Alibaba bets $717m on making rural farmers the crown jewel of their e-commerce empire 

Chinese e-commerce giant Alibaba just invested oodles of cash in a network and mom-n’-pop shops to expand their user base beyond cities.

April 20, 2018

Alibaba has invested $717.2m in Huitongda Network Co., a platform that provides e-commerce solutions in rural areas, after rival Pinduoduo pulled in a $3B round of investment earlier this month.

Since just about every consumer in a Chinese city who has ever bought anything already uses Alibaba, the 80k+ rural mom-n’-pop shops in Huitongda’s network are one of the last obstacles on Alibaba’s path to commercial dominance.

Farmers: the final frontier

Alibaba is an e-commerce kingpin in cities, but since the urban market is as saturated as an Instagram beach-pic, e-shopping increased just 17% in cities last year — compared to a 41% jump in rural areas.

Since 43% of Chinese consumers (600m people) live outside of cities, Pinduoduo’s 60%-rural user base gives them an opening to loosen Ali-B’s choke-hold on e-commerce.

But Alibaba’s fearless leader, Jack Ma, found a quick way to make friends with farmers by partnering with Huitongda, which already dishes out merch in 15k small towns across 18 provinces. 

Rural-urban divides in e-commerce are common

E-commerce saturates cities first then overflows into rural areas to expand the market. In India, half of all internet users will live in rural areas by 2020, and e-commerce giant Flipkart is aggressively pursuing rural customers to cement its position at the front of the e-commerce pack.

And, in America, metropolitan-mogul Amazon and backroads-baron Walmart are locked in a similar delivery war for the future of American commerce.

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