Rural E-commerce: Rejecting Plausible but Fallacious Views

In the process of engaging in rural e-commerce, we often hear some plausible but fallacious views. They sound reasonable at first, but on closer thought, they feel hollow, and when actually implemented, they turn out to be far from reality. Analyzing the reasons, there are generally three: first, using urban e-commerce thinking to guide rural e-commerce; second, failing to objectively recognize one's own capability limits and blindly pursuing grandiosity; third, not carefully studying the market and imagining user needs on a whim. In a nutshell, although they claim to be user-centric, they are actually self-centric, not truly "sleeping with users" to understand them and the market.

The following discusses the most representative "plausible but fallacious" statements, aiming to express our real experiences in the mud, as a few mud-stained bricks, hoping to attract jade.

1 The value of a platform lies in integrating resources; the more resources integrated, the stronger the platform. Therefore, platforms need to do addition, constantly expanding categories and services.

We believe that since the internet will become a basic infrastructure in the future, so-called "internet platforms" will also become ubiquitous, but their types will be diverse. There are large and comprehensive ecological platforms (like BAT), small and beautiful specialized platforms (like Meilihui, Chuchujie, and Helijia), and obscure infrastructure platforms (like SF Express, RRS, and Cainiao). The key is that everything is user-centric; what users need will exist. Therefore, sometimes not only should you not do addition, but you should also do subtraction, fully considering your own capabilities and resources, focusing your direction, rather than seeking to be big and comprehensive. In this way, although it looks small, you can do it deeply, and still achieve considerable scale and a beautiful model.

2 Farmers' purchase of consumer goods is basically smooth, and it is agricultural products entering the city that the government, society, and ordinary people care most about, so the key to rural e-commerce is agricultural products entering the city.

First, there are significant problems with farmers purchasing consumer goods. In terms of SKU count, urban convenience stores have about 2.5 to 3 times more SKUs than rural convenience stores, meaning at least half of the goods are not available in rural convenience stores. Farmers need to go to towns or even counties to buy such goods. In terms of service cost, due to low average transaction value per rural store, the cost of delivering goods to villages remains high, with visit-and-delivery costs alone accounting for 7%-8% of sales, far higher than in urban markets. These two reasons interact and reinforce each other, making the rural market small in scale, scattered in distribution, chaotic in order, and weak in competitiveness. It is indeed not easy for farmers to have sufficient choices to buy suitable goods.

Second, the current economic situation requires strengthening the distribution of consumer goods to rural areas. From the perspective of rural consumption, farmers' per capita disposable income and consumption are growing rapidly, and they are experiencing consumption upgrading. In the FMCG market, rural growth has already surpassed urban growth. From the perspective of urban industrial production, a large number of enterprises are struggling, the original market is sluggish, new markets are weak, and signs of overcapacity are quite obvious. The wave of store closures by traditional retail giants such as Walmart, Carrefour, and RT-Mart is a typical manifestation. Therefore, we see that on one hand, the vast rural market is launching a massive consumption upgrade, and on the other hand, production enterprises urgently need to find markets that can absorb a large amount of excess capacity. Isn't the distribution of consumer goods to rural areas an effective solution?

Third, agricultural product sales also require consumer goods to go to the countryside. Based on our investigation, we believe that there are three major difficulties for agricultural products entering the city: first, the standardization of agricultural products; second, the sales channels for agricultural products; third, the distribution cost of agricultural products. Therefore, by building infrastructure (warehousing, distribution, personnel) through the distribution of consumer goods to rural areas, and basically amortizing the operating costs of the infrastructure, while carrying out platform-based operations, and cooperating with primary agricultural product processing enterprises to achieve agricultural product sales through B2B or B2C models, the above problems can be effectively solved.

From the above analysis, it can be seen that the way out for rural e-commerce lies in urban-rural integration and two-way logistics, not just agricultural products entering the city. In fact, relevant national documents have already pointed out the direction: first, industrial goods and agricultural materials going to the countryside; second, agricultural products entering the city; third, infrastructure construction. It is just that grassroots units overemphasize agricultural products, leading to a one-sided view.

3 Agricultural products entering the city are only effective if they cross regions.

First, in the consumption of agricultural products, the local market accounts for more than 60%. Only focusing on external markets, or even believing that only cross-regional sales can solve the problem of agricultural product sales, is to put the cart before the horse.

Second, blindly pursuing cross-regional sales may look lively, but it increases many costs (the logistics cost of goods in China is optimistically estimated at 17%-18%, pessimistically over 25%, and cross-regional transportation of agricultural products is even worse). It is only suitable for a small number of high-quality, high-price, high-value-added "three-high" agricultural products. And for such products, sales are not a problem in the first place; rather, it is the sales of bulk ordinary agricultural products that have not been resolved for a long time.

Third, from the perspective of agricultural producers, as long as products can be sold and income increased, regardless of black cat or white cat, it is a good cat. Therefore, compared with "agricultural products entering the city," "agricultural products leaving the village" may be more accurate. As long as sales volume can be increased and costs reduced, whether sold to local or external markets may not be too important.

4 The internet is user-centric, so whether B2B or B2C, the initial stage must rely on subsidies to attract users and fans.

B2B users are operators, and their core need is profitability. B2C users are consumers, and their core need is convenience, with discounts as an additional need. Therefore, through discounts and convenient user experience, some C-end users may form habits and increase stickiness. In contrast, facing "profit-seeking" B-end users, often once subsidies stop, they will leave you and go to platforms with better discounts or larger subsidies. This has nothing to do with whether users are good or bad, but is entirely determined by the core needs of users. Therefore, if a platform only imitates mechanically, using B2C thinking to guide B2B business, simply copying market models like Didi Chuxing, and frantically engaging in subsidy wars, it will be a vicious cycle from the start and eventually lead to a situation where all parties lose.

Source: Lanli Jiandui -END-

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