Amazon and Alibaba compete for booming mobile market
WASHINGTON – E-commerce pioneer Amazon.com is lagging behind in the fight to grab market share in China, which, with 1.25 billion mobile phone users and 640 million Internet users, is now the world’s largest e-commerce market.
Currently, the Chinese firm Alibaba and its two flagship services Taobao and Tmall dominate the Chinese e-commerce market. Taobao is a consumer-to-consumer service similar to e-Bay in the United States. According to Forbes, it currently controls 96.50% of the country’s C2C market.
Meanwhile, the more competitive business-to-consumer market still has Amazon’s China operation taking up a paltry 2.7% of the market share with Alibaba’s Tmall controlling 50% alone, and the remainder being divided between smaller services including JD.com, which has a 22.4% share of the market.
Despite recently opening a store on Alibaba’s Tmall in an effort to reach a broader swath of Chinese consumers with highly in-demand Western products, Amazon China still has a lot of ground to cover if it wants to compete with any of China’s other e-commerce giants.
But Amazon may have an ace up its sleeve as many of China’s e-commerce sites are overrun with cheap domestic goods, or outright counterfeits, which can be dangerous.
When word got out in 2013 that fake baby formula was being sold online, the resulting run on Hong Kong super markets, where looser tariffs allow for the import of high-quality Western formula, resulted in the Hong Kong government imposing a cap on how much baby formula could be transported to the mainland.
Amazon is a well-known brand name and its association with Western products could endear it to Chinese consumers, but only if it is able to maintain a high standard of quality goods.
Amazon could also face a significant challenge in gaining traction with Chinese regulators and lawmakers who are notoriously protectionist. The company’s partnership with the Alibaba group is poised to be its best bet, and its greatest source of competition at the same time.
