In a surprise move US internet giant Amazon is opening a webshop at Tmall, part of its competitor Alibaba ´s empire. Retail analyst Ben Cavender explains why Amazon is teaming up with its competitor to enter the China market at CNBC.
Amazon is currently doing a test run of its Tmall store, with an official launch slated for the end of March or early April.
The U.S. e-commerce giant currently offers consumer electronics, food and beverage, household and baby and maternity items on the site.
Ben Cavender, an analyst at China Market Research Group says the move is perhaps an acknowledgement that they cannot tackle the China market alone.
“I wonder if they are conceding the market and recognizing that it’s better to work through Tmall because that’s where the traffic is going,” he said.
China’s B2C e-commerce industry is currently dominated by Tmall and JD.com, which hold 57 and 21 percent shares of the market, respectively, according to iResearch.
Alibaba’s Tmall shop could also be part of a strategy to breed familiarity around its brand which is less known among Chinese consumers, Cavender said.
“They may be conceding revenue to Alibaba via Tmall in the near term, but in the longer-term it could pay off,” he said.
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