In order to capture more shares of Chinese markets, Amazon.com is all set to start a store on Alibaba Group’s site. The store is going to be operated as a pilot project and the store will start functioning next month on Tmall.com, Alibaba Group’s website. While wholesale based buyers are catered by Alibaba, Tmall is portal to market goods directly to online shoppers in China. The store will be focused on the selling of imported goods.
The e-commerce giant of the United States wants to expand its presence in China, world’s second largest economy. Amazon already operates e-commerce website in China, but it only hold’s share of 0.8% in China’s online retail market as per the reports from Analysys International, market research firm in Beijing.
On the other hand Alibaba runs three quarters of the online retail market for its Tmall and Taobao, marketplace websites. The group has 265 million monthly active users.
E-commerce in China is estimated to reach at US$1.01 trillion by 2018, more than double from its size in 2014. Amazon definitely wants to fight for a bigger share despite fierce competition from domestic players in Chinese markets. Domestic players often offer heavy discount, and promotional deals. The strategy is to create more choice for Chinese consumer by importing shoes, toys and kitchenware. This will also elevate the overall shopping experience on Tmall.com.
Overall Amzon’s business is strong in the markets of United Kingdom, Japan and Germany internationally. These markets gave only 38 percent of revenue to Amazon. Till now the company only built warehouses to ship merchandise in China. Now Amazon has formed ‘cross border e-commerce platform’ at a free trade zone in Shanghai. This is going to bring millions of product selections.
Meanwhile Alibaba Group has welcomed this development. Established brands like Samsung, Apple and Costco wholesale have been selling goods on Tmall.com.