Amazon And Alibaba Begin E-Commerce Strategy In China

We have thought for years that AmazonSupply was one day going to become serious e-commerce competition to traditional distribution. Then last September, Alibaba entered the American e-commerce industry with a bang by far overachieving its projected revenue with its IPO.

Today, thanks to an incredibly successful IPO, Alibaba is worth nearly $250 billion dollars, which is more than Wal-Mart, as we wait to see how or if the world-wide company will begin selling products traditionally sold in electrical distribution. We already know AmazonSupply has dipped into the electrical distribution world by recruiting distributors and manufacturers to sell some of their products through their website.

Now, the two online “rivals” have reached their first agreement to begin selling through e-commerce in China.  Are there more agreements to follow? Below is the story that just recently crossed the Associated Press wire:

NEW YORK (AP) — Two of the largest e-commerce companies in the world appear to be working together in China.

Seattle-based has opened a store on Chinese e-commerce powerhouse Alibaba’s Tmall retail platform.

The move helps Amazon expand in the lucrative e-commerce market in China, since Alibaba’s Taobao and Tmail and other e-commerce sites account for about 80 percent of Chinese online commerce.

Amazon also operates its own site in China. In January, the company said it launched Amazon Global Store on its Chinese site that offers about 200,000 products selected from Amazon’s U.S. website, which Chinese consumers can buy for the same price as U.S. consumers with a Chinese e-commerce shopping experience.

It was not clear how Amazon’s store on Tmall compared to Amazon’s e-commerce site in China. Amazon andAlibaba did not respond to a request for comment.

Bernstein analyst Carlos Kirjner said the move appears to show Amazon is acknowledging that the Alibabamarketplace in China is the most efficient way to get e-commerce traffic in China.

“It is hard to determine at this point whether this is just a small experiment or reflects a material change in strategy for Amazon in China,” he wrote in a client note. “If Amazon has decided to work with Alibaba instead of competing with it, it may signal lowered medium term aspirations in China and hence lowered risk of large, mounting losses in that market.”

Shares of Inc. fell $7.07, or 1.8 percent, to $380.76 as the broader market declined. The Dow fell about 1.5 percent in afternoon trading on Friday.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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