Amazon is used to charging its marketplace sellers 20 to 30% for each transaction. The deal with Alibaba only has them paying 5% for each sale on products such as candy, clothes, shoes and wine.
One of the big reasons why Amazon has really failed to have a meaningful impact in China with selling digital books or products is because government regulations have historically safeguarded China-based companies, making it difficult for foreign firms to gain a foothold without at least partnering with a Chinese company. For instance, in the video game market, the only way for console makers to sell their hardware to Chinese consumers is to team up with a China-based business. This is why basically in order to do business in China they had to partner with Alibaba.
Alibaba is a juggernaut, although some people have equated them to being an Amazon clone. When they filed for an IPO the company was valued at $25 billion dollars, which is more than Amazon and eBay combined.
It will be interesting to see if Amazon can solve the shipping issue, which historically has not resonated well with Chinese customers. Things simply take too long to get from point a to point b and likely Amazon will have to heavily invest in fulfillment centers in China to predicatively stocks the most commonly ordered products.