Amazon is closing its domestic Chinese e-commerce business, he told sellers Thursday. By July 18, Amazon.cn will no longer be open to third-party vendors, which means it will not compete with China's massive e-commerce giants, including Alibaba and JD.com. Amazon still plans to allow Chinese customers to buy in international versions of the site, including the US, British, German and Japanese markets of the company. Amazon says it is reassessing its compliance strategy in the country to meet those needs.
Amazon tells The Verge in a statement, "In recent years, we have been evolving our Chinese online retail business to increasingly emphasize cross-border sales, and in return we have seen very strong Response from Chinese customers. "Their demand for authentic and high-quality products from around the world continues to grow rapidly and, given our global presence, Amazon is well positioned to serve them."
Notice that the business will continue in China in the form from the Amazon Web Services cloud computing division, Kindle device sales and e-book content, and accessibility to third-party vendors in China who want to reach global buyers, Amazon will also continue to operate a limited and more economical version of its Prime subscription in China that does not include its video-on-demand benefits.
Amazon silently entered China early of the 2000s, but ultimately could not compete with rivals who offered low shipments, often free, without users meeting minimum orders. Amazon, in comparison, required customers to reach a minimum of 59 yuan to 200 yuan ($ 8.79 to $ 29.81), depending on whether the item was eligible for Prime.
Chinese consumers, often harmed by sellers who swallow shipping costs and offer overnight deliveries to the same province, choose national companies such as Tmall and Taobao from Alibaba. Amazon.cn owns only 6 percent of the Chinese e-commerce market, according to The Wall Street Journal citing Nomura Securities. For example, when I visited China last year, I was able to get a phone case from a Taobao vendor in the same province, and the order only cost me a couple of dollars, which places it well below the minimum required by Amazon for free shipping
According to the WSJ, Amazon could merge its operations in China with the Kaola of NetEase. NetEase is known for its partnership with Blizzard Entertainment to operate local versions of World of Warcraft and Overwatch in China, but also manages Kaola.com, an e-commerce platform that sells a variety products, including diapers, beauty products and Beats headphones. If a merger is made, Amazon would lose its name and operate under Kaola, but it could continue to make profits in the region as a result. Amazon declined to comment on any possible merger plan.
eBay also failed in China after investing hundreds of millions in domestic services in the country. After three years, eBay sold its operations in 2006, and has been on the sidelines ever since. Walmart equaled its Chinese operations at JD.com after years of trying to attract Chinese customers.
Outside of e-commerce, other technology companies clashed with domestic rivals, all with a similar conclusion: Google vs. Baidu; Facebook against WeChat; Apple against Huawei, Oppo, Vivo and Xiaomi; and Uber against Didi Chuxing, which is a rivalry that resulted in Uber selling his business in China to his main domestic competitor and effectively admitting the defeat.
On the contrary, the Chinese giants find a rare success abroad. AliExpress, similar to Amazon.cn, is Alibaba's effort to sell to Western consumers, but still struggles to compete against Amazon in its local court.
Nick Statt contributed to this report.