Here’s How Amazon Is Looking To Attract Chinese Consumers

While Alibaba might be dominating the Chinese e-commerce market, Amazon  (NASDAQ:AMZN) is looking at indirect ways to attract to growing Chinese internet buyers to its platform. Recently the company launched a Chinese version of its Japanese e-commerce website Amazon.co.jp on the back of growing demand from Chinese consumers for high quality Japanese goods. While foreign products are popular in the region and Alibaba’s Tmall hosts stores for several popular foreign brands including Macy’s and Costco, Amazon is looking to capture the trend where consumers prefer to purchase even daily need items such as baby food and toothpastes manufactured in Japan. The quality of domestic products is not appealing to a section of consumers who prefer to make annual trips to Japan to stock up necessary products. Amazon’s Japanese website is proving to be attractive to these consumers as it caters to a segment where Alibaba’s Taobao (which has domestic product) and Tmall  (which mostly hosts premium foreign brands) fall short.  Amazon’s initiatives to make it convenient for Chinese shoppers to transact on its Japanese website will ensure that it indirectly gets a share in the growing Chinese e-commerce market which is likely to reach $1.21 trillion by 2017.

See our complete analysis for Amazon

Capturing The Increasing Demand For Japanese Products

According to Japan’s Ministry of Economy, Trade and Industry, demand from China for Japanese goods is projected to triple to nearly $ 25 billion by 2019. While this is a small percentage of the total Chinese e-commerce market, Amazon is aiming to capture a leading market share in this space.  In addition to launching a Chinese language version of its Japanese e-commerce website, the company has also reduced shipping rates for China on this platform and is adding new inventory which can be easily exported to the region. Demand for products such as baby food, health products and high quality apparel from Japan is high among Chinese consumers, due to its perceived high quality.  However, the frequency of counterfit merchandise on Chinese e-commerce sites is high.

Asia Pacific is expected to play a significant role in e-commerce growth in the next few years. According to eMarketer, e-commerce sales in this region will climb to $ 1.459 trillion by 2019 contributing to over three-fourths of the global e-commerce growth of $1.907 trillion. China will be a significant contributor to this growth where retail e-commerce sales as a percentage to total retail sales are expected to be nearly 35% by 2019, much higher than the estimated 10% figure for the U.S. While Amazon is focusing on this region and investing heavily in India to capture the growing e-commerce demand in this country, it needs to use indirect ways to penetrate into the China, given Alibaba’s dominance and regulatory restrictions in the country.

We believe China can play a significant role in Amazon’s growth in the long term. The subtle initiatives which the company is taking while it strategizes to compete with Alibaba in the region can help the company to gradually penetrate into this growing market.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research