Costco enters China via Alibaba's Tmall

Costco, which is said to have been wary of entering the retail market in China, has made its fi rst online foray by selling through Alibaba.

The results have been very encouraging, especially considering the fact that the US warehouse club retailer offered only a very limited stock range compared to its global product offering. According to reports, Alibaba said it amassed US$6.4 million in revenues from Costco’s first month online with Tmall.

It would be interesting now to see how the company intends to further develop its business in China.

Costco has appeared reticent in entering China despite the country’s huge potential on reasons of strong growth at home and in other Asian markets where there were lower barriers to entry.

Its debut performance may encourage it to expand but possibly with caution.

Forbes predicts that Costco is likely to now enter China with its own direct-to- consumer offering online before establishing any physical stores there.

The Chinese market can be a difficult one for foreigners. Local players usually do better because of their knowledge of the Chinese market and consumer behaviour.

According to Forbes, Chinese shoppers tend to be “very cautious” and their buying decisions are not always price-driven. They can be more inclined towards products that are tailor-made and are concerned over the authenticity and quality of products.

“Due to these factors, US retailers entering the region have not always adapted well to the local environment, which has resulted in sluggish growth,” Forbes added.