Finance:Rural businesses in the age of e-commerce

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Rural businesses in the age of e-commerce refers to major shifts in the branch's pre-existing approaches. Rural businesses have traditionally been isolated from the larger markets due to geographical, logistical, and infrastructural limitations. However, with the advent of e-commerce, the dynamics of doing business in rural areas have undergone significant changes.[1][2]

History

Before the e-commerce boom, rural businesses primarily catered to local markets with limited access to urban or international customers. Their growth was often hampered by restricted access to resources, transportation difficulties, and limited market awareness.[3]

E-commerce influence

With advancements in internet infrastructure, smartphones' proliferation, and the increased reach of e-commerce platforms, rural areas have gradually been integrated into the global market. Platforms such as Alibaba, Amazon, and regional counterparts have played pivotal roles in providing rural businesses a gateway to global customers.[3][4]

Advantages to rural businesses

E-commerce provides some advantages to rural businesses:[5]

  • Access to larger markets: E-commerce allows rural businesses to tap into national and international markets, increasing their potential customer base.
  • Reduced operational costs: Digital platforms reduce the need for physical storefronts, helping save costs.
  • Digital payments: E-commerce facilitates online payments, thus reducing dependency on cash transactions.
  • Direct interaction with consumers: Businesses can directly engage with customers, understand their preferences, and tailor products accordingly.
  • Branding and digital presence: Even small businesses can establish brand identities and foster customer loyalty through online interactions.

Challenges for rural businesses

There are some challenges for rural businesses in the e-commerce market:[6]

  • Logistical issues: While selling online may be feasible, shipping goods to far-flung areas or receiving raw materials can still pose challenges.
  • Limited digital literacy: The lack of familiarity with digital tools can be a barrier to fully leveraging e-commerce.
  • Competition: Exposure to a global market also means competing with a larger pool of businesses.
  • Infrastructure: Despite improvements, internet connectivity can still be inconsistent in many rural areas.
  • Cultural barriers: Adopting new business methodologies might face resistance due to traditional business practices.

Taobao villages

Taobao villages are rural Chinese villages where the local economy has developed to focus extensively on the e-commerce platform Taobao.[7](p112) Alibaba's research division defines Taobao villages as those in which (1) businesses are located in an administrative village in a rural area, (2) the village's annual e-commerce revenues exceed RMB 10 million, and (3) the village has either an excess of 100 active online shops or active online shops account for more than 10% of village households.[7](p112)

References

  1. ↑ Xubei, Luo; Chiyu, Niu (2019). E-Commerce Participation and Household Income Growth in Taobao Villages. World Bank Group. https://documents1.worldbank.org/curated/en/839451555093213522/pdf/E-Commerce-Participation-and-Household-Income-Growth-in-Taobao-Villages.pdf. 
  2. ↑ 孙迟. "China sees rapid development in rural e-commerce". https://www.chinadaily.com.cn/a/202308/15/WS64db6169a31035260b81c4ce.html. 
  3. ↑ 3.0 3.1 Cassetti, Luca; Delberghe, Christel (2022). European E-Commerce Report 2022. https://ecommerce-europe.eu/wp-content/uploads/2022/06/CMI2022_FullVersion_LIGHT_v2.pdf. 
  4. ↑ Sánchez-Acevedo, Miguel A.; Álvarez-Velásquez, Israel; Sabino-Moxo, Beatriz A.; Márquez-Domínguez, José A.; Morales-Salgado, Ma. del Rocio G. (2020). Rural Economy Activation Through E-Commerce: Challenges and Opportunities. IGI Global. 
  5. ↑ Bowen, Robert; Morris, Wyn (2019). "The digital divide: Implications for agribusiness and entrepreneurship. Lessons from Wales". Journal of Rural Studies 72: 75–84. doi:10.1016/j.jrurstud.2019.10.031. ISSN 0743-0167. http://dx.doi.org/10.1016/j.jrurstud.2019.10.031. 
  6. ↑ Esteban-Navarro, Miguel-Ángel; García-Madurga, Miguel-Ángel; Morte-Nadal, Tamara; Nogales-Bocio, Antonia-Isabel (2020-12-05). "The Rural Digital Divide in the Face of the COVID-19 Pandemic in Europe—Recommendations from a Scoping Review". Informatics 7 (4): 54. doi:10.3390/informatics7040054. ISSN 2227-9709. 
  7. ↑ 7.0 7.1 Hu, Richard (2023). Reinventing the Chinese City. New York: Columbia University Press. ISBN 978-0-231-21101-7. 



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