NEW YORK (TheStreet) -- China is already the world's largest e-commerce market, and with $1 trillion in sales up for grabs by 2019, the battle for market share among U.S. and Chinese e-commerce companies is intensifying.
San Jose-based eBay (EBAY - Get Report) recently partnered with Beijing-based JD.com (JD - Get Report), and Seattle-based Amazon (AMZN - Get Report) has partnered with Hangzhou-based Alibaba (BABA - Get Report). All four are actively vying for the attention of Chinese consumers.
The potential in China for these companies is huge. According to Forrester Research, the e-commerce market in China is set to reach $1 trillion dollars by 2019, up from $307 billion in online sales in 2013.
Both eBay and Amazon already operate their own sites in China, but the partnerships could help them expand their footprints in the country.
Alibaba is the clear leader in the China, accounting for 57% of the business-to-consumer market. JD.com comes in second with 21%. Alibaba controls a whopping 85% of the mobile commerce market in China with JD.com at 7%. Alibaba reported $367 billion in gross merchandise volume for the past year, while JD.com reported $41.9 billion in GMV.
"We believe that this situation is unlikely to change in the next few years given the leaders' sheer size and the high brand recognition that they enjoy among merchants and shoppers," Forrester analyst Vanessa Zeng wrote in a recent report, referring to Alibaba's current stronghold in the market.
While Alibaba is nicely positioned in China, JD.com, Amazon and eBay are far from giving up on the market.
By bringing eBay and other international sellers aboard through a new cross-border platform, JD.com is hoping to gain an advantage in the market.
"This new cross-border sales platform marks a major step forward in connecting Chinese consumers with international brands,"said JD.com founder and CEO Richard Liu in a press release. "By combining the advantages of China's cross-border free trade zones, JD's warehouses and unparalleled last-mile logistics network, and our experience developing winning marketing campaigns for our partners, JD Worldwide gives international sellers and brands the most comprehensive and effective solution available for reaching Chinese consumers."
JD.com is also trying to attract more customers by taking control of the whole transaction, from order to delivery. It keeps its inventory in its own warehouses, and delivers products through its own logistics system, similar to what Amazon does in the U.S. That's helping JD.com earn consumers' trust: They know their products will not be fake if they come directly from JD.
Alibaba, on the other hand, follows a business model similar to eBay, merely serving as a marketplace for third-party sellers and delivering products through third-party logistics companies.
Perhaps that's why eBay teamed up with JD.com and Amazon with Alibaba, since there is no overlap in their respective business models, Needham & Company analyst Kerry Rice said. "Maybe eBay chose to partner with JD.com because it's less competitive," he added.
However, the two teams may not be permanent.
eBay and Amazon may be using JD.com and Alibaba as entry points into China so that they can learn about that nation's consumer behavior and cultural differences before they move to solidify their independent presences. It will also get their names in front of the average Chinese consumer who visits Alibaba frequently, but who may not have heard of eBay or Amazon.
"It's more of a market intelligence approach to understand how the consumer shops and how to win in China," said Michael DeSimone, CEO of Borderfree, which helps retailers such as J. Crew, Macy's (M - Get Report) and Neiman Marcus operate internationally. "I don't see this as a massive coming together of the two to figure out how to work together. That may happen but I don't see it as that. I don't see Amazon giving up to Alibaba. I think they're being smart about learning."
Both eBay and Amazon already have their own separate Chinese sites, but neither has gained any real traction in the market yet, as evidenced by Alibaba and JD.com's dominant combined market share.
eBay first made a large attempt at entering China decades ago, and it largely failed. "The approach eBay took was not necessarily tailored or as relevant to the Chinese market as it could have been," said Johnna Hoff, director of communications at eBay. Now, eBay is taking a different approach by setting up shop on JD.com and trying to tailor its shopping experience more to Chinese consumers, she explained.
"Right now, we are really focused on experimenting and teaming up also with strong domestic partners to take the friction out that our buyers may have faced," added JF Van Kerckhove, vice president of geographic expansion and cross-border trade for eBay.
Van Kerckhove admits that it's a long-term journey, but one that will be rewarding for eBay and its sellers. "We don't have to believe in a massive upside to make it worthwhile, given the market," he said. "Even 1% is a $6 billion opportunity."
Amazon, too, has long seen the opportunity in China, having first entered the market in 2004.
In March, Amazon opened up shop on Alibaba's T-Mall marketplace "as an additional and experimental traffic channel," Amazon spokeswoman Sharon Zheng said. "Our customers in China trust that we offer authentic, high-quality products, and we saw an opportunity to reach new customers, so we're trying it out."
Nonetheless, both eBay and Amazon have a long road ahead before they'll reap those benefits. Neither breaks out sales for China, but from an awareness standpoint at least, the two are certainly behind.
"I don't think eBay has too much presence in China," said Si Shen, founder of PapayaMobile, which provides a Chinese advertising platform for companies like Amazon and Alibaba. "I don't think regular users have even heard of the company."
And Amazon isn't much further ahead, according to Shen, who called it "a very minor player in the e-commerce field in China and for only very high-end users that are looking for products outside of China."
Shen is working with Amazon to deliver app install ads in China, but she said that it has been difficult because Amazon is "not very well localized in China," so it is less efficient than local players.
When Shen integrated Alibaba into her platform, it took half a day, she said, but for Amazon "it takes three months to convince them to do the integration and they're still waiting for a response from their headquarters."
"It's a small example, but you can see how the style and efficiency level is for these U.S. companies in China," Shen said.
Like all U.S. retailers, Amazon and eBay face real challenges abroad. There are language barriers, cultural differences, back-end logistics, customs clearance, delivery, payments, fraud and a host of other issues. It's not as if they can just create a Chinese website and assume the orders will flow in and deliveries will happen seamlessly.
"It's complex to sell internationally," DeSimone said. There are stumbling blocks "from the point the consumer lands on the website until the purchase is complete."
"Starting with a known quantity like an Alibaba property is a great way to enter the China market," he said.