Alibaba, rural consumers and the last mile

China's leading ecommerce company, Alibaba, may be dealing with some growing pains, but there is no question that it has been successful in expanding its size and reach.

One factor in this success is Alibaba’s Taobao Village project, which is bringing rural areas of the country access to online shopping. In October 2014, Alibaba announced plans to invest 10 billion yuan in logistics, hardware, and training to push its e-commerce model into 100,000 villages in the next three to five years. It’s opening warehouses and working with delivery companies and local officials.

A Bloombergarticle from last August profiles how the project works in Yunnan. The project is centered on the Taobao rural service center -- often located in local convenience stores -- where villagers can access a computer and Internet connection to browse and order goods. Their purchases are then delivered through the same service center, a convenience for the customer, and a benefit to the shop owners. Alibaba provides computers and monitors, ensures timely delivery of purchases, and trains villagers to serve as its representatives in the centers.

This is happening against a backdrop of shifting demographics and economics in China. More Internet-savvy migrant workers are returning home, and Alibaba's success is even attracting competition. JD.com planned to open more than 500 rural service centers by the end of 2015.

According to Bloomberg, the companies’ rural forays fit in with government policy. Beijing wants to boost household consumption as a share of gross domestic product, so China’s government will “support migrant workers, college graduates, and army veterans who wish to return to their rural home towns to start new businesses” and “encourage e-commerce in rural areas” the Xinhua News Agency reported last June.

We are interested in how Alibaba and its competitors are trying to solve the last mile infrastructure and talent issue in the countryside by working with local businesses and government, while attracting Internet-savvy migrant workers to return to their homeland.

Image source: Alibaba.com

-- Yichen Rao 饶一晨

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