China-based e-commerce firm Alibaba is teaming with Costco to provide Chinese consumers with food and healthcare goods as well as products under the Kirkland private label. Costco will open an online store in China through Alibaba’s Tmall marketplace, which offers merchants online storefronts and portals for payments.
“Costco sees tremendous growth opportunities in China, especially in light of Chinese consumers' increasing appetite for imported products,” said Jim Murphy, Costco’s executive vice president, in a statement.
The deal with Costco brings another recognizable Western brand to Tmall’s stable, following the recent additions of Inditex, Burberry and ASOS. For Costco, the move comes during an extended flat period of sales for the Washington-based firm. Currently, less than 3% of Costco’s revenue is generated from online sales.
Entering China will give Costco access to the world’s largest Internet retail market – one that reached $295 billion in 2013. Analysts see tremendous growth potential in Chinese e-commerce, too, with only about 46% of China’s population users of the Web. Costco expects Tmall’s warehouse stores to cut logistical costs and delivery time, too.
Alibaba’s Tmall, a B2C site, features brands from more than 50,000 global merchants, serving nearly 200 million buyers annually. It maintains a greater than 50% online B2C market share in China.