There is huge potential in a less developed area in China. The customer base consists of more than 600 million internet users with a monthly income of RMB 1k to 8k. It has a massive retail market. The total retail sales in lower-tier cities and towns amount to RMB 15 Trillion in 2020. There is rapid penetration of e-commerce. The rural e-commerce GMV grew 5 times from 2015 to 2020.
This segment of Alibaba’s business focuses on manufacturer-to-consumer (M2C). Refer below for the traditional distribution network.
Alibaba’s Taobao Deals work on multi-day delivery. Taocaicai provides a next-day self-pickup service. Both link manufacturers to consumers directly. Taobao Deals or merchant warehouse will store the products from manufacturers and deliver or pick-up directly by the consumers.
Taocaicai focus on high purchase frequency items that perishables and FMCG. Both Taocaicai and Taobao Deals provide value-for-money goods to less developed areas. They have more than 270 million Annual Active Consumers for Taobao Deals and Taocaicai. It has achieved a year-on-year increase of 200% for twelve months ended September 2021. There is a 400% year-on-year increase in daily orders.
Taocaicai has achieved 40% coverage of counties and townships in China. They leveraged Cainiao’s capabilities in rural areas through its logistics network. Taocaicai’s average number of SKUs sold has increased by 800% within the last 6 months, comparing September and March 2021. In terms of GMV, there was 530% increase in the last 6 months dated till September 2021.
Taobao Deals capitalize on more than 30 warehouses close to manufacturing hubs. This increases efficiency and lower fulfillment cost. The fulfillment is executed by Taobao Deals. Taobao Deals have more than 240 million Annual Active Consumers. The Total Order Growth achieves more than 290% year-on-year. There are 1.1 billion M2C orders for direct-from-factory products for twelve months ended September 2021. There are 180 million orders of agricultural products for twelve months ended September 2021.