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Amazon Prime debuts in China to compete with Alibaba

October 28, 2016 10:43 AM
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(Bloomberg)—Amazon.com Inc. has started offering its Prime free-shipping service in China, ratcheting up attempts to compete with Alibaba Group Holding Ltd. for the rising number of shoppers hankering after overseas goods.

From Friday, Chinese Prime subscribers get free shipping on orders exceeding 200 yuan ($29.50) on millions of eligible overseas goods, the company said in an emailed statement. Domestic goods will also be delivered free and a membership costs 388 yuan a year, lower than the U.S. fee of $99. Amazon China representative Wu Shanhan said membership won’t include access to any digital content.

Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide and No. 4 in the Internet Retailer 2016 China 500.

Since its inception in 2005, Amazon Prime has attracted more than 65 million members in the U.S. with free delivery perks and access to a growing library of videos and music. The program has been credited with fostering customer loyalty, driving spending and has been steadily expanded over the years to include digital content.

Amazon, which has made little headway against Alibaba, is focusing on the demands of a growing middle-class seeking better-quality goods from abroad. Amazon’s global logistics network will manage shipping and final delivery to each Chinese customer, it said. Packages are estimated to arrive within five to nine days in 82 cities across the country, with single orders of more than 2,000 yuan requiring additional time, the company added.

The introduction of Prime also comes as Wal-Mart Stores Inc. (No. 4 in the Top 500) intensifies a battle with its online rival in India and China.

After unsuccessful efforts to scale its own e-commerce network, Wal-Mart has launched several initiatives through a tie-up with JD.com Inc., Alibaba’s closest domestic rival. With that partnership, the U.S. retailer said it will now be able to deliver goods ranging from American vitamins to Japanese hand cream to more than 90% of China’s 1.4 billion consumers. JD.com is No. 1 in the China 500. While Alibaba’s two big online marketplaces—Taobao and Tmall—account for more than 80% of online retail sales in China, Alibaba, like eBay Inc., does not own any merchandise and thus is not ranked in the China 500.

 

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