[050815.EN.BIZ] Unilever Uses Alibaba to Reach Into Rural Online China Market

UNILEVER has achieved modest growth in China thanks to e-commerce, and especially through its partnership on the Mainland with e-commerce giant Alibaba.

Their relationship dates back to 2011 when Unilever opened its first a virtual store on Alibaba's Tmall online marketplace.

With the latest agreement, their relationship has been expanded to focus on Chinese consumers based in rural areas. This agreement will include working with Alimama, Alibaba's online marketing platform, which will advertise to consumers through online-offline retail integration.

Alibaba's Tmall Global will provide cross-border e-commerce and expand distribution channels as well as cooperation between the partners in terms of data analytics and supply chain management, reported UK's Transport Intelligence.

The Chinese rural market is one that Alibaba has targeted for further growth. According to Business Insider, ten per cent of goods purchased on Alibaba owned marketplaces were delivered to rural areas in the first quarter. And this market, which represents 44 per cent of the total Chinese market, is growing fast.

Business Insider further highlighted that Alibaba is planning to spend CNY10 billion (US$1.61 billion) to establish 1,000 county offices and 100,000 village offices across rural China within three to five years. These facilities will deliver goods purchased through Taobao.

The Unilever and Alibaba partnership may prove a winning solution to attract consumers in rural areas by focusing on providing necessities such as food products and toiletries. In terms of delivery, it appears China Post Group may be among those to benefit.

According to Alibaba's logistics arm, Cainiao, it is working with partners including the China Post Group to build a massive rural delivery network. State-owned Xinhua News Agency has indicated that China wants to enable delivery to every village by 2020.

The news comes as Unilever reported that first half net earnings dived 11 per cent against the previous year to EUR2.67 billion (US$2.92 billion) on 2.9 per cent higher sales at EUR27 billion (adjusted for currency fluctuation) due to "weak?consumer demand and the fact that "emerging markets continue to be subdued,?the company said, a concern given that half of its sales come from emerging markets.

Source : HKSG.