The accepted wisdom in China’s retail market used to be that rural consumers were too poor, too dispersed  and too far away to engage with. But not anymore.

While rural consumers have leapfrogged technologies to catch up with their urban peers,  they still lack the same range of shops and products, resulting in a push to  shop online, especially via smartphones. And they are now even selling the products of their labour directly to urban consumers online.

As rural consumers were just beginning to get noticed by China’s retailers, along came online shopping giant Alibaba to accelerate this development by launching its first Ali Chinese New Year Shopping Festival – focusing on the rural market.

Coming so close behind the massive November 11, 2015 Single’s Day 24-hour shopping festival, one might imagine China’s consumers were all shopped-out. Yet, between 17 and 21 January 2016, Alibaba sold 2.1 billion items, including many international products direct from overseas (from 5,000 international brands in 25 countries), straight to consumers all over the country, including rural families. Not only can domestic companies now reach remote rural villages, so too can New Zealand seafood producers!

The catalyst is m-commerce: 70% of orders during the CNY shopping festival were made using a mobile phone. Nearly one third of rural consumers are already online, and are catching up quickly.

99% of tier 1 to 3 urban consumers already own smartphones, up from 84% in 2013.

According to the exclusive consumer survey conducted for Mintel’s Mobile Phone and Apps China 2014 report, 99% of tier 1 to 3 urban consumers already own smartphones, up from 84% in 2013. Growth of smartphone ownership has been fastest in lower tier cities and provincial towns, and among those with personal monthly income below RMB 5,000.

And it wasn’t just the usual clothes and food items being purchased. Rural shoppers were also buying smart TVs, kitchen appliances, air conditioners, baby products and cosmetics. They also spent a lot more money. The average order value placed via the 12,000 or so Taobao Rural Service Centers went from RMB 121 in December 2015, to RMB 262 during the Ali Chinese New Year shopping event – an increase of 117%.

Rural consumers also made money. Many rural products sold well in urban areas, as the event created a two-way flow of trading. Be it eggs or chilli sauce, apples or black pork, rural producers sold to urban consumers with ease.

Logistics was always the excuse for retailers not going rural. It is true that the delivery logistics did not exist in most rural areas until recently. However, Alibaba has been investing in distribution infrastructure, along with its competitors. The result is that rural consumers are now within easy reach.

But it is not just about logistics. Retailers and brands now need to learn who these rural consumers are, how they choose to buy, and what they aspire to. Out “in the sticks” is where the next phase of consumer research in China really begins!

Matthew is Mintel’s Director of Research for Asia-Pacific. He looks at the development of China’s consumer lifestyles and the impact on Chinese people and society. Having previously co-founded research company Access Asia, Matthew has worked exhaustively on trying to make sense of the myriad of contradictions in China’s economics and statistics on consumer markets across China.

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