Alibaba Group, ShopRunner plan to launch joint China service

May 08 2014, 08:20 IST
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'The history of US retailers going to China is one that's fraught with peril.' 'The history of US retailers going to China is one that's fraught with peril.'
Summary'The history of US retailers going to China is one that's fraught with peril.'

Alibaba Group Holding Ltd <IPO-ALIB.N> has struck one of its largest deals with a U.S. e-commerce company, agreeing to help Amazon.com rival ShopRunner expand into China.

ShopRunner, whose partners include Neiman Marcus and Nine West, will use Alibaba's domestic logistics infrastructure to launch in China later this year, ShopRunner Chief Strategy Officer Fiona Dias told Reuters on Wednesday

The move would offer a new way for U.S. retailers to tap the world's second largest economy, where many have stumbled in the past. It also allows Alibaba to cater to booming Chinese demand for authentic American products, in a market flooded with counterfeits.

"The history of U.S. retailers going to China is one that's fraught with peril," Dias said in an interview. "This is a very low cost way to do it that doesn't require them (U.S. retailers) to go to China to figure it out."

In October, Alibaba paid $202 million for a 39 percent stake in ShopRunner, which launched four years ago and sells products from thousands of brands like American Eagle Outfitters and Calvin Klein. The startup, with over a million members, is still a minnow compared with Amazon or eBay Inc, but a move into China could afford a major boost to its growth.

Alibaba and ShopRunner now aim to create a "joint brand" in China, Dias said. The venture will be in addition to Alibaba's other Web sites, including the three marketplaces that make up more than 80 percent of the e-commerce giant's revenue, according to the company's IPO filing on Tuesday.

U.S. retailers from Best Buy to Wal-Mart have long tried to crack a Chinese retail market dominated by strong local players. But many have run afoul of China's patchwork of regulations and competing local interests. Some, like Home Depot Inc and eBay, shut their big-box stores or pulled out of the country.

"Everyone would love to have a way to at least test the market," said Richard Last, a former JC Penney executive and now a professor of retail at the University of North Texas. "If you partner with the Alibaba group, you might have a good shot at being successful."

COURTSHIP

Alibaba, which on Tuesday filed for what could eventually become the world's largest technology debut, has been trying to court U.S. retailers for years. Its Tmall marketplace hosts an increasing number of brands like Gap.

The company also has been investing in U.S. technology startups, from ridesharing service Lyft to

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