Amazon.com, Inc (NASDAQ:AMZN) has opened a store in Alibaba Group Holding Ltd (NYSE:BABA)’s Tmall store with the hope of reaching Chinese shoppers in the world’s second biggest economy, as reported today on BBC News.
By opening a store inside Alibaba’s Tmall, Amazon becomes Alibaba’s customer. The retailers and brands that operate inside the e-commerce site have to pay a commission to Alibaba every time a transaction is made.
The Amazon.com, Inc (NASDAQ:AMZN) store inside Tmall offers a limited number of product categories, such as women’s shoes, toys, imported food and kitchen equipment. In the toy section international brands such as Crayola and Lego can be found.
“Tmall has been a committed leader in providing quality products and services to consumers, and we continuously seek out partners who share the same passion. We welcome Amazon to the Alibaba ecosystem, and their presence will further broaden the selection of international products and elevate the shopping experience for Chinese consumers on Tmall,” said Candice Huang, a spokeswoman for Hangzhou, China-based Alibaba.
Tmall is key in Alibaba Group Holding Ltd (NYSE:BABA)’s success in China. It gives digital storefronts to major retailers across the world and has been a great commercial gateway to a growing middle class in China.
There are several big US companies that have storefronts on Tmall, including Nike Inc (NYSE:NKE) and Apple Inc. (NASDAQ:AAPL). In most cases, the companies use Tmall to sell their products to Chinese consumers.
Amazon has have difficulties to repeat its success with American consumers overseas. International sales made up 38 percent of the Web retailer’s revenue in 2014, compared with 48 percent in 2009. While Alibaba Group Holding Ltd (NYSE:BABA) mostly provides to businesses seeking to buy wholesale goods, Tmall is a portal for sellers seeking to market goods directly to Web shoppers in China.
Alibaba has made every move it takes to make it clear that it’s looking to expand its presence in the US. The US market has always been more welcoming of foreign companies than China. Just this January, Alibaba announced its new service, Alipay, its digital payment platform that was designed to make it easier for US companies to sell directly to Chinese consumers.
“China’s e-commerce industry is fast-growing and nobody wants to miss it,” said Yang Xiao of e-commerce services provider HC International. “Amazon wants to add an additional distribution channel in China.”
Amazon.com, Inc (NASDAQ:AMZN)’s international business is focused in the U.K., Germany and Japan, and the company has had trouble to increase sales its sales in China, where it has invested in building warehouses to ship merchandise.
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