Alibaba and JD.com Battle for the Next Big Emerging Market: Inland China (Quartz)
QUARTZ has a lengthy article about how China’s two biggest e-retailers, Alibaba and JD.Com Inc (NASDAQ: JD) who have built multi-billion-dollar businesses based around e-commerce and the online shopping craze that’s already swept China’s rich coastal cities over the last decade, are eying the next big emerging market: Inland China.
While the biggest volume of online retail sales still comes from the early-adopting and wealthy coastal provinces such as Guangdong, Jiangsu and Zhejiang, the e-retail sector’s growth is fastest in smaller inland provinces with the top three being Ningxia, Qinghai and Guizhou where disposable incomes are surging.
Moreover and outside the 35 biggest cities like coastal Shanghai and provincial capitals like Chengdu, China still has 125 other cities whose populations exceed one million residents along with many hundreds of more cities with populations of more than 500,000. Brick-and-mortar shopping options in these smaller cities are much scarcer than in major coastal cities – limiting the quality, safety and selection of available products for Chinese consumers.
However and as QUARTZ notes:
…freight infrastructure and well-trained personnel in these promising new inland markets are also much scarcer. Logistics networks are fragmented and unreliable, smothered by thick layers of bureaucracy. Parcel delivery services must obtain courier permits from postal bureaus in each province, says JD.com’s prospectus, as well as separate permits for cross-province delivery. They must also earn road freight permits from each provincial-level transport ministry.
The QUARTZ article then goes into some detail about the strategies and investments Alibaba and JD.Com Inc are making to tap into the massive e-commerce opportunities that China’s vast inland areas offer.
To read the whole article, Alibaba and JD.com are battling for a huge emerging market: poorer, inland China, go to the website of QUARTZ.
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