Amazon is pushing its expansion into China through a somewhat unexpected channel.
The U.S.’s biggest e-commerce player has opened a flagship store in an online market of its Chinese counterpart – Alibaba Group Holding’s online marketplace.
Located in Tmall, Amazon’s new offering is so far a limited number of product categories including imported food, women’s shoes, toys and kitchen equipment. Highlighted items on sale include Crayola crayons and Legos.
By signing on with Alibaba, Amazon has essentially become a merchant customer and will be paying Alibaba a commission on each of its transactions. However, with Amazon struggling to gain a foothold in the massive and expanding Chinese market, the transaction commissions may be worth it. Amazon had just a 1.3 percent share of the total business-to-consumer market in China, down from the 13.8 percent it controlled in 2008.
And though Alibaba is the largest local competitor Amazon faces, it is by far not the only one. Companies like JD.com are also lurking in the background – with a direct to consumer model that is more similar to Amazon’s than Alibaba’s marketplace based take on e-commerce.
An Alibaba spokeswoman said the company welcomes Amazon to its ecosystem, reports The Wall Street Journal.
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