When Amazon And Alibaba Want To Sell Products From Abroad to Chinese Customers

Amazon in China

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.

This is the context for Amazon registering for ocean freight services. This is also the context for Amazon planning a “global supply chain by Amazon”.

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?

More on this topic:

9 comments

  1. Amazon won´t gain a considerable market share unless they adapt their services to the mobile only market in China. At the moment they cannot compete with services such as Tabao as the Tabao App KPIs presented at Alibabas investors day showed. Serving customers in rural china will be another big problem for amazon as well because Alibaba occupied nearly all available infrastructur & resources. As a result the majority of “Amazons revenues” in China is generated through their branded site on Tmall. It will be interesting to see if Alibaba was able to gain even more market share this quarter. We will find out tomorrow when Alibaba reports their quarterly results.

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  2. Amazon won´t be able to compete with Alibaba or TD.com unless they adapt their services to the mobile only market in China. Serving customers in rural China will be another problem since Alibaba & TD.com occupy nearly all available infrastructure & resources buying into this will be expensive. It will be interesting to see if Alibaba gained more market share We will find out tomorrow when Alibaba presents its quarterly results.

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    1. Yes, I agree with you there. As I wrote this is a start but it almost certainly won’t bring Amazon very far in China right now.

      “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”

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  4. […] When Amazon And Alibaba Want To Sell Products From Abroad to Chinese Customers […]

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  7. […] bringing the Chinese market, sellers and buyers, and the rest of the world together. […]

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