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Amazon Prime expands to China

Amazon has launched its Prime membership program in China, in an attempt to boost its profile in a market dominated by domestic e-commerce giants, Alibaba and JD.com.

Amazon Prime is now available to Chinese consumers for 388 yuan per year (around US$57), which is cheaper than the membership’s annual US$99 price tag in the US.

Amazon Prime in China does not include any video or streaming services. The focus rather is on gaining market share by offering delivery perks like no-minimum free domestic shipping and free international shipping on purchases of at least 200 yuan (around US$29) from the Amazon Global Store. The storefront stocks over four million international products. Shipments are said to arrive in five to nine days in 82 cities across the country.

As many Australian retailers can attest, demand for Western products in China is strong. According to a 2016 study from McKinsey, China’s cross-border consumer e-commerce amounted to an estimated US$40 billion in 2015 and is growing upwards of 50 per cent annually.

Despite this, Amazon has struggled in China, which it entered more than a decade ago. Research firm iResearch estimates the e-commerce company commands less than 1.5 per cent of the market. In comparison, a report from Consumer Intelligence Research Partners suggests that nearly half of US households have a Prime membership.

The dominance of Alibaba certainly has made it hard for Amazon to gain a foothold in China. But according to a statement Amazon CEO Jeff Bezos made at the Code Conference earlier this year, the US company also made the fatal mistake of delivering a one-size-fits-all service in a country that demands localisation:

“We mostly tried to roll out what worked well for us in Japan, Germany, the UK, Spain, France, Italy, the US, etc., and it needed more local market customisation,” Bezos said. “If you want me to give one meta-lesson, it’s that one.”

At the same time, Amazon has increasingly been looking to India as its most important international market. The company launched Amazon Prime there in July, and it has said it will invest a total of US$5 billion in the market in coming years.

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