Jacob Cooke, chief executive officer of consulting firm Web Presence in China, explained that Amazon could not compete with a gigantic local player like Alibaba.
“Alibaba has in-country experience, low costs that are passed on to consumers and unique knowledge of counterfeits / fake items. Additionally, they have market data in China that is superior to Amazon’s,” he said.
Analysts said Amazon has been concentrating on cross-border commerce since realizing that it cannot effectively compete in the “local to local” business of selling Chinese goods to Chinese customers, which accounts for the bulk of e-commerce activity.
“Our belief is that the cross-border business suits Amazon much better, as the “local to local” model is filled by large companies who operate on very low (virtually non-existent) margins,” said Cooke. “We feel that cross-border is exactly where Amazon should focus their efforts in China, based on their strengths.”
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