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A new way for Western brands to sell online to Chinese consumers

April 15, 2015 12:52 PM
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Chinese consumers bought $450 billion online last year, according to government statistics, and the country’s biggest e-commerce players are making it easier for foreign companies to capture some of those web sales.

JD.com, the major rival to Chinese e-commerce giant Alibaba Group Holding Ltd., announced today the launch of its own platform for facilitating online sales of imported goods, JD Worldwide. It comes just over a year after the February 2014 launch of Tmall Global, Alibaba’s marketplace for selling imported items to Chinese online shoppers.

As with Tmall Global, foreign companies can set up shop on JD Worldwide without having a physical presence in China. They can either ship to Chinese shoppers from overseas or they can choose to warehouse goods in China.

Either way, they get access to the 100 million consumers who regularly shop on JD.com, according to JD’s figures. At the launch of JD Worldwide, the marketplace has 450 storefronts offering 150,000 products from 1,200 brands. Among the prestige Western brands available on the site are Coach and Nike.

In addition, JD has partnered with a potentially powerful U.S. ally—eBay Inc. JD has created a special channel on JD Worldwide where eBay will feature items from U.S. sellers it deems reliable. There is no comparable eBay channel on Tmall Global. There are no plans at this time to offer a similar eBay channel on other Chinese sites, an eBay China spokeswoman says. "First we want to see what we can achieve through JD Worldwide, and then we'll move to the next step,” she says.  

Alibaba says there are 5,400 storefronts operating on Tmall Global. Other Chinese online retailers, such as Vip.com and Xiu.com, also have rolled out similar businesses selling foreign goods.   

These marketplaces don’t just cater to foreign companies. Chinese sellers of imported goods also can set up shop on both the Tmall Global and JD Worldwide marketplaces. An executive of one such Chinese company, who asked not to be named, says JD Worldwide is charging a lower annual fee, $1,000 versus $5,000 for Tmall Global. He also says JD Worldwide is approving applications faster than Alibaba, which, he says, can take a month or two to register new sites for Tmall Global.

However, JD is charging higher commissions than Alibaba. According to information on their web sites, JD Worldwide will take between 3% and 8% of the purchase price as a commission, versus 2% to 5% on Tmall Global.

Besides offering storefronts to other sellers, JD.com also sells imported goods on its own behalf on JD Worldwide. Unlike Alibaba, which is an eBay-like marketplace operator but owns no merchandise, JD purchases goods and sells them on its e-commerce sites, as well as opening those sites to outside merchants. That makes JD more like Amazon than eBay.

JD.com is No. 1 in the Internet Retailer China 500 and its online sales reached $41.9 billion in 2014, a 107% increase over 2013. However, rival Alibaba, whose Taobao and Tmall allow some 9 million merchants sell to Chinese consumers, accounts for about 80% of online retail sales in China. The value of goods sold on of Alibaba’s Chinese e-retail platform grew about 48% to 2274 billion yuan ($362.42 billion) in 2014 from 1542 billion yuan in 2013 ($245.80 billion), according to Alibaba.   

 

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