Online Shopping Grows In Popularity In Rural China

Online shopping has caught on in unlikely places. Inhabitants of some rural regions in China, despite remaining by most measures impoverished, have been taking up shopping eagerly.

Stores and malls are sparse in rural regions like southern mountainous Guangxi Zhuang Autonomous Region, while the number of people getting online for the first time is great. That adds up to a surge in online shoppers that tops the rate of expansion in the rest of the country, the Financial Times reported on Wednesday.

Online spending in Guangxi grew 156 percent between 2012 and 2013, the fastest of any region in China, according to a new report from Alipay, the e-payment platform of Alibaba, China’s largest e-commerce group by sales.

Following on the heel of Guangxi is Henan province, which used to supply migrant workers for heavily industrial regions like Guangdong but now has become a manufacturing hub in its own right.

“Seven out of 10 of the areas where online spending is growing fastest are less-developed provinces,” the Alibaba report said, citing the increasing availability of smartphones as a key factor driving Internet spending there.

This is significant, even though wealthier provinces – like coastal Guangdong, Zhejiang and Jiangsu -- still spend more overall, as retailers will increasingly be able to penetrate remote regions without having to set up physical stores, which is expensive and logistically difficult, according to the Financial Times.

Apple Inc. (NASDAQ:AAPL) recently opened a store on Tmall.com, a flagship online shopping platform under Alibaba’s banner, along with its 10^th brick-and-mortar store, a strategy that brands can easily copy.

Nonetheless, logistics remain a challenge for online retailers, as China’s infrastructure, especially to more remote regions, is still under development. Jingdong.com, one of Alibaba’s main competitors, can deliver to shoppers in Shanghai in just a few hours, but delivering to remote regions like Tibet and Inner Mongolia takes more sophisticated warehouses and trucking networks than currently available.