NEW OPPORTUNITIES

For e-commerce giant Amazon and its competitors, including NYSE-listed Alibaba, 2014 saw new opportunities to tap into this market.

On Aug. 20, Amazon China announced it would begin cross-border online shopping in the Shanghai Free Trade Zone. Chinese buyers could go to Amazon websites in the U.S. and other countries to buy online and receive shipments in a week to 10 days with lower delivery costs.

Amazon has tactically changed the "proxy" mode of overseas online shopping, whereby a Chinese buyer pays a proxy to buy goods abroad, and the proxy dispatched the goods as personal items.

The proxy mode has several risks, such as fake goods provided by the proxy, delivery delays, and documentation and tax issues during Customs clearance. If all goes smoothly, a shipment by air from the U.S. could arrive in one month, or 20 days from Europe, 10 days from Japan.

Amazon's bonded warehouses mode is easier and cheaper. With the help of data collected over the years, Amazon can forecast orders and send goods in advance by sea to Shanghai Free Trade Zone bonded warehouses. Amazon sends the items from Shanghai after a Chinese buyer makes a purchase.

Big players in China's e-commerce sector, such as Alibaba and NASDAQ-listed 360buy, have followed Amazon to open haitao channels.

Moreover, Alibaba uses its global payment system, Alipay, to bring in more players from abroad, including U.S. retailing giants Macy's, Bloomingdale's, Saks Fifth Avenue and Neiman Marcus, and luxury brands like Prada and Hugo Boss.

Chinese consumers can log on to foreign retail websites and pay in RMB through Alipay, which includes duties and delivery costs. Then they wait a week or two to receive the goods, which can be tracked online. This also avoids the risks of using proxies.

SHOPPING SPREE

Singles Day (Nov.11) set a new China record for online shopping. For Alibaba alone, online sales of Tmall.com, Taobao.com and its overseas outlets hit 57.1 billion yuan that day.

The stunning sales encouraged Alibaba, Amazon and other competitors to promote Black Friday, the big sales day after the U.S. Thanksgiving holiday.

Amazon China announced Black Friday discounts enjoyed by U.S. shoppers on its website. Macy's, Bloomingdale's, Saks Fifth Avenue and Neiman Marcus and others had Chinese-language webpages, saying they accepted RMB by Alipay.

IT news website PingWest reported Metao.com, a website dedicated to foreign goods, registered sales of more than 20 million yuan that day. Another haitao website, ymatou.com saw sales of 100 million yuan over five straight days around Black Friday.

Alibaba and Amazon declined to reveal their sales numbers, suggesting a worse-than-expected result. Some buyers found the offers too limited; others had reached their spending limits on Singles Day.

Macys.com president Kent Anderson said he hadn't expected big Black Friday sales in China this time, but it would help sales growth in future. Macy's had selected about 100 items to sell online for its China debut.

For Cao Lina, Black Friday was fruitful. She bought U.S.-made fish oil capsules and vitamin tablets for her parents, who live in southwest China's Sichuan Province. Ten days later they received the parcel sent from bonded warehouses in neighboring Chongqing.

"My parents are happy, and next time they want to do their own haitao," she says.