Amazon has recently opened a store on Tmall, an Alibaba-owned online marketplace for Chinese shoppers. The move is an attempt by Amazon to increase sales and their reputation in the Chinese ecommerce market. Currently, the majority of Amazon’s business is gained from the US, UK, Germany and Japan with only 38% coming from international sales.
What is Tmall?
Tmall is a Chinese online marketplace which hosts store fronts for major retailers including Adidas, Nike and Apple who pay a commission based on sales to Alibaba. It is perhaps for this reason that Tmall haven’t objected to Amazon setting up shop on its marketplace.
Amazon is currently selling shoes, toys, food and kitchenware on Tmall. This is a more limited range of product categories than in it currently sells on its other platforms.
Ecommerce in China
If you can’t beat them, join them, seems to be the approach Amazon bosses have taken.
The Chinese ecommerce market is expected to grow beyond $1 trillion by 2018. With that in mind, it is not difficult to see why they have chosen to join forces with an arch-rival and increase their presence in the world’s number one ecommerce market, where web sales reached $449.12 billion in 2014.
The Chinese market has proved a difficult nut for Amazon to crack.
According to a report from iResearch, Tmall accounted for 56.7% of China’s business-to-consumer sales in Q3 of 2014. In comparison Amazon’s four-year-old Chinese site accounted for just 1.3% of sales transactions. One reason for poor sales may be the stringent regulations placed on foreign companies by the Chinese government.
Amazon v Alibaba
Alibaba does not currently sell its own products like Amazon does, instead choosing to provide a portal for organisations to sell its products. Alibaba was the biggest initial public offering ever in 2014, raising $25bn (£15bn).
Alibaba owner and China’s richest person Jack Ma, a somewhat quirky man, has gone on record that he sees Amazon as a partner and not a direct competitor. Jack Ma said, “we’re coming here to help a lot of small businesses, which I think a lot of things may need to be done. It’s not a competition [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][with Amazon]”.
Tmall welcome Amazon
An Alibaba spokeswoman told CNET , “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 products and elevate the shopping experience for Chinese consumers on Tmall.”
One area where Alibaba is looking to take Amazon on is cloud services, with the company recently announcing the opening of a data centre in Silicon Valley.
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