Amazon strikes deal in China to offer more imported goods
Amazon had signed an agreement with a free trade zone in Shanghai
By Michael Kan | Published: 04:44, 21 August 2014
Amazon.com is hoping to attract more consumers from China, with a new agreement that will let the U.S. e-commerce company bring millions of products from its international sites to the country as imported goods.
The company's China business made the announcement on Wednesday, with the signing of an agreement to establish its own "cross-border e-commerce platform" in Shanghai's new free trade zone.
Amazon's imported goods will be shipped to and stored at the free trade zone, where the company plans to build a logistics and warehouse center, it said in a statement. In addition, the U.S. e-commerce giant wants to help local Chinese businesses export their goods to Amazon's international customers via the trade zone.
Although a big name in the U.S., Amazon is a smaller e-commerce player in China. In this year's first quarter, it had a 2.9 percent share of the country's business-to-consumer online retail market, trailing far behind Alibaba Group's Tmall.com site, which had 48.4 percent share, according to research firm Analysys International.
Despite the small market share, the company has been in China for ten years, and already expanded its logistics so that it can deliver to 3,000 cities and counties in the country.
China's e-commerce sector is crowded, and Amazon has struggled to stand out, said Vanessa Zeng, an analyst with Forrester Research. Domestic e-commerce sites from Alibaba Group have long dominated the market, but other local players such as JD.com have also managed to gain a major following through promotional deals, she added.
"Amazon's services are fine, but they haven't been different enough to attract more consumers," Zeng said.
That could change with the company's new effort to bring in more imported goods. Chinese consumers like to buy foreign products, with the expectation that they are of a better quality, Zeng said. But in Amazon's case, the company will have to price its imported products low enough, and ensure shipment is fast, otherwise Chinese consumers won't buy, she added.
"A lot of Chinese travel outside the country to buy foreign goods. So if Amazon can open up its inventory, then I think the company will be able to address some of the customer demand," Zeng said.