Sin­gles Day soars

In first seven min­utes of 11/11, shop­pers spend $1.47 bil­lion

China Daily (USA) - - FRONT PAGE - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

This is an ag­gres­sive move on Ama­zon’s part in its quest to be­come the first truly global e-com­merce plat­form” Michael Zakkour, Tomp­kins In­ter­na­tional

Ama­zon moves in on ri­val Alibaba’s big day

As Alibaba’s Sin­gles Day shop­ping spree un­folded on Fri­day, the fo­cus was on num­bers: For con­sumers, it was the sell­ing price. For an­a­lysts, it was how many or­ders did Alibaba process and what were the to­tal sales.

And there was a ma­jor par­tic­i­pant to watch: Ama­zon Inc, Amer­ica’s big­gest e-com­merce com­pany and a ri­val to Alibaba Group Hold­ing Ltd, and how it fares in what has be­come the Chi­nese ver­sion of “Black Fri­day” — the huge sales day af­ter Thanks­giv­ing in the US.

To jump­start its busi­ness in the main­land, late last month Ama­zon launched its Prime mem­ber­ship pro­gram that tar­gets Alibaba and other ri­vals like JD.com. Ac­cord­ing to iRe­search, Ama­zon has less than 1.5 per­cent of the mar­ket, and to reach the mar­ket, it launched a store on Alibaba’s Tmall last year.

The Prime pro­gram, which will cost about 188 yuan ($27.83) for the first year in a dis­counted in­tro­duc­tory pro­mo­tion, will of­fer Chi­nese con­sumers un­lim­ited do­mes­tic ship­ping and free in­ter­na­tional ship­ping with a min­i­mum pur­chase of 200 yuan. Alibaba and JD.com Inc of­fer free ship­ping but mainly for do­mes­tic trans­ac­tions.

Michael Zakkour, vi­cepres­i­dent of the China and Asia prac­tice at global con­sul­tants Tomp­kins In­ter­na­tional, said the in­tro­duc­tion of Prime is not just fo­cused on com­pet­ing with Alibaba, JD and oth­ers for mar­ket share.

“This is an ag­gres­sive move on Ama­zon’s part in its quest to be­come the first truly global e-com­merce plat­form. That is where the real com­pe­ti­tion be­tween Alibaba and Ama­zon lies. They both want the global con­sumer. They both want 2 bil­lion cus­tomers. Ama­zon wants to roll out Prime glob­ally to pro­vide the sell from any­where-to-any­where plat­form to achieve that goal,” he said in an email.

Al­though both are the big­gest e-com­merce com­pa­nies in China and the US re­spec­tively, the sim­i­lar­i­ties pretty much end there as they have dif­fer­ent busi­ness mod­els. Ama­zon fo­cuses on sell­ing mer­chan­dise di­rectly via an on­line mar­ket­place. The Seat­tle-based com­pany re­ceives about three-quar­ters of its rev­enue from mer­chan­dise sales and the rest from pro­vid­ing dig­i­tal con­tent.

Hangzhou-based Alibaba acts as a mid­dle­man be­tween on­line buy­ers and sell­ers and fa­cil­i­tates sales be­tween the two par­ties through a net­work of web­sites.

Ama­zon has strug­gled in China and is look­ing to Prime to help it take mar­ket share from Alibaba and the oth­ers in the main­land.

“Alibaba via TMall and then JD.com es­sen­tially con­trol con­sumer e-com­merce traf­fic in China. Even if a con­sumer doesn’t end up buy­ing via one of those plat­forms, they still check them first so Ama­zon isn’t the first on­line store­front that a con­sumer thinks of,” noted Ben Caven­der, se­nior an­a­lyst at the China Mar­ket Re­search Group in Shang­hai in an email.

Pric­ing will be im­por­tant for Ama­zon Prime in China, ac­cord­ing to Ni­cole Peng, re­search direc­tor at Shang­hai-based con­sul­tancy Canalys.

“Ama­zon’s ex­ist­ing re­la­tion­ship with over­seas sell­ers is a key for Ama­zon to pro­vide the prod­ucts at a com­pet­i­tive price,” she said.

Caven­der said Prime and Ama­zon’s fate in China will come down to how suc­cess­fully they are able to tie it to prod­ucts that Chi­nese con­sumers are in­ter­ested in buy­ing.

“Ama­zon has an op­por­tu­nity to of­fer a range of brands or prod­ucts that Alibaba can’t nec­es­sar­ily of­fer sim­ply be­cause of Ama­zon’s global sup­ply chain and strong prod­uct se­lec­tion in the US, but it’s go­ing to have to work hard to fig­ure out which of those brands and prod­ucts are po­ten­tially valu­able to Chi­nese con­sumers,” he said.

SHEN BOHAN / XINHUA

Jack Ma (right) ap­plauds as a gi­ant screen shows Alibaba’s sales pass­ing 10 bil­lion yuan ($1.47 bil­lion) within seven min­utes of the start of China’s Sin­gles Day on­line sale on Nov 11.

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