The online shopping industry is just around 10 years old in China, but its total turnover reached 2.8 trillion yuan ($450 billion) in 2014, exceeding that of the US and making China the largest online retailing market in the world. In recent years, however, the booming market has seen stronger competition and some companies have found that cooperating with its competitors is the only way to develop.
This month, two e-commerce giants Alibaba Group and Amazon started working together. Amazon's official flagship store on tmall.com was launched on March 6 for a trial period and features a wide selection of imported food, clothing, toys, kitchenware and more.
All of Amazon's products on tmall.com come from Amazon's direct sourcing business model, meaning the products are purchased overseas by the company's own teams. By doing this, distribution channels abroad can be narrowed and the costs can be reduced. This is Amazon's advantage and what tmall.com is particularly interested in. tmall.com agreed that by cooperating with Amazon, consumers will be able to access more international products from overseas at home, according to a report from news portal huanqiu.com.
Amazon has selected thousands of products that are currently sold on Amazon China's own online store z.cn for sale on tmall.com, according to Xinhua News Agency. The vice president of Amazon China Niu Yinghua said in a media interview that Amazon hopes consumers can always access products from around the world anywhere, anytime. "Opening our flagship store on tmall.com is meant to widen and diversify our sales channels," Niu said.
Although some believe that with the opening of the Amazon store on tmall.com, the visitor rate of z.cn will drop, Amazon does not see it in this way. A spokesperson of Amazon China Zhang Saying said in Entrepreneur magazine that there are more than a million different imported products on z.cn, and only a small portion of them are available in its Tmall store.
Amazon is not the only e-commerce company that has opened an online store on tmall.com. Dangdang.com, the leading Chinese B2C e-commerce bookstore, also opened its online store on tmall.com in 2012. Following that were other renowned companies, including the large domestic electronics seller Gome which opened its online store on tmall.com in April 2013.
It is believed that Amazon's entry is more or less a must for a breakthrough of its business, which is now stagnant in the growing competitive e-commerce market in China. But whether or not Tmall or Amazon will benefit in this cooperation is still unclear. Some evidence suggests that this cooperation will benefit Amazon more.
Although Amazon's warehouses are the second largest in scale after China's e-commence enterprise JD, its sales volume ranked eighth in the third quarter of 2014 in China, according to the market research firm iResearch's statistics in 2014.
When Amazon entered the Chinese market via purchasing the e-commerce enterprise Zhuo Yue in 2004, most of its counterparts including Alibaba were less well-known compared with Amazon. A decade later, however, Alibaba and JD are dominating China's online shopping industry, and Amazon China is trying to catch up.
