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Amazon opens a store on rival Alibaba’s Tmall site

Jeff Bezos
Getty Images
Jeff Bezos

Amazon opened a store on Alibaba's business-to-consumer platform Tmall on Thursday in a move that analysts say will boost awareness of its brand in China – a market where it has struggled to make a mark amid intense competition from domestic players.

"We welcome Amazon to the Alibaba ecosystem, and their presence will further broaden the selection of products and elevate the shopping experience for Chinese consumers on Tmall," a spokesperson from Alibaba said.

Amazon is currently doing a test run of its Tmall store, with an official launch slated for the end of March or early April.

The U.S. e-commerce giant currently offers consumer electronics, food and beverage, household and baby and maternity items on the site.

Ben Cavender, an analyst at China Market Research Group says the move is perhaps an acknowledgement that they cannot tackle the China market alone.

Amazon's Tmall homepage
Amazon's Tmall homepage

"I wonder if they are conceding the market and recognizing that it's better to work through Tmall because that's where the traffic is going," he said.

China's B2C e-commerce industry is currently dominated by Tmall and JD.com, which hold 57 and 21 percent shares of the market, respectively, according to iResearch.

Brand recognition

Alibaba's Tmall shop could also be part of a strategy to breed familiarity around its brand which is less known among Chinese consumers, Cavender said.

"They may be conceding revenue to Alibaba via Tmall in the near term, but in the longer-term it could pay off," he said.

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Building up a presence in China - the world's largest e-commerce market - would be beneficial for boosting Amazon's international sales, which made up just 38 percent of the company's revenue last year.

China's online retail spending reached $307 billion in 2013 and is forecast to grow at a compound annual rate of nearly 20 percent until 2019, when it should exceed $1 trillion, according to research firm Forrester.