On August 20, the company’s 10th anniversary in China, Amazon announced a strategic cooperation with the Shanghai Free Trade Zone (SFTZ) and Shanghai Information Investment. The agreement ensures the direct delivery of millions of products from Amazon sites across the globe to Chinese customers and will allow small and medium-size Chinese enterprises to conveniently export their products to Amazon customers around the world.

With the already fierce competition in China’s eCommerce market ramping up, eCommerce players are scrambling to find ways to increase their competitiveness. After 10 years of operating in China, Amazon has found its new growth opportunity: cross-border eCommerce. The overabundance of middlemen in China’s traditional retail industry has driven up retail prices, especially for imports — so online retailing of imported goods via a large-scale eCommerce platform confers tremendous price advantages. Amazon aims to provide the best cross-border shopping experience for all of its customers — both in China and around the world. Amazon will invest and locate its cross-border eCommerce platform in the SFTZ and establish a logistics and warehouse center there; goods from Amazon’s overseas sites and vendors will enter China through the SFTZ. Amazon has a few key competitive advantages over other cross-border eCommerce vendors by offering:

  • A vast selection of products at competitive prices. Amazon will introduce more than 13,000 product items from 27 countries and focus on four major categories: international boutique, fashion, smart devices, and kitchenware. Consumers will have a vast selection of imported goods from Amazon’s platform. The scale of Amazon’s global operations gives it an unassailable price advantage over both online vendors and traditional retailers.
  • High-quality international brands and exclusive products.Amazon will satisfy fashion insiders’ need for trendy goods by introducing products from more than 70 global designers. And the firm will also offer thousands of kitchen supply products from exclusive international brands.
  • Fast delivery, convenient service. Amazon has built 13 fulfillment centers with a total of 900,000 square meters of floor space. This enables the company to deliver to 3,000 cities and counties across China; 146 cities will get same-day or next-day delivery service. In the meantime, Amazon provides mobile point-of-sale payments in 185 cities and over 800 self pick-up spots. It has set up four 24×7 customer service centers for Chinese customers.

According to the China Electronics Commerce Research Center, overseas purchases reached RMB 76.7 billion ($12.5 billion) in 2013, with year-over-year growth of 58.8%. This explosively growing market has attracted many eCommerce players to the segment in addition to the large eCommerce players that were already present, like Alibaba and JD.com. With these two Chinese eCommerce giants listed on US stock markets, they will expedite their expansion into global markets, with a strategic emphasis on cross-border eCommerce. While Amazon won’t be sailing in calm waters, this announcement is great news for Chinese consumers; Amazon’s entry into a previously chaotic overseas purchasing market will normalize the space. To learn more about about cross-border eCommerce in China, please watch for my report on China’s online retail forecast for 2014 to 2019, which will appear later this year.