Rural e-commerce profits are nowhere in sight - is it really worth it?
The rural market can be said to be the last "virgin land" for e-commerce expansion, but it is also the vastest area that is hardest to cultivate. Today, among the "gold rush" army of rural e-commerce, there are large e-commerce platforms such as JD.com, Suning and Taobao, as well as traditional public-ownership enterprises in transition such as supply and marketing cooperatives, agricultural reclamation farms and postal services, plus a large number of localized and regional e-commerce enterprises and various sources of venture capital and private capital. The momentum can truly be described as vigorous and booming.
However, in interviews across the province over the past months, Southern Daily reporters found that the development of rural e-commerce is basically still in the construction stage. E-commerce enterprises invest heavily but profit little, and it is even more premature to talk about profitability.
The development of enterprises cannot aim at public welfare. Facing profit expectations that are nowhere in sight, is rural e-commerce really a worthwhile deal?
The social benefits of rural e-commerce cannot be underestimated
In April this year, Shixing County and Alibaba jointly launched the Village Taobao partner system. When recruiting partners for Village Taobao service stations, more than 2,400 people signed up in less than 6 days. Qiu Xinhui of the county government's e-commerce office said that the applicants were basically young people under 35, among them many returning youths with higher education qualifications. In Shixing County, the rural e-commerce cause has already created a huge employment attraction for rural youth.
Today, Village Taobao service stations have become a local entrepreneurship and employment incubation base in Shixing. Liu Lifang of the Mashi Town service station used to run a shop in Shenzhen. Considering the development potential of rural e-commerce and the factor of reuniting with her family, she ultimately chose to return home to do Village Taobao service. Drawing on the experience she had accumulated, she quickly became the county's sales champion. Dong Bin, operations manager for South China at Alibaba's Rural Business Unit, said that the Village Taobao service station plan will cover all 113 administrative villages in Shixing by 2018, and by then there will be more rural capable people like Liu Lifang opening up their own fields of endeavor.
After Aunt Cheng's grocery store in Daling Village introduced the "Lecuntao" electronic screen, it began helping villagers who are not very familiar with online shopping make purchases on their behalf from goods all over the country. Although it added only more than 10 orders a month, Aunt Cheng has already tasted the sweetness of online purchasing on behalf of others and feels that she has not been abandoned by the trend - the internet has brought not only a shock to physical stores like hers, but also hope. In Renhua County, after traditional rural retail stores were given the wings of e-commerce, a new world opened up.
The arrival of e-commerce has also brought hope for transformation and development to traditional rural circulation enterprises such as supply and marketing cooperatives. In Xinhui District of Jiangmen City, one "old store" of the supply and marketing cooperative after another began information-based upgrading, connected to e-commerce platforms, and transformed into "online stores" full of modern genes - rural e-commerce public service stations. Huang Ruilou, deputy head of Xinhui District, revealed that, on the one hand, Xinhui is a pilot area for the comprehensive reform of the Guangdong supply and marketing cooperative system, and the transformation and development of the supply and marketing cooperative system is imperative; on the other hand, Xinhui plans to establish service points with full coverage in all of the district's more than 190 administrative villages next year. Only the supply and marketing cooperative system, whose outlets reach into every corner of the countryside like tentacles, can complete this task quickly.
At the same time, the supply and marketing cooperative system in Zhaoqing City found another path for transforming into e-commerce. By organically combining traditional business operations with "Internet Plus," the Zhaoqing supply and marketing cooperative built the "Vegetable Basket" express service e-commerce platform, delivering fresh agricultural products from the fields to urban residents' dining tables through one-stop service. As of the first half of the year, the "Vegetable Basket" express service line had reached 73 residential communities, delivered to more than 90 government and institutional canteens, and developed more than 32,000 members. At the other end, the "Vegetable Basket" express service line connected with more than 80 specialized cooperatives and bases, driving a planting and breeding base area of more than 30,000 mu, and achieved service to both urban residents and rural farmers.
It can be said that, as more and more rural e-commerce models deepen, rural commercial development is entering a stage of transformation and upgrading. The previously relatively quiet rural commercial market has been greatly activated with the deepening of rural e-commerce, and the "channels" for agricultural products to go out have also opened up, bringing new vitality and a way forward for rural commercial development. In this sense, the social benefits brought by "e-commerce going to the countryside" are difficult to estimate, and certainly cannot be denied by temporary difficulties in economic returns.
Find the right path, and both survival and profitability are not difficult
Rural e-commerce is by no means a loss-making business doomed to lose money and serve only as public welfare. During interviews, the reporters encountered several explorations of e-commerce models in which economic returns were truly seen, or at least the dawn of profitability was seen.
The Jisong Network built by the Yingde supply and marketing cooperative takes the county as its unit and, through the linkage of online stores and offline physical stores, has created a small but beautiful regional e-commerce enterprise. The physical supermarket opened by Jisong Network sells goods directly to consumers. At the same time, if consumers choose to place orders online, delivery personnel can also take goods from the physical supermarket, pack them, and deliver them to customers in the urban area within 30 minutes. According to reports, Jisong Network currently has an average daily order volume of nearly 3,000, with more than 10,000 active online members per month on average and monthly online sales of more than 4 million yuan, already exceeding the revenue of the physical supermarket. What is commendable is that Jisong Network achieved profitability in only one year, and customer activity and stickiness have both remained at a relatively high level.
Jiaxian Farm, born out of the Guangdong Agricultural Reclamation system, after more than two years of exploration, found a way for fresh food e-commerce to survive. Backed by the powerful agricultural reclamation system, Jiaxian Farm integrated online and offline operations and opened a rapid channel for agricultural products from the field to the table, accumulating nearly 200,000 members, including more than 50,000 online members. Li Guangjian, chairman of Guangdong Guangkeng Green Agricultural Products Co., Ltd., said bluntly that steadily building up offline physical stores and the supply chain first, and then channeling traffic from offline to online, is precisely the important reason Jiaxian Farm could gain a firm foothold in the highly competitive fresh food market in just two years. "The community fresh food O2O that Jiaxian Farm does is similar to today's booming restaurant takeout platforms. After customers place orders online, Jiaxian Farm's directly operated physical stores in that community are responsible for delivery," Li Guangjian said. In this way, store employees are both shop assistants and couriers, and can promptly deliver the freshest ingredients to customers' homes after customers in the area covered by the store place orders, with high efficiency and low logistics costs.
Jiaxian Farm also keenly "smelled" the purchasing needs of small restaurants scattered near its stores, providing them with a procurement channel with open and transparent pricing. As long as small restaurant owners directly place orders on the mobile client according to their needs, Jiaxian store employees will deliver to their doors.
At the same time, Jiaxian Farm also attaches great importance to two types of B2B business: first, group meal business, which is to provide raw materials and other one-stop solutions through e-commerce channels for government organs, schools, canteens of enterprises and institutions, and chain restaurant companies; second, through mobile APP ordering, providing delivery services directly to vegetable market stall owners. At present, B2B business has become Jiaxian Farm's most stable source of profit, accumulating energy for its development of B2C business for individual consumers. This may be a breakthrough for agricultural product e-commerce enterprises to survive and achieve sustainable development.