In the face of increasing shareholder pressure, China’s ecommerce companies such as Alibaba and JD.com have started to invest to pursue growth in rural areas. This comes at a time when growth in urban areas have slowed to 17% (compared to 41% growth in rural areas).
Alibaba is investing 10 billion yuan to set up 1,000 county-level distribution centers over the next 3 to 5 years, which will be operated by third-party service providers. On the other hand, JD.com intends to run its own network of warehouses while outsourcing deliveries to third-party logistics providers.
According to analysts, despite the high growth rate in rural areas, deliveries to rural areas make up only 10 percent of parcels generated from Alibaba’s marketplaces.