Is Amazon rolling over for Alibaba in China?

As Amazon.com struggles to expand in China, the U.S. online retailer has opened a flagship store in local competitor Alibaba Group Holding’s online marketplace. Amazon’s store inside Alibaba’s Tmall, launched this week, so far offers a limited number of product categories including imported food, women’s shoes, toys and kitchen equipment. The food section, for example, includes Blue Diamond almonds and Californian wine, while the toy section carries international brands such as Lego and Crayola. By becoming a Tmall seller, Amazon becomes Alibaba’s customer. Retailers and brands that operate their flagship stores on Tmall pay a commission to Alibaba for each transaction. Amazon is a household name for U.S. shoppers, but the company has faced an uphill battle in China, where Alibaba dominates the growing e-commerce market. Amazon had just a 1.3% share of the total business-to-consumer market in China in the third quarter of last year, a 13.8 percentage point loss of market share from the same quarter in 2008, according to a Daiwa Capital Markets report on e-commerce in China, citing data from iResearch.