Amazon aims to sell more to Chinese online shoppers
August 26, 2014 04:46 PM
The world’s leading online retailer by web sales is paying greater attention to the world’s leading e-commerce market.
On its tenth anniversary of entering China, Amazon.com Inc. announced plans last week to build a fulfillment center in a free-trade zone in Shanghai, hoping to be able to sell items from its global sites to Chinese consumers at lower prices and to deliver goods more quickly. The e-retailer also plans to let Chinese consumers shop on Amazon.com in their own language, Amazon senior vice president for international consumer business Diego Piacentini said at a ceremony in Shanghai marking Amazon’s commitment to open a facility in the free-trade area.
“The Chinese consumer will be able to go to the Amazon global web site and have access to the products in Chinese. So that’s going to be one opportunity,” Piacentini said. “We’re going to have lower shipping charges, faster delivery coming into the free-trade zone, so there are going to be very many benefits.”
Piacentini did not say when Amazon would add Chinese-language support to Amazon.com, which currently is only in English. Amazon did not immediately respond to a request for comment.
Besides its main site in the United States, Amazon operates 12 e-commerce sites around the world, including one in China, which is No. 4 in the 2014 Internet Retailer China 500, a listing of the top retail web sites in China. Amazon is No. 1 in the 2014 Internet Retailer Top 500, which ranks e-retailers in North America.
Amazon China signed an agreement last week to locate a distribution center in the China (Shanghai) Pilot Free-Trade Zone, launched last September as a test by the Chinese government. Amazon signed the agreement with the operator of the zone, Shanghai Free Trade Zone and Shanghai Information Investment Ltd., a state-run investment company managed by Shanghai’s municipal government.
Amazon’s move into the Free-Trade Zone will enable Chinese consumers to buy products from Amazon’s sites outside of China at lower prices. Chinese online consumers pay 20% to 30% less on products coming through the Shanghai area in some common categories.
While Amazon did not say when its new fulfillment center will open, a company working with Amazon in China, Orient Electronic Payment Co., says it likely will be operational in the fourth quarter of this year.
“Working with Amazon, we have tested placing more than 1,000 orders from Amazon’s U.S. site in June, and the delivery time to China was about seven to ten days,” says Wang Peng, general manager of Orient Electronic Payment Co. “In addition, Amazon plans to store some popular products in the warehouse inside the Free Trade Zone, and that will make delivery even faster.” Orient Electronic Payment is a subsidiary of Shanghai Information Investment Ltd., the operator of the free-trade area.
Amazon China operates 15 fulfillment centers across China and sells more than 20 million products in 32 categories. Amazon China can deliver products to 3,000 cities or towns and offers same-day or next-day delivery in 146 cities, the company says.
Amazon China has been introducing new products and services in China. Last year, Amazon introduced its Kindle tablet and its app store into China. Its Amazon Web Services unit, which provides web-based data storage and computing capacity, also began operating in China in December.
Buying from overseas web sites is increasingly popular in China and the trend even has been given a name in Chinese, haitao. Chinese consumers purchased $3.3 billion from e-commerce sites in other countries in 2012 and those purchases are doubling each year, according to Alibaba Group Holding Ltd., the leading e-commerce company in China, which is planning an IPO soon on the New York Stock Exchange.
Offering a wide selection of products from its U.S. site may help Amazon compete with domestic players in China.
Amazon only accounts for 2% of Chinese consumer online purchases from retail or brand web sites om China, compared to 47.7% for Tmall, the premium marketplace operated by Alibaba, and JD.com’s 16.4%, according to Chinese research firm iResearch.
JD.com Inc. ranks No. 1 in the China 500. Alibaba is not ranked because, like eBay Inc., it does not sell merchandise on its own behalf, instead providing a platform for other online sellers.