In the first half of 2015, e-commerce transactions amounted to 7.63 trillion yuan ($1.20 trillion). (Photo : Reuters)
China's countryside, or the rural region, is catching the attention of e-commerce giants such as Alibaba and JD.com, making it as a potentially new battlefield among the sector's players as they face a growth slowdown in urban areas.
When combined, Alibaba and JD.com's share in the $440-billion retail e-commerce market in China is about 80 percent. The large fraction is driven mainly by strong sales to urbanites. But with the coming of the mentioned plight, the two are turning their focus beyond capturing the urban market.
Both Alibaba and JD.com eye to reach 100,000 country villages by 2020. As part of this goal, the two titans have recently hired an army of drivers to make delivery rounds in key rural towns across the country.
Currently, around 600 million rural citizens have their incomes increasing faster than residents of urban areas.
Additionally, the untapped market is now discovering the wonder of online shopping. This comes after most of the village residents have bought Internet-connected smartphones last year, mostly via government programs.
Though rural China's number of e-commerce customers is just a third of that of the cities, their population have been increasing rapidly.
According to government research group China Internet Network Information Center, around 77 million people shopped online in the countryside--a 41-percent increase. The growth figure is also higher than the increase posted by the urban e-commerce customers, which is only 17 percent.
E-commerce analyst Wang Xiaoxing, who is affiliated with Analysys International, said that "the scale of online shopping in rural areas is still lower than in the cities, so there's a huge space to unearth, a big market that can be fought for."
Leading e-commerce firm Alibaba is reportedly investing 10 billion yuan to establish 1,000 country-level distribution hubs and 100,000 village-level drop-off locations for the next three or five years.
Meanwhile, JD.com, known for selling goods directly like U.S.'s Amazon.com, is running its system of 166 regional warehouses and a thousand local delivery stations to conquer the countryside. The firm is also working with third-party logistics to receive and hand off packages.
