Bloomberg on the newly launched Amazon Prime in China:
Chinese Prime subscribers get free shipping on orders exceeding 200 yuan ($29.50) on millions of eligible overseas goods, the company said in an e-mailed statement. Domestic goods will also be delivered free and a membership costs 388 yuan a year, lower than the U.S. fee of $99. Amazon China representative Wu Shanhan said membership won’t include access to any digital content.
This makes a lot of sense. Amazon is having a hard time establishing a presence in China. What is the advantage Amazon is having over Alibaba and JD? The most obvious one is having a direct relationship with brands in the US and in European markets Chinese citizens are interested in buying themselves.
So, why not make it easy and inexpensive for them to buy those products overseas?
Looking at Amazon and China like that, Amazon’s recent logistics endeavours get another very good (large, marketsize wise) reason for existing.
On that note, I recently attended an event in Switzerland where attendees told me Alibaba is planing to bring Swiss brands to its Chinese marketplace through direct partnerships. Alibaba is not (at this point) considering opening a marketplace in, say, Switzerland. Rather, bringing products to the Chinese market abroad is their chosen path of internationalization here.
So, both Alibaba and Amazon are going into the same direction coming from two different positions here.
The most interesting question is not just how this will play out in the Chinese market -Alibaba and JD do own the Chinese customer, Amazon’s standing in Western markets and thus its access to brands there doesn’t change that, so, I wouldn’t bet my money on Amazon China just yet-, no, the most interessting question is this:
If building up a truly vertically integrated global logistics arm makes more and more sense for Amazon, doesn’t it make at least as much sense for Alibaba as well?
- “Global Supply Chain by Amazon”: Disintermediation Will be the Name of the Game
- Bloomberg: “Global Supply Chain by Amazon” Planned To Start This Year, To Compete With UPS, DHL
- Why is Amazon all of a sudden not re-investing all its profits?
- Amazon Is Becoming Far More Than ‘a Kind of E-Commerce Walmart With a FedEx Attached’