Amazon to close online store in China

Marco Green
April 20, 2019

American e-commerce giant Amazon announced on Wednesday (April 17) the company is shutting down its online marketplace that sells Chinese products to local customers.

Pulling out of e-commerce in China - the world's largest retail market - represents a setback for both Amazon and chief executive Jeff Bezos, known for his willingness to weather losses in order to achieve long-term gains.

Amazon is the latest example of an American tech company in China struggling to contend with local leaders like Alibaba Group Holding and JD.com, as well as group buying app Pinduoduo, which went public in NY previous year.

Sources familiar with its plans had told Reuters a day before that the company had planned to make such a move.

"Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling". However, till the July 18 of 2019, Amazon.cn customers will only be able to acquire imported goods, as well as books only in the electronic format and the services in the cloud.

Amazon will wind down support for domestic-selling merchants in China in the next 90 days and review the impact on its fulfillment centers in the country, some of which it may close, one of the people said.

While the well-known giant e-commerce site, Amazon's main competitive advantage in China is its vast selection of global products, which could be reduced as the plans of Chinese companies like Alibaba go through to improve their cross-border trading platforms. Alibaba in January reported its slowest quarterly earnings growth since 2016, while JD.com is responding to the changing business environment with staff cuts. Amazon said it would instead focus on selling to Chinese consumers through its global stores and its web and Kindle services.

She said it has been shifting the focus of its online retail business in China to cross-border sales, which cater to Chinese merchants selling to consumers overseas and to Chinese customers looking for high-quality goods from around the world.

Similarly, the country appears to factor less in the global aspirations of fellow USA tech majors Netflix, Facebook and Alphabet's Google, Wedbush Securities' Pachter said.

Amazon first entered the Chinese market in 2004 after taking over Joyo.com, a Chinese online bookstore. But in a sign of Tmall's dominance, Amazon opened an online store on the Alibaba site in 2015.

But Amazon still has to contend with Chinese e-commerce players in India, where Alibaba and others are building up operations or investing in local start-ups such as Paytm E-commerce and BigBasket.

Other reports by Click Lancashire

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