JD cultivating rural customers

By Meng Jing (China Daily) Updated: 2014-07-18 07:17

An advertisement for e-commerce retailer JD.com Inc in Shanghai. Yan Daming / For China Daily

Online shopping giant shifting attention from top-tier cities to other regions, reports Meng Jing

After raising $1.78 billion in a high-profile initial public offering on Wall Street in May, e-commerce giant JD.com Inc is eyeing China's vast rural areas for growth potential.

In a recent post on Sina Weibo - a Twitter-like microblogging site - the second-largest e-commerce player in China said it can be both international and rural, as reflected in two pictures it posted.

One is the huge screen in New York's iconic Times Square announcing JD's IPO. The other shows the company's promotional slogan painted on the wall of a house in a remote village. It reads: "How much you earn depends on how hard you work; how much you save depends on how often you shop on JD."

JD.com campaign nets 100% rise in orders

The ad is one of JD's latest strategies to promote itself to hard-to-reach rural residents. As the online shopping market in large cities matures, the large untapped market in lower-tier cities has emerged as a new gold mine for Internet retailers.

Consumers in small cities are active shoppers, and JD has had to act aggressively, said Shen Haoyu, chief executive officer of JD's e-commerce business unit.

Since the end of 2013, JD has painted its ads on more than 8,000 walls in 145 cities. In addition, to raise awareness of JD, the Beijing-based company has three customized buses it sends out to more than 100 cities to showcase its products and services to local residents.

According to Shen, even without the aggressive promotional moves, JD's sales growth in third- and fourth-tier cities has significantly outpaced sales growth in major cities.

Besides JD, other big names such as Baidu Inc and Taobao - the online market-place owned by China's e-commerce giant Alibaba Group Holding Ltd - have also created wall advertisements in lower-tier cities.

Rapid urbanization and increased spending by residents have made lower-tier cities the new engine that drives domestic consumption, said Yao Yang, head of the National School of Development at Peking University, at a forum at Alibaba's head-quarters in Hangzhou earlier this month.

According to the Alipay Annual 2013 China Spending Report released in January, consumption growth is gradually shifting from the wealthy coastal regions, such as Shanghai, Zhejiang and Jiangsu, to the poorer but rapidly growing inland provinces.