Reuters

(Reuters)

Costco to Enter China Through Alibaba's Tmall

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U.S. warehouse club operator Costco Wholesale Corp said it would open an online store in China using Alibaba Group Holding Ltd's fast-growing Tmall online marketplace, entering the country's booming ecommerce market to combat slowing sales at home.

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Costco said the online store would provide customers in mainland China with both branded products, which would initially include food and healthcare goods, and also products under its Kirkland Signature private label business.

"Costco sees tremendous growth opportunities in China, especially in light of Chinese consumers' increasing appetite for imported products," Executive Vice President Jim Murphy said in a statement on Tuesday.

China-based iResearch in July raised its 2014 growth forecast for China's online retail sales to 45.8 percent from 32.4 percent. The consultancy forecast sales of 2.76 trillion yuan ($446.6 billion) for the year.

Alibaba's Tmall offers virtual store fronts and payment portals to merchants and Costco said Tmall Global's warehouse stores would help it cut logistics costs and delivery time.

Costco, which has reported slowing same-store sales growth for the last three years, said Tmall.com would also connect it with its consumer online marketplace Taobao.com and its daily deals site Juhuasuan.com.

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Costco's Asian presence, as of May, included 19 shops in Japan and 10 each in Taiwan and Korea through majority-owned subsidiaries, while its online presence was restricted to the United States, Canada, the United Kingdom and Mexico.

The company adds to a growing list of western retailers, including Zara owner Inditex, Britain's Burberry and ASOS, who have joined TMall this year.

Costco shares closed at $126.97 on Monday on the Nasdaq. They have risen 6.7 percent so far this year compared with a 1.8 percent fall in the broader Dow Jones U.S. retailers index . (Reporting by Rama Venkat Raman and Sruthi Ramakrishnan in Bangalore; Editing by Gopakumar Warrier and Savio D'Souza)