Amazon has just opened a store on Tmall, a business-to-consumer platform owned by Alibaba, the world's largest e-commerce market, in a bid to increase brand awareness in China. The company is just the latest western retailer to join Tmall this year among the likes of Inditex, Burberry and ASOS.
Other major retailers hosted on the site include Costco, The Gap, Nike and Apple.
Currently, Amazon at Tmall is selling a limited selection of products compared with those that are sold on Amazon China. This includes food, toys, kitchenware, consumer electronics, children's wear and women's shoes. The site is still on a test run and will be officially launched at the end of March or early April.
"We welcome Amazon to the Alibaba ecosystem, and their presence will further broaden the selection of products and elevate the shopping experience for Chinese consumers on Tmall," said a spokesperson from Alibaba.
Ben Cavender, an analyst at China Market Research Group, believes that Amazon's decision to move to Tmall is perhaps an acknowledgement that the company cannot handle the China market by itself.
"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," said Cavender.
According to Daiwa Capital Markets report on China's e-commerce industry, Amazon's share of the total B2C market in China earned only 1.3 percent in the third quarter of 2014. Such value means that the company has incurred a loss of market share by up to 13.8 percent compared with the same period in 2008.
Daiwa added that Amazon China has earned total revenue of about $1.6 million in 2013, which makes up a mere 3 percent of its gross merchandise volume worldwide. The company added that Amazon China was expected to continue experiencing net loss in 2014.
Amazon China has long struggled in the country where it faces stiff competition from Alibaba's two marketplaces, namely Tmall and Taobao. Other homegrown rivals include Suning and JD. Toward the end of 2014, Amazon was ranked as the eighth-biggest store in China with a market share of 1.3 percent. Tmall's market share of 57.6 percent makes it China's dominant market place.
Amazon's move to Tmall means that the company is now an Alibaba customer and will be expected to pay a commission for every successful sale it makes through the site. With its new home, Amazon has the chance to become more competitive in a market that is speculated to grow beyond $1 trillion by 2018.
