Amazon sets up shop on Alibaba

Amazon has opened up a store on Alibaba-owned Tmall platform in order to secure a greater hold on China’s thriving e-commerce market

Amazon's decision to open up a store on Alibaba-owned Tmall shows how serious it is about tapping into China's e-commerce market

US e-commerce giant Amazon has conceded precious market share to its arch-rival Alibaba by launching a second digital storefront on Tmall, a business-to-consumer site owned by the group. The American heavyweight listed its Kindle ebook reader on the site last year, though the decision to expand its offerings to food, clothing, kitchenware and toys this time around marks a milestone submission to Alibaba.

China surpassed the US as the single-biggest e-commerce nation in 2013

The Tmall store differs to Amazon in that the marketplace is merely a platform for other businesses to sell their products, and makes money by taking a percentage of the spoils, whereas Amazon actively resells products and profits this way. Amazon has a presence in China already, not least through, an online books and music retailer that the company bought as in 2004 and rebranded. However, the Tmall listing gives the online retailer a much-needed extra platform to reach a free-spending population and make good on a budding e-commerce opportunity.

China surpassed the US as the single-biggest e-commerce nation in 2013, and the sector is growing faster almost than any other country. One Statistica projection showed that the overall market scale of online commerce came in at 21.6 percent for the period through 2014 and 2015, after a growth rate of 27.9 percent the year previous. And although we’re unlikely to see same sky-high rate in the years ahead, growth for the next two years is forecast to come in at 19.4 and 16.8 percent respectively.

The sheer scale of the market is reason enough for why Amazon is willing to concede a share of its business to Alibaba, if only to reach a greater number of Chinese consumers. Whereas the two companies are fierce competitors, the Tmall listing is one instance where both parties might profit as a result: Amazon from the exposure and Tmall from the infrastructure.