Alibaba Group Holding Limited entered a partnership agreement with Shoprunner, an online retailer in the United States, to sell American products and handle deliveries in China, according to report from Reuters.
Fiona Dias, chief strategy officer of Shoprunner, confirmed the partnership in an interview with the news agency yesterday. According to her, Shoprunner plans to launch its service in China by the end of the year and it will be using the logistics infrastructure of Alibaba Group.
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Strong demand for American products
Shoprunner launched four years ago. The online retailer competes with Amazon.com, Inc. (NASDAQ:AMZN), and it is selling products from numerous brands including American Eagle Outfitters, Calvin Klein, Neiman Marcus, Nine West, Tommy Hilfiger, Brooks Brothers and many others. Shoprunner offers 2-day shipping with no minimum order, and free and easy return shipping to its members.
“There’s a pent-up demand for U.S. goods in China. Alibaba has this vision that we totally subscribe to in moving to a frictionless global model where consumers can buy from retailers anywhere,” according to Dias.
Alibaba owns 39% stake in Shoprunner
Alibaba Group already holds 39% stake in Shoprunner. The Chinese e-commerce giant invested $202 million in the U.S. based online retailer last October. Alibaba’s vice chairman Joseph Tsai is a member of the board of Shoprunner.
According to Diaz, Shoprunner’s partnership with Alibaba Group is an easy way to tap consumers in the second largest economy worldwide. Diaz said, “The history of U.S. retailers going to China is one that’s fraught with peril. This is a very low-cost way to do it that doesn’t require them (U.S. retailers) to go to China to figure it out.”
Shoprunner’s service will be added to the online marketplaces currently operated by Alibaba such as Tmall, Taobao, and Juahuasuan. A select group of Alibaba consumers will receive Shoprunner memberships to be able to browse the websites of its partner retailers and purchase products.
Forrester analyst Kelland Willis opined that Alibaba Group intends to learn from the United States to be able to compete globally given its investment in Shoprunner and other acquisitions. Willis said, “I think they realize that if they want to be competitive on a global level, they’re smart enough to know that they can’t go in and build from scratch. They’re going to have to make investments and acquisitions.”
Alibaba Group recently filed for an initial public offering (IPO) in the United States with the Securities and Exchange Commission. The Chinese e-commerce giant aims to raise $1 billion from the offering, but analysts forecast that the company will be able to raise as much as $20 billion–making it the largest IPO in the history of the tech industry.