As more of the world becomes connected to the Internet, a greater number of people have access to e-commerce websites. E-commerce is now expanding to areas of the world that never before had Internet access – like certain parts of China. Still, many rural parts of China lack the infrastructure to provide people with access to the Web. According to the Cheung Kong Graduate School of Business Knowledge, e-commerce giant, Alibaba, is going to invest $1.63 billion into infrastructure to try to bring more people online and deliver goods they purchase.
Alibaba's investment should pay off over time. The Chinese online retail giant estimates that the rural market will be worth somewhere around $74 billion, according to Quartz. If the rural population of China can be brought online and starts making e-commerce purchases, it would have an effect on online shopping worldwide. China, which already has the largest amount of e-commerce shoppers in the world, will add several million more as internet access becomes more available.
What companies are reaching out?
Alibaba and JD.com, the two largest e-commerce companies in Asia, are leading the charge to get people in rural areas of the world online. In addition to Alibaba's investment, JD.com is doing some work of their own by partnering with Grameen Trust to provide rural people with loans and other banking services. Not only are these companies encouraging people to buy online, but they're also encouraging them to sell goods and create online stores, according to Financial Times.
This has led to a dramatic increase in the amount of people who are interested in starting online stores to sell their goods. There are even classes available – usually taught by other rural business owners – to show others how to get into the e-commerce business.
"There's basically no expense – no expense in advertising, no expense in employment, the owner can do all of it himself, at most with his wife," said Liu Yuguo in Financial Times. Liu is the owner of Ku mei jiao, a cashmere sweater and fabric store, which provides goods to over 400,000 customers.
What are the challenges?
While Internet connectivity and infrastructure pose the biggest challenges for many rural communities, there is also the question of payment. Many of these rural communities new to e-commerce don't have access to payment processing services like the rest of the world does. While primarily, they are selling goods to people who used the same currency, this isn't always the case. As the rural market expands, more forms of electronic payments will have to be offered.
Brought to you by PacNet Services, your one-stop global payment processing solution.