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Copying business is easy but make it not

By Han Shasha (People's Daily Online)    13:39, July 23, 2015

San Francisco, July 22, (People's Daily Online)--"Amazon's Prime Day is more like a copy of Taobao's Double 11," said Derek Wang, former VP of Alimama, the Advertising BU of AlibabaGroup, a giant online retailer in China.

Even the US online news aggregator Huffington Post wrote that "Amazon seems to have taken a page from Alibaba's playbook". However, the difference is Taobao announced its jaw-dropping $9.3 billion sales in 24 hours after the online shopping spree ended on November 11, 2014,while Amazon refused to mention its one-day business numbers.

The only data can be traced about Amazon's celebration day is that"At best, it'll be Cyber Monday which is about $2 billion," saidSucharita Mulpuru-Kodali, an analyst at the market research firm Forrester, referring to the U.S. online shopping day that falls just after Black Friday.

The one-day sale was actually a celebration of 20th anniversary of Amazon's web-site launch and 10th anniversary for the Prime service.

Compared with the frenzy Chinese that set an alarm to vie for discounted goods on Taobao, what Steve Wang did is nothing. He post a moment on Wechat that "I checked three times from morning to the evening on the prime day, but I find nothing to buy." He lived in Silicon Valley for two years.

"Travel costs, social structure and vertical-driven demands are the main factors for the development of ecommerce," Derek said. He specified that less than 100 million private cars in China have already messed up many big cities with pollution and traffic congestion."If it takes too long to travel from one place to the other, you would rather stay at home. Besides, most Chinese people enjoy staying at home, which is the typical lifestyle prevailing in China,"he said, "But Americans like social, they would like to share great time with people whenever they have time."

"That's why the development of ecommerce brings such a great impact to Chinese supermarkets or malls but little to the U.S. ones." When he made this comment, he was sitting in a coffee shop in San Francisco where every table has been taken. "Malls in the United States are places for social and shopping. In China, they are more like utilities for products display, catering, and leisure. Shopping function has been greatly reduced."

Elian, a college student at UC San Diego said "Although my Americans friends are also ecommerce-savvy, they still prefer trying on clothes in malls. And the prices are the same in store and online." She added that "Not like in China, we try clothes or shoes in store but buy them online for there are price differences."

These disparities also teach lessons for a company to expand its international business in other countries. The recent one is the U.S. operation of Alibaba. 11 Main.com is its U.S. online shopping site trying to replicate the giant's success by providing an online platform for merchants to sell products in fashion, home, tech, toys and jewelry and others in the United States. However, after one year in business, the website was announced to be sold last month.

On the website, many of its brands are no-name brands. One consumer questioned that "why would I go to this website to buy things I don't even know at a higher price without history of customer reviews?" The website is more like a brand company's official website to display products. As a result, the customers have no idea of the quality or reputation of the merchant.

"Logistics infrastructure is another problem," said Derek. If consumers buy something at Amazon, the product is either shipped by Amazon or by the merchant through Amazon. With strong logistic support, Amazon can cut time and shipping cost to keep the efficiency for sending products to consumers. While Alibaba is just an agent to introduce the consumers to the merchants. The business model is quite a success in China but a failure in America.

With more and more business models copied between countries and even around the world, how to localize it is a realistic and imminent question. Derek said, "Uber, as a new form of vertical-driven ecommerce, has done great in many countries, but whether it can live and grow in China is still hard to predict."

"Doing business in China, you need to have the mindset that you are doing this in other 25 countries for each city has its own market with various demands," he explained. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Zhang Qian,Bianji)

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