Amazon.com, Inc. (NASDAQ:AMZN) has moved to fish where the fish are, opening a retail store in Alibaba Group Holding Ltd (NYSE:BABA)’s Tmall.com marketplace. Alibaba and Amazon are competitors except that Alibaba tends to focus more on wholesale e-commerce. The move is expected to expand Amazon’s global footprint, which is currently mostly concentrated in Europe.
China is the second-largest world economy, and its e-commerce industry is growing rapidly, making it an interesting market for multinationals such as Amazon.com, Inc. (NASDAQ:AMZN).
Alibaba welcomes Amazon
Alibaba has welcomed Amazon to list of its Tmall marketplace, with a spokeswoman for the Chinese e-commerce giant highlighting various benefits of the development. Chinese shoppers are expected to have a wider variety of items to buy, especially a broader selection of international goods. Amazon has listed foods, kitchenware, shoes and toys on Tmall.
Challenge for Amazon in the international space
International sales have been challenging for Amazon.com, Inc. (NASDAQ:AMZN). The company generated just about 38% of its total revenue outside the U.S. in 2014. That was a decline from 48% of total revenue that came from international sales in 2009. A stronger presence in China could help the U.S. company improve its international sales. The Chinese e-commerce industry is expected to reach above $1 trillion in the next three years. That will be more than double growth from $426.3 billion last year, according to the data supplied by eMarketer.
Looking at the e-commerce projections in China, certainly the country is where the fish are, and Amazon cannot hesitate to go fishing there. Amazon has struggled to boost sales in China and listing on Tmall is expected spark some growth in the market.
International presence
Currently, Amazon.com, Inc. (NASDAQ:AMZN)’s international operations are mostly in the U.K. and Germany. Amazon also has a presence in Japan but needs a bigger share of the fast-growing Chinese market.
China’s Alibaba owns a numbers of marketplace platforms that include Taobao and Tmall, which together finished 2014 with 334 million active buyers.
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