Chinese e-commerce accelerates expansion into rural markets
"I've bought a desktop computer online before. It wasn't very easy to use, but I didn't know who to send it to for repairs. Now if there's a problem, I can go to a physical store, which feels much more reassuring." In the "JD Help Service Store," 26-year-old Qingzhen resident Yang Dong said this while using a computer to browse products.
Guizhou Province's first "JD Help Service Store" recently opened in Qingzhen, a county-level city under Guiyang. The store has a total of 6 service staff, mainly responsible for helping county-town and rural consumers select home appliances on the JD online mall and providing a full range of one-stop home appliance services including delivery, installation, repair, maintenance and replacement.
For a long time, Chinese rural residents have been at the end of the retail market, with limited channels through which they can buy home appliances, few categories, and uneven quality. Many rural consumers are unfamiliar with the online shopping that has flourished in recent years, do not understand product and after-sales service policies, and have doubts about buying home appliances online.
Data from iResearch shows that China's rural population accounts for nearly half of the total population, but the proportion of internet users is less than 30%, and the proportion of online consumption is less than 10%, showing huge market potential. Statistics show that in 2014 the national rural online shopping market reached 180 billion yuan, and by 2016 it will exceed 460 billion yuan, becoming a new growth point for the online shopping market.
E-commerce has quickly captured the huge business opportunities brought by this change. The eyes of e-commerce giants such as Alibaba and JD.com have converged on rural areas, stepping up "encircling land in the countryside," vying for the rural market, and positioning themselves for the next strategic high ground.
On December 18, 2014, Alibaba officially launched the "Thousand Counties, Ten Thousand Villages" plan, investing 10 billion yuan within three to five years to establish 1,000 county-level operation centers and 100,000 village-level service stations; in 2014, Suning Commerce Group invested heavily in laying out a nationwide logistics network and announced a strategic plan for rural e-commerce, hoping to build 10,000 Suning.com service stations within 5 years, covering one quarter of the country's townships.
In 2015, JD.com accelerated implementation of its "e-commerce into rural areas strategy." Taking the remote southwestern province of Guizhou as an example, all cities where prefectures are located have now achieved large home appliance delivery services. Within this year, JD.com will build more than 30 "JD Help Service Stores" in more than 30 county-level areas in the province, and in the future JD.com will continue to expand at a rate of about a thousand per year.
It is understood that JD.com will soon also launch construction of "county-level service centers" in Guizhou. With such centers as the core, it will establish "rural cooperation points" at the township and village levels under their jurisdiction, recruit rural promoters, and push the reach of e-commerce further downward. In addition, JD.com will accelerate its layout in Guizhou, building FDC warehousing, large-item business operation centers and more.
"Over the past decade, Chinese e-commerce has mainly competed in large cities. This year JD.com's most important strategy is channel expansion into lower-tier markets," said Li Chen, general manager of JD.com's Southwest Region.
"E-commerce has always been a 'shortcoming' in rural areas. Now e-commerce is actively 'penetrating' the rural market, which helps open up the 'last kilometer' of home appliances going to the countryside." Zhou Qin, chief economist of the Guiyang Municipal Commerce Bureau, believes that this move can solve the five major problems in rural home appliances: high prices, few categories, no delivery, slow installation, and difficult returns and exchanges, allowing rural consumers to enjoy the same prices and services as first-tier cities such as Beijing, Shanghai and Guangzhou.
Analysts pointed out that the development of rural e-commerce and its supporting warehousing, logistics and other construction will also have a significant effect on "three rural" issues such as improving the quality of life of China's rural population, broadening sales channels for agricultural products, and attracting surplus labor to employment.