Taobao goes rural

24/06/2018

Alibaba reported Thursday that it plans to expand its rural e-commerce initiative to 1,000 counties and 150,000 villages across China in the next three years.

 

Launched in October 2014, Alibaba said Rural Taobao is one of its three main strategic projects, aside from globalization and cloud computing.

The goal of the project is to support stronger trade ties between China’s countryside and urban areas in order to improve the lives of rural Chinese. Around half of China’s 1.3 billion people live in rural regions, the company said.

“Our mission is clear: We want to improve the living conditions of China’s rural regions,” said Bill Wang, vice president of Alibaba Group and general manager of Rural Taobao, in a statement. “To do so, we need to provide high-quality goods, personalized services, smart logistic solutions and prices comparable to that of the cities.”

As part of the project, a network of e-commerce service centers has been created at the county and town level to provide services that enable villagers to purchase products online, as well as sell their goods via Rural Taobao’s online marketplace and other Alibaba e-commerce platforms. According to the company, this allows people living in villages to access a wider range of products and promote their own products beyond village borders.

The initiative currently covers 700 counties, with a total of more that 30,000 service centers.

 

“Our mission is clear: We want to improve the living conditions of China’s rural regions,” said Bill Wang, vice president of Alibaba Group and general manager of Rural Taobao. “To do so, we need to provide high-quality goods, personalized services, smart logistic solutions and prices comparable to that of the cities.”

 

Speaking at 2018 Rural Taobao Merchant Summit at Alibaba’s Hangzhou headquarters, Alibaba executives discussed the consumption power of China’s rural population. Though it’s currently weaker than urban centers, it’s slowly becoming a more significant force, the execs explained.

According to the latest report from National Bureau of Statistics, in 2017, the average disposable income per capita in China’s rural region increased by 8.6% year-over-year to $2,066 (RMB 13,432).  Consumption per capita also climbed 8.1% compared to last year.

The amount of online retail shopping in rural areas is also booming. In 2017, sales reached $194 billion (RMB 1.24 trillion), representing an on-year surge of 39%, according to China’s Ministry of Commerce.

One of the short-term goals is to offer next-day delivery of any goods and at-home installation of large electronic products, Wang added. Alibaba said it has also recently opened a number of Taobao Select Service Stations, where villagers can purchase a range of products, from food to clothes and electronic items, at a physical location, without having to place the orders online.

An integral part of the initiative is empowerment of the merchants, Wang said. By sharing analytics about customer preferences and market trends with the brands, companies can develop products or craft marketing campaigns tailored to the tastes of rural customers.

 

The amount of online retail shopping in rural areas is also booming. In 2017, sales reached $194 billion (RMB 1.24 trillion), representing an on-year surge of 39%, according to the Ministry of Commerce.

 

According to Alibaba, Germany-based skincare and personal hygiene giant Beiersdorf Group recently sent a team of researchers on a three-month trip to  China’s villages to learn about their hair-washing habits. Based on the information they collected, the parent company of brands like Nivea and Eucerin designed a unique shampoo for them.

“Even though rural regions constitute a small portion of our total revenue, we treat it as an important market, not merely a sale channel,” said John Zhang, general manager of Beiersdorf China. Zhang visited around 50 villages in China as part of the project.

Rural Taobao also conducts training sessions for service station managers to instruct them on quality customer service, Wang said.

 

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