China Focus: "Impulsive" rural consumers targeted by e-commerce players

Less than a generation ago, rural Chinese needed to wait until market day, once or twice a week, to go shopping. Now they simply go online.

The Internet lets rural Chinese make purchases beyond the confines of their geography. On the Singles' Day shopping spree this year, rural consumers bought 70 percent of large freezers and 50 percent of widescreen televisions and drum washers sold on JD.com, according to a report released by the company in December.

Apple was the top selling mobile brand in rural areas, followed by Huawei and Xiaomi, according to the report. For electronics, rural consumers made the same choices as those living in cities.

Cyberspace has granted rural residents the same access to bargains as people in the city, said Li Yongjian, an online economy expert at the Chinese Academy of Social Sciences.

"China's rural areas will generate huge potential in consumption in the future," Li said.

China has 191 million rural Internet users as of June, accounting for 27 percent of all web users, according to a China Internet Network Information Center report released in August.

But e-commerce in rural areas is dependent on network penetration and whether people have spare money to spend.

Half of all online transactions made by China's rural residents in 2015 were in coastal regions such as Jiangsu, Zhejiang, Shandong and Guangdong, only 1 percent came from remote provincial regions such as Qinghai, Tibet,and Gansu.

Ministry of Commerce statistics in 2015 showed the value of China's rural online market almost doubled year-on-year to 353 billion yuan (51 billion U.S. dollars), and is expected to almost double again this year.

People in the cities joke that Singles' Day ought to be known as the hand-chopping festival, that is that only by chopping their hands off can they prevent themselves from shopping too much. However, data suggests that rural consumers are even more impulsive with spending than urban shoppers.

Forty-nine percent of rural consumers, in contrast to the overall average of 36 percent, are willing to buy types of items online they have never bought before, and they are less susceptible to negative online reviews and more willing to try out new things, according to the report.

Huge opportunities make the rural market a new battlefield for e-commerce players. As of 2015, e-commerce giants including Taobao, JD.com and Suning have opened 250,000 online service centers in 1,000 counties across China.

Alibaba aims to further invest 1.6 billion yuan in three years to set up 100,000 Taobao village centers, while JD.com has enrolled over 300,000 extension agents to teach villagers to shop online.

Mobile devices play a vital role in motivating rural consumers to go online. The proportion of online transactions made through handsets in rural areas is 5 percentage points higher than in first-tier cities. And when any new trend appears, rural consumers follow those living in cities.

Local delicacies, for example, are in vogue among online consumers in both rural and urban areas, despite white-collar workers still being the main online consumers.

The major hurdle is delivery.

"Our farmers this year wanted to sell fresh goji berries online at 10 yuan per jin, but the delivery fee costs 80 yuan," said Guo Jing, who is in charge of a local e-commerce service center in northwest China's Ningxia Hui Autonomous Region. "Fresh goji berries go bad easily and must reach consumers within three days; only one company was willing to take our orders."

China has close to 95,000 delivery stations in rural areas, covering 70 percent of its towns and counties. But there are still villages hard to reach, and the cold-chain logistics system that is essential to transport fresh food is lagging behind market demand.

"E-commerce in rural areas should concentrate on personnel training and brand building. They should also develop a comprehensive tracing system to guarantee good produce quality and delivery services," said Mo Wenjian, who runs an online company delivering fresh food from northeast China's Jilin Province. "Otherwise, it will be difficult to continue to promote sales and reach demanding customers." Endi