New name, same game
Updated: 2011-11-25 07:34
By Su Zhou, Lin Jing and Tang Yingxian (China Daily)
Wang Hanhua, president of Amazon China, says more international approaches will be brought to China. Provided to China Daily
Amazon China's new marketing campaign draws on recognition of its parent company for new customers
People waiting for the subway in Shanghai may notice new posters displaying a computer mouse clicking on the address "z.cn". It's not an advertisement for a new Internet site, but the new marketing campaign for Amazon China, the recently rebranded name of the US-based e-commerce giant Amazon.com Inc's China operations.
This is the first time Amazon has been so public about advertising its company, says Wang Hanhua, the president of Amazon China. "If the trial in Shanghai works, we will promote the strategy in other cities in China."
Amazon entered the Chinese market in 2004 by acquiring the local e-commerce website Joyo and had been using "Joyo Amazon" as its brand. Now, to access the website, customers only need to type in z.cn, which is short for and links to Amazon.cn.
Billboards and TV ads remind Chinese consumers that Amazon China is not only an online bookstore, but also an online mall, and tries to relate Amazon.cn to the globally known Amazon.com.
Amazon China's strategy has turned more aggressive with more investment from its US-based headquarters in Seattle.
On Oct 27, Amazon China opened a new operations center in Kunshan, Jiangsu province, which covers more than 120,000 square meters. This is its largest center outside the United States.
Wang says Amazon will double the number of operations centers as well as its investment into China.
Amazon China also established a platform for merchants to sell products and services on its website, something the US site has been doing for years.
The company's "Selling on Amazon" campaign was introduced to China in July. This platform is expected to attract more customers by offering more choices.
"We are fully aware of the potential of this business, but we need to be prepared in logistics, packing center and operation systems."
This division already makes up one-third of the total business for the whole Amazon group, Wang says.
Amazon China also plans to bring more international approaches to China, including the hotly discussed Kindle Fire, a tablet version of Amazon.com's Kindle e-book reader. Wang didn't unveil any more details, including a release date.
Farhad Manjoo, an American columnist, comments in his recent article titled The Great Tech War of 2012 for Fast Company that Amazon.com used to be known solely as a web store. But it, Apple, Facebook and Google have "come to define 21st century information technology and entertainment" and will likely butt heads to dominate more markets, including mobile phones, tablets, mobile apps and social networking.
In China, Amazon still has some growing to do before it can take over other markets.
"Amazon China will still stick to the online business-to-customer (B2C) for a longer time," says Chen Shousong, an e-commerce analyst with Analysys International, a Beijing-based Internet research company. "The localization of global strategy here could encounter a series of problems, like intellectual property rights of Kindle books. It still has a long way to go."
Wang says he doesn't think there will be as dominant of a player as Amazon.com in China. "The Chinese e-commerce market will have a lot of winners, and Amazon China will be one of them."
But the competition of e-commerce in the B2C market has become increasingly fiercer. Amazon China has more challenges to face beyond rebranding.
According to Analysys International, sales on Chinese B2C websites are expected to more than triple to 650 billion yuan ($102.3 billion, 75.8 billion euros) in 2013 from an estimated figure of 198 billion yuan this year.
Leading players are Taobao Mall, a subsidiary of Alibaba Group, and Jingdong Mall, with market share at 50.9 and 18.6 percent respectively, according to iResearch, a Beijing-based consulting group. The market share of Amazon is only 2.9 percent.
Alibaba has recently split off Taobao Mall from Taobao Marketplace, and is aiming to develop Taobao Mall, which is geared toward the B2C market, as a platform of logistics. Taobao Marketplace allows customers to sell to other customers.
Taobao Mall has the advantage of support from Alibaba, which has well-established databases, long-term relationships with merchants and customers, an online payment system and much more.
Jingdong is planning to go public next year. The rapid growth of Jingdong since opening in 2004 can be attributed to its focus on 3C (computer, communication and consumer electronic) products from the beginning. Jingdong is also undergoing a rebranding campaign and is marketing itself as a shopping mall.
Compared with its competitors, Amazon China's strategy isn't aggressive. It needs to find ways to stand out from the homogeneous competition to remain viable.
Wang insists Amazon China guarantees customers' experiences will be better than its competitors, even with the same product, the same price and the same delivery time.
"Amazon China's market performance was below our expectations," Chen says. "However, Amazon China is still one of the leading players though it is not the best; Amazon China still has the potential of further development.
"After tapping into China by acquiring Joyo.com, a Chinese online book store, seven years ago, Amazon China has been very prudent in the B2C market," Chen says. "Its competitors, like Jingdong, are very active in marketing and logistics."
Amazon China has been trying to establish more operations centers, improve customers' experiences and diversify its categories to look more like a combination of retail superstore Carrefour and Taobao Mall, Wang says.
"The basic point of our business in China is whether we can provide customers with more products at lower prices, swifter delivery and better quality, so we aren't introducing more approaches in China aggressively," Wang says.
Amazon China's obsession with Chinese customers' experiences has pushed Wang and his team to do a lot of "micro-innovations", such as communicating the time of delivery and better packaging - details all quickly copied by other B2C websites.
"Amazon China's strategy is to invest continuously and focus on the long-term market; that's the reason why Amazon didn't question its investment into China when it didn't produce high returns," adds Wang.