The Chinese rural market represents almost 50% of the population - here's how Alibaba intends to capture that untapped opportunity

Alibaba divulged a number of statistics at a recent summit that help inform its latest efforts to expand its presence in China's rural commerce market.

• Rural China represents a large minority of the country: 600 million Chinese citizens live in rural areas, equating to about 44% of the country's total population.
• But it's still a largely untapped region for e-commerce: Under 10% of goods purchased on Alibaba's China-based online marketplaces were sent to rural areas in Q1 2015. And there were only 77 million rural online shoppers last year, up 40% year-over-year (YoY).
• Mobile commerce is surging though: Rural-originated mobile commerce volume on Alibaba's Tmall.com, Taobao Marketplace, and Juhuasuan jumped 250% to $32 billion in 2014.
• Rural areas are driving the growth in mobile commerce: 75 of China's top 100 counties for mobile shopping volume growth were rural in 2014.

Alibaba is establishing a physical network to tap into this demographic. Alibaba is seeking to build 101,000 local fulfillment centers throughout rural China in the next three to five years that will deliver goods purchased through Taobao. At the summit, Alibaba stated that so far it has built 63 county-wide centers and 1,803 village-wide ones.

With this investment, Alibaba is betting that mobile commerce will continue to balloon in rural China. If Alibaba successfully builds out a parcel network in these areas, it could establish familiarity among rural customers before its competitors do. This would help the company build loyalty among rural customers, giving it a steady new stream of shopper activity.

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