US Ecommerce giant Amazon announced its plans on setting up shop in Alibaba’s backyard in Shanghai.
With Alibaba making moves into the US market, it would seem Amazon is doing the opposite. The firm is taking advantage of China’s 28 sq km free-trade zone, located in Shanghai. Plans include the building of an Amazon fulfillment center and warehouse, helping lower prices by lowering shipping costs and freight times. The free-trade zone was set up last year in 2013 to act as a test bed for economic reforms.
“We’re going to have lower shipping charges, faster delivery coming into the free-trade zone, so there are going to be many benefits,” said Diego Piacentini, vice-president of international consumer business.
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This is not Amazon’s first foray into the Chinese market. In 2004 the company acquired local Chinese shopping site Joyo.com. In 2007 the site was renamed to Amazon.cn and acted as a Chinese version of Amazon’s popular platform.
If you follow us here at Payment Magnates, you can probably guess Amazon’s performance in China is less than stellar. Local players like Alibaba and JD.com dominate the landscape, literally leaving no room for outside completion. Amazon averages about 2% of the local Chinese market.
If Amazon can figure out the logistics, the gamble should pay off. A large trend sweeping China’s online shopping sector is imported goods, primarily from the US. Amazon has the technology, and infrastructure to serve China, and the establishment of a fulfillment center should keep costs down, thus increase sales.
What do you think of Amazon fully entering China? Is it maybe too little too late given the current competition, or is Amazon what Chinese shoppers have been waiting for? Let us know n the comment section below.