pace of the central government's deepening of the comprehensive reform of supply and marketing cooperatives, a reporter recently interviewed Zou Tianjing, vice director of the council of the All China Federation of Supply and Marketing Cooperatives, with this question.

The advantage of supply and marketing cooperatives lies in the "last kilometer"

In Zou Tianjing's view, e-commerce is not a disadvantage for supply and marketing cooperatives but an advantage, bringing them new vitality. "Supply and marketing cooperatives are familiar with rural areas, close to the rural market, and understand farmers. Their advantage lies in the 'last kilometer.' By the end of last year, the supply and marketing cooperative system's operating outlets had reached 1 million, and their business areas covered more than 80% of townships and more than 60% of administrative villages nationwide, initially possessing a good foundation for developing a modern rural logistics system."

Based on this, this year supply and marketing cooperatives proposed building a nationwide e-commerce platform and accelerating the construction of "online supply and marketing cooperatives." Platform construction has already started and is expected to go online in the third quarter of 2015.

Zou Tianjing told the reporter that in many years of service practice, supply and marketing cooperatives have already formed a five-level organization at the national, provincial, municipal, county, and township levels, with federations, specialized cooperatives, and grassroots cooperatives. At and below the county level there are now 25,000 grassroots supply and marketing cooperatives, and in recent years 114,000 specialized cooperatives have also been established, along with 330,000 comprehensive service cooperatives and 12,000 various industrial and trade associations, forming a uniquely characteristic organizational service system covering both urban and rural areas, and constituting an important part of the rural service system with Chinese characteristics.

Traditional supply and marketing cooperatives face the new challenge of e-commerce directly

Supply and marketing cooperatives have a history of 61 years. Some people say they are a term belonging to the previous era. Regarding this, Zou Tianjing has another view: "Compared with e-commerce, this new thing, supply and marketing cooperatives are relatively traditional, but old supply and marketing cooperatives can likewise radiate a new look. In the future, online supply and marketing cooperatives will be an important aspect of our continued renewal. I believe we will certainly be able to keep up with the pace of the times, rather than fall behind or even remain stuck in the previous era."

Full of confidence, and also directly facing challenges. "In recent years the e-commerce industry has developed rapidly. Companies such as Taobao, JD.com, and Yihaodian, these well-known e-commerce enterprises, have one after another gone to the countryside and entered the rural market, which indeed has brought us quite a few new challenges. But we believe that e-commerce is essentially a new business model, and for us it is also a major opportunity to develop new circulation formats and raise the level of operation and management. As long as we give play to the advantages of our physical network and accelerate innovation and transformation to realize integrated online and offline development, we can likewise gain a competitive advantage," Zou Tianjing said.

Relying on 1 million business outlets, supply and marketing cooperatives have offline physical outlet resources that ordinary e-commerce companies do not yet possess. Zou Tianjing said, "We are willing to rely on these outlet resources to cooperate with various types of e-commerce enterprises and jointly form a synergy for serving agriculture."

Striving for online supply and marketing cooperatives to reach 80% by the end of the "13th Five-Year Plan"

Zou Tianjing said that serving agriculture is the unchanging purpose of supply and marketing cooperatives. "The internet has broken through the limits of time and space. In the past, production and sales were too far apart. With the internet, farmers directly meet the target market. With the internet, formerly remote villages are no longer disadvantaged. As long as it is for serving agriculture, as long as it benefits farmers, and as long as it can provide farmers with practical benefits, we are willing to try innovations."

The reporter also learned that online supply and marketing cooperatives did not start from zero. Around the late 1990s, agricultural products with a relatively high degree of standardization, such as cotton, had already developed B2B e-commerce. At present, the number of enterprises in the whole system developing B2C, C2C, and O2O e-commerce transactions has reached 954, and some successful models have also been explored.

Speaking of the next goals and plans, Zou Tianjing told the reporter that after 3 to 5 years of effort, the whole system would build a new pattern in which a nationwide e-commerce platform and regional and specialized platforms support each other and online transactions and offline transactions develop in an integrated way. It will strive to ensure that by the end of the "13th Five-Year Plan" period, the e-commerce application rate of circulation enterprises in the whole system reaches more than 80%, the proportion of informationization transformation of grassroots operating service outlets reaches more than 70%, and the share of e-commerce transaction scale in the total sales of the whole system reaches more than 40%.