According to a March 6th report from Fortune, retailing giant Amazon is having a tough time growing its business in China. After losing almost $600 million on its operations in China last year, the sell everything e-tailer has had to resort to opening a store on rival Alibaba’ Tmall, a website for known global brands like Nike, Apple, Samsung and P&G.
Tmall is a venue for Western brands wanting to sell to Chinese consumers, who are starting to become willing to pay for safer products and looking to avoid name brand knockoffs. Companies pay Alibaba a service fee to operate their own stores on the Tmall website.
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Did not announce opening of Tmall store
Of note, Amazon did not publicly announce that it was opening a store on Tmall, the site was just stumbled upon by Chinese reporters on Thursday. Fortune’s Scott Cendowski says maybe this is “because it doesn’t make Amazon look very strong in the world’s largest e-commerce market”, and notes that an Amazon spokeswoman in China did not reply to a request for comment on the story.
Amazon struggling with Chinese ecommerce
Amazon has had their own Chinese website Amazon.cn for four years, but the web retailer has actually had a presence in China since acquiring book and music site Joyo.com back in 2004. Like eBay and other American retailers, Amazon has not had much success trying to overcome Chinese competitors such as Alibaba and JD.com who control the market.
However, Amazon has clearly not thrown in the towel on China. The firm recently with the government of Beijing and another Chinese city to provide cloud services and operate eight China-based fulfillment centers. Almost a year ago, Amazon’s CFO said Amazon of China that the firm is “investing a lot and trying to grow the business.”
That said, Amazon’s share of China’s e-commerce market share in China is a meager 1.5%, based on data from iResearch.
Amazon’s products cost more than products from local competitors
According to Cendowski, Amazon’s biggest problerm is that its good are notably more expensive than those of its competitors. Cendowski, who lives in China, notes: “I surf both Amazon’s Chinese site and Alibaba’s platforms. Whatever I can’t find on Alibaba’s sites, I look for on Amazon. But I never visit Amazon first because I know the prices will inevitably be higher. Sometimes the brand I buy matters, in which case Amazon is reliable and trustworthy, but most times I don’t care—and neither do many Chinese.”