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Alibaba Enters Japan’s Duty-Free Shopping Market

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Apr. 1 2019, Published 7:11 a.m. ET

Deal allows Chinese travelers to shop for duty-free products in advance

Alibaba (BABA) has built another platform to tap the spending of Chinese tourists traveling abroad. Alibaba has partnered with Laox to allow Chinese tourists traveling to Japan to stockpile duty-free products ahead of their travel, according to a report from the Nikkei Asian Review. Laox operates a network of duty-free shops throughout Japan. The partnership will allow Chinese travelers to Japan to shop virtually at Laox stores in Japan for duty-free items for up to one month before they leave China, allowing them to make some cost savings in their travel plan.

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China is Japan’s largest tourist source market, according to data from the Japan National Tourism Organization (or JNTO). International travelers spent $14 billion on shopping in Japan in 2018, indicating a huge new opportunity for Alibaba as it enters the business of facilitating advance shopping in Japan for Chinese tourists to the country.

Alibaba inserting itself in Chinese tourists’ travel plan

The partnership with Laox marks another step in Alibaba’s efforts to capture expenditures of China’s international tourists. The company has been cutting deals with businesses in places like America and Europe to adopt its Alipay service as a payment option to allow them to better serve Chinese tourists traveling to those places. Alipay and Tencent’s WeChat Pay are the most used mobile payment platforms in China. Alibaba’s pitch to overseas businesses is that it can sell more to Chinese tourists if they adopt the payment service that those tourists are already familiar with. Alipay charges a transaction fee when used to pay for purchases.

Alibaba posts $17 billion in revenue

Alibaba’s revenue rose 41% YoY to $17.1 billion in the third quarter, which ended in December. Revenue rose 22% YoY for JD.com (JD) and 20% at Amazon (AMZN) in that quarter. Shopify (SHOP) and eBay (EBAY) recorded a revenue increase of 54.3% and 6.0% YoY, respectively, in the December quarter.

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