Top 500 retailer Costco enters China
October 14, 2014 04:56 PM
After a long wait, Chinese consumers finally can purchase Costco Wholesale Corp.’s products directly in China. Costco says it entered China this week by working with Alibaba Group’s imported goods online marketplace, Tmall Global.
Costco operates bricks-and-mortar stores in Taiwan, but not in China. The warehouse club retailer is not the only retailer to enter China without bricks-and-mortar operations. Last month, British fashion company Topshop launched its China operations on Shangpin.com, a Chinese online fashion site.
Costco, No. 14 in the Internet Retailer 2014 Top 500 Guide, says it will sell products in four categories: food, nutrition/cosmetics, kids and home. The company says it plans to expand into more categories in the future.
In China, Costco’s Tmall store allows consumers to buy Costco’s products without membership. In other markets, consumers must pay a membership fee to become members before they buy from the warehouse club retailer.
On Costco’s Tmall store, some products are priced lower than those in the United States. For example, one of the best-sellers is Kirkland Signature fish oil and its price on Tmall is 89.99 yuan ($14.69). In the United States on Costco.com the price is $16.99. But to get that product in China, consumers have to pay about $3 for international shipping from Taiwan and wait up to 20 days for delivery, according to Tmall Global.
Tmall Global, an extension of Tmall.com, allows overseas brands with no China business licenses to sell products in mainland China. Orders can be fulfilled and shipped from outside China and orders settled in the preferred currency of the retailer.
At present, more than 5,000 international brands have opened stores on Tmall Global.
Costco made quick work of entering China. Tmall says the U.S retailer only took several months to launch its online store after it contacted Tmall for the first time.
“Chinese consumers have increasing demands for imported products and Costco is optimistic about the huge opportunity for market growth. In collaboration with Tmall Global, we can sell directly to Chinese consumers from our official company store,” Costco executive vice president, international, James Murphy says.
Costco says it stocks some products in warehouses in six Chinese cities with pilot free trade zones, which allows Costco to ship some products in China after receiving the orders. This model enables Chinese consumers to buy imported products from foreign e-retailers with lower customs tax and save the time on shipping.
“As our collaboration goes deeper, Tmall Global will help Costco enter other Alibaba e-commerce platforms, such as Taobao,” says Alibaba’s general manager of global B2C unit, Wu Qian. Tmall Global also plans to introduce many data mining and marketing tools to Costco on Alibaba’s platform in the future, Wu says.
This is the latest international e-commerce move for the Issaquah, WA-based retailer. Costco debuted Costco.com.mx to shoppers in Mexico (Costco’s Mexico site ) last year. It also operates international sites for consumers in the United Kingdom and Canada.
Currently, more than half of the top 20 U.S. e-retailers have entered China, including No. 4 Wal-Mart Stores Inc. and No. 3 Staples Inc., according to Top500guide.com and the Internet Retailer 2014 China 500.