China’s rural areas have added three million new internet users in the first half of this year, rising to 26.3% of its total online population - this growth is boosting and is benefiting from this demographic's e-commerce potential.
This is according to figures from the China International Electronic Commerce Centre, reported by the South China Morning Post, which depict the changing makeup of the country’s 854 million-strong online population.
Growth in China’s under-regarded rural internet use has, in turn, pushed up online sales among these users by 21% to represent an actual market of $109.6 billion (777.1 billion Yuan), well above the national growth rate.
Though this is a major opportunity, the way for large e-commerce players – and by extension big brands, both global and national – to capitalise on rural consumers is by improving infrastructure and delivery.
Alibaba, the e-commerce giant, for instance, is working to expand its Rural Taobao initiative, which has a target of 150,000 villages across the country in two years’ time. As much as 70% of growth in new annual actual users is, according to full year results, coming from rural areas and lower-tier cities.
However, analysts warn to think with caution. Speaking to the SCMP, Chen Tao, a senior analyst at Analysys notes that it’s “a little bit early to say that China’s e-commerce battlefield is moving to rural China,” but goes on to note how some of the country’s largest e-commerce players are working toward connecting rural communities and establishing an important foothold in this largely untapped market.
“It also takes time to educate rural residents to accept e-commerce services as most of them are new to online. There is still a long way to go to popularise online shopping in rural China,” Chen adds. However, lower incomes in rural areas create a limit on the potential market – though it is probable that greater connectivity and infrastructure will affect this aspect.
According to Carol Fung of JD.com, customers from rural and lower-tier cities tend to create demand for particular categories: baby and maternal, home appliances, digital, and luxury products.
Sourced from South China Morning Post