Global ecommerce giant Amazon is to make a rare retreat from China and has confirmed it will pull domestic ecommerce operations in the country this July.
Amazon will continue selling imported products and services to consumers in China, but has abandoned its platform for third-party merchants in the country after running up against stiff competition from established domestic platforms like Alibaba and JD.com.
Chinese shoppers will still be able to order goods from sellers in the States, Japan and parts of Europe through Amazon Global Store, and Chinese merchants will be able to sell to overseas customers, too. Other Amazon divisons, such as its Kindle marketplace, online content hubs and Amazon Web Services, will also remain open to consumers and businesses in China.
Analysts say it’s no longer profitable for Amazon and growth is stagnant. Some point to Amazon’s failure to evolve its offering to suit local tastes: what works well in terms of web interface and tone of voice in the west doesn’t necessarily translate in China. Others blame the cost its sunk into logistics while rivals instead partner with smaller courier and fulfilment businesses.
Support for domestic sellers in China will be pared back over the coming 90 days, Amazon says. This will include a rethink of its logistics and fulfilment operations in the country which may lead to some closures, according to a Reuters source.
Though Amazon was an early entrant in China’s ecommerce sector, launching in 2004, domestic rivals like Alibaba’s Tmall and JD.com – whose billionaire founder has in recent days been accused of rape by a student – have proven increasingly popular with consumers, often offering free delivery and goods at a fraction of the price leaving Bezos’ behemoth with no competitive edge.