Amazon China will open a store on Tmall, the successful Alibaba subsidiary, in April. It will offer a “select range” of about 500 goods in what it stresses is a pilot program.
Alibaba, with Tmall, Taobao and other portals, account for more than 70 per cent of the online market in China, a market in which Amazon has struggled since 2004 to gain any critical momentum.
“We welcome Amazon to the Alibaba ecosystem and their presence will further broaden the selection of products and elevate the shopping experience for Chinese consumers on Tmall,” an Alibaba spokeswoman said in a statement.
Chinese have an insatiable thirst for foreign made and marketed goods, but selling to them through eCommerce platforms other than local ones has proven a virtually impossible challenge for companies outside China. If you don’t open on Tmall, or a smaller rival site, it’s almost impossible to achieve a sustainable volume.
That reality is well illustrated by the fact that Amazon is the fifth largest player in China’s eCommerce market, yet its market share is a miniscule 1.4 per cent.
Analysts surmise Amazon’s move is intended to boost visitor numbers to its own site rather than any prelude to a merger, by increasing local brand awareness.
“China’s e-commerce industry is fast growing and nobody wants to miss it,” said Yang Xiao of eCommerce service provider HC International. “Amazon wants to add an additional distribution channel in China.”
He suggests the strategy may be aimed more at gaining traffic and volume away from JD.com, a smaller rival to Tmall with a similar business model to Amazon.
“It’s simple game logic – an enemy’s enemy is a friend,” Yang said. “Amazon is more likely targeting JD.com and it’s a win win situation for Tmall.”