Costco Rubs The Magic Lamp: To Enter China Through Alibaba's Tmail
Costco Rubs The Magic Lamp: To Enter China Through Alibaba's Tmail
US retailer Costco Wholesale Corp has just announced plans to start an online store through Alibaba Group Holding Ltd's Tmail online marketplace. With slowing sales at home, Costco is now looking to tap the booming Asia market and the billions of online consumers in China, according to a Reuters report.
The warehouse club operator has announced that the online store will sell branded products which will include food and healthcare goods to start with along with store branded products under the private label called Kirkland Signature.
Low capital entry will provide Costco the chance to enter Chinese markets using nominal capital investment, according to analysts quoted by Reuters. Alibaba Tmail will also provide virtual store frons and payment portals for merchants.
Many Western retailers such as Inditex, Burberry and ASOS joined Tmail last year to tap Chinese markets. Costco has indicated that Tmail global's warehouse stores will be perfect for cutting down on delivery time apart from logistics costs, Reuters reported.
"Costco sees tremendous growth opportunities in China, especially in light of Chinese consumers' increasing appetite for imported products," Executive Vice President Jim Murphy said in a statement released to the media. Costco is now aiming to grow its online business and US retailers are on the move to find big markets as the online shopping movement gathers momentum.
Costco has been reporting same store sales growth rate for the past 3 years now and the retail giant has figured it is now time to grow and spread into the e-commerce niche for greater success.
Currently, Costco has 19 shops in Japan and 20 of which half are in Taiwan and the other half are in Korea through majority-owned subsidiaries. Online presence is restricted to North America and Latin America only.
With so many angles to see this from, what is clear is that Costco has yet to tap the potential of the Asian markets. E-commerce has its share of critics but it is really catching on in recent times and there is little doubt established retail giants will have to think up new ways to catch up with the changing market. Collaborations such as these go a long way in accomplishing this.
E-commerce has a lot of scope in the Asian economies which are currently on the path of development and growth. Consider the demographic dividend of India which some see as a ticking population time bomb. Seeing it from another angle, if the demographic dividend pays off, it's a great market for foreign retailers. Whether India reaches this stage influences the prospects of this retailers as well in a way.
