Amazon eyes China growth

28 November 2011

BEIJING: Amazon, the ecommerce giant, expects there to be a "lot of winners" in China's online retail sector, reflecting the intense competition and huge potential presented by the country.

The company established a presence in China in 2004 after purchasing Joyo for $75m. It has recently rebranded its website as Amazon China, replacing the previous name, Joyo Amazon.

"Amazon China's strategy is to invest continuously and focus on the long-term market; that's the reason why Amazon didn't question its investment into China when it didn't produce high returns," Wang Hanhua, Amazon China's president, told the China Daily.

According to insights group Analysys International, the online retail market should be worth RMB198bn in 2011, hitting RMB650bn in 2013.

Figures from iResearch, another data monitoring firm, show Taobao Mall, a unit of Alibaba, currently holds a 50.9% share of the market, with Jingdong Mall on 18.6%, and Amazon further back on 2.9%

"The Chinese e-commerce market will have a lot of winners, and Amazon China will be one of them," Wang argued.

The core tactics pursued by Amazon have included building up its distribution network, as well as implementing "microinnovations" like providing details on delivery times and enhanced packaging.

"The basic point of our business in China is whether we can provide customers with more products at lower prices, swifter delivery and better quality, so we aren't introducing more approaches in China aggressively," Wang said.

In a bid to raise awareness, Amazon has run an ad campaign - one of the company's most high-profile such efforts thus far - in Shanghai.

Posters and TV spots attempt to draw on Amazon's international brand credentials, and emphasises it sells a wide range of items beyond books. "If the trial in Shanghai works, we will promote the strategy in other cities in China," Wang said.

The firm has also launched the "Selling on Amazon" feature allowing third-party vendors to offer goods and services via its pages, and which already yields a third of its business.

"We are fully aware of the potential of this business, but we need to be prepared in logistics, packing center and operation systems," Wang said.

Data sourced from China Daily; additional content by Warc staff