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Costco Taps Alibaba for Online Debut in China

Warehouse club Costco Wholesale Corp. announced Tuesday that it will enter the Chinese market for the first time by opening an online flagship store on Alibaba’s Tmall Global platform. Tmall Global lets foreign brands and retailers establish a presence on Tmall.com, China’s largest third-party platform for brands and retailers, without the need for physical operations in the country.

Costco will tap into Chinese consumers’ increasing demand for foreign brands with its online store at costco.tmall.hk, offering a range of food and healthcare products, and Costco’s private-label Kirkland Signature line.

Jim Murphy, Costco’s executive vice president, said, “Costco sees tremendous growth opportunities in China, especially in light of Chinese consumers’ increasing appetite for imported products. We have chosen a great partner, Alibaba, for the official launch of Costco’s Flagship Store. Our Tmall Global flagship store will give Chinese online shoppers a channel to purchase directly from Costco.”

Alibaba Group’s chief operating officer Danien Zhang welcomed Costco on behalf of Chinese consumers and Tmall, and said, “This important partnership will help give Chinese consumers a better shopping experience, and will enable us to better support the expansion of cross-border retail sales of consumer goods into China.”

Costco is not the first retailer to target Chinese consumers via Tmall. Just last week Inditex announced that it would cede partial control of its online operations to Alibaba, opening an online store on Tmall.com for its Zara brand this month. Gap and Nike are already doing business on the platform.

Maggie Wu, general manager of International B2C Division of Alibaba Group, said, “As Tmall.com and Costco deepen their collaboration, Tmall.com will connect Costco with our Group’s C2C platform, Taobao and group-shopping site, Juhuasuan. Together, we will develop and explore innovative market campaigns to unlock Costco’s membership value.”

Costco said it will “carefully select” the most suitable product, which will be offered at “highly attractive prices” for its Chinese shopper based on its own analysis of the consumer there and Alibaba’s expertise in big data. The warehouse club noted that it will continue introducing new brands and products to Chinese consumers, and that Tmall.com’s bonded warehouse model will aid Costco in reducing logistics costs and shortening delivery time.

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