Over the last two years, India has supplanted China as Amazon’s most important international market of the future. But Jeff Bezos’s company apparently still sees enough present opportunity in China to invest in new big projects there today.
Amazon is bringing Prime to China, where it has struggled for market share
Don’t be confused: India is still Amazon’s No. 1 overseas market.
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Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
Amazon on Friday unveiled its popular Amazon Prime membership program in China, a market where it has long struggled to crack the dominance of Alibaba or the rise of another competitor, JD.com.
Amazon Prime will cost Chinese shoppers 388 yuan a year, or about $57, according to Bloomberg. That’s cheaper than the $99 U.S. shoppers pay for Prime, but the program perks aren’t the same in both markets.
China’s version of Prime does not include any digital content — video and music streaming — the way it does in the U.S. Instead, the program focuses on giving free shipping to consumers who place orders of more than 200 yuan — or around $29 — from a catalogue of millions of overseas products. There is strong demand in China for products from Western brands.
Still, the launch of Prime in China is somewhat surprising considering how long Amazon has already been in the market and how much it has struggled there to date. Research firms estimate that Amazon only owns 1 percent to 3 percent of China’s e-commerce market, more than a decade into its efforts there.
That’s because the Chinese e-commerce market has long been dominated by Alibaba, which operates the Taobao shopping site where cheap, no-name brands are popular, as well as the Tmall site where many big Western brands have set up shop.
In recent years, another e-commerce site, JD.com, has also risen in popularity. JD has a market cap of more than $36 billion and recently acquired Walmart’s e-commerce business in China. Walmart now owns nearly 11 percent of JD.com.
As Amazon has struggled in China, it has vowed to invest $5 billion in India, the world’s second-most populous nation where there is not yet a dominant e-commerce power. At the Code Conference in May, Jeff Bezos said Amazon has passed along some high-level learnings from its stumbles in China to help inform its India strategy.
“We mostly tried to roll out what worked well for us in Japan, Germany, the U.K., Spain, France, Italy, the U.S., etc., and it needed more local market customization,” he said of the company’s approach in China. “If you want me to give one meta-lesson, it’s that one.”
This article originally appeared on Recode.net.
