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.
Get the 5-minute roundup you’ll actually read in your inbox
Business and tech news in 5 minutes or less