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Amazon jumps onto rival Alibaba's bandwagon in China

ALIBABA and Amazon, two of the world's largest e-commerce companies, appear to be working together in China, giving rise to speculations on whether the rivals are turning into "frenemies".

Seattle-based Amazon opened a store on Chinese e-commerce giant Alibaba's Tmall retail platform on Thursday. Amazon did not respond to a request for comment yet.

"We knew it was coming. We didn't know where, when, how, or why, but we knew Alibaba, the largest and most profitable e-commerce company in the world, and Amazon, the second largest, would inevitably come into direct contact with each other," said Michel Zakkour, vice president of Tompkins International Consulting, in a note.

Amazon, a company waging a losing battle to compete head to head with Alibaba in China, has seemingly declared "if you can't beat them, join them," Zakkour added.

The move helps Amazon expand in the lucrative e-commerce market in China, since Alibaba's Tmall accounted for 61.4 percent of business-to-consumer online commerce in the second quarter of 2014, while Amazon China only had 1.3 percent of that market, according the Shanghai-based iResearch Consulting Group.

Since Amazon also operates its own site in China, Zakkour said "this is the bricks and mortar retailing equivalent of Target announcing they will be opening stores within stores inside Wal- Mart."

It would appear that Amazon has realized that you can't do e- Commerce in China without partnering in some way, shape or form with Alibaba, Zakkour added.

Analysts said such move allowed them to open a major channel in China and also allowed Amazon to better understand the characteristics of e-commerce in China.

Nonetheless, Zakkour said, it remains to be seen if Amazon and Alibaba end up in a major partnership, if they develop into " frenemies" or if things fall apart and they battle for global e- commerce domination.


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