Amazon has announced that it will shut down its China online store as it struggles to compete with local rivals in the market. The US-based online retail giant said that the online store will be shut down by July 18, 2019 and it will instead focus on the business of selling overseas goods and cloud services in the world’s most populous nation. The move highlights how US-based tech companies find it difficult to get a firmer footing in the Chinese market. Facebook, the world’s largest social media platform, is yet to find a way to establish in the market while Google is facing criticism for its plan to enter the market by censoring search.
In the online marketplace, Alibaba Group Holding’s Tmall and JD.com controlled 82 percent of the Chinese e-commerce market last year, said iResearch Global in a report. Amazon told Reuters that it has already begun notifying sellers that it will no longer operate a marketplace and will also not be providing sellers services on its Chinese website. “We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible,” an Amazon spokeswoman told Reuters in a statement.
While Amazon is exiting Chinese online retail market, the company will continue to allow sellers interested in continuing to sell on Amazon outside of China through Amazon Global Selling marketplace. The report adds that Amazon shoppers in China will not be able to buy goods from third-party merchants in the country but they will still be able to order from other countries like the United States, United Kingdom and Japan via the global store.
The company will shut down support for domestic selling merchants in China in the next 90 days. and it also plans to review the impact on its fulfillment centers in the country. It is expected to close some of those in the aftermath of this pull out. Amazon’s exit from Chinese market is mainly caused by the fact that it did not offer any competitive advantage over its local rivals. “There’s no reason for a consumer to pick Amazon because they’re not going to be able to ship things as fast as Tmall or JD,” Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, told Reuters.
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Having struggled to establish itself in the online retail space, Amazon says it will now focus on investing and growing in China through its Global Store, Global Selling, Kindle e-readers and online content platform. Amazon will also focus on Amazon Web Services, its cloud and data storage service. The announcement will help local rivals like Tmall and JD but it also shows a larger picture of e-commerce slowdown in China.