American online giant Amazon has opened a store on Alibaba's online marketplace, Tmall. Basically, it is opening a store at its biggest competitor in an attempt to spur its Chinese sales.
Pay a fee to your major rival
Retailers on Tmall have to pay a fee to Alibaba for every transaction, which means Amazon will pay its competitor for every item it sells on Tmall. Nevertheless, Amazon is determined to move ahead, as it is facing a struggle to gain ground in China - currently only reaching a 1.3 % market share, while Tmall dominated the market with 57.6 %. Despite China's huge online potential, Amazon barely generated 3 % of its total turnover in China.
The company seems to have realized it cannot increase its Chinese business on its own and is now searching for brand recognition and sales through a competitor that currently owns about 80 % of the Chinese online market. Several other brands, like Apple, Nike and Gap, also have their own store on Tmall to better service potential Chinese customers.