Amazon is partially retreating from the world’s biggest market for online shopping.It will close its marketplace in China in the coming months, meaning Amazon customers in the country will no longer be able to buy goods from Chinese merchants.Amazon (AMZN) did not explain why it was withdrawing its marketplace service, saying only it will instead focus on selling goods shipped from other countries into China.
“We are notifying sellers we will no longer operate a marketplace on Amazon.cn, and we will no longer be providing seller services on Amazon.cn effective July 18,” the company said in a statement.
Amazon’s platform competes for Chinese sellers with Tmall, owned by the country’s e-commerce leader Alibaba (BABA).Amazon first entered the Chinese market 15 years ago, when it acquired an online book retailer, but it has struggled amid fierce competition. Research suggests that the company’s market share in China was miniscule compared to local rivals.China’s online retail market is huge, notching up about $2 trillion in sales annually, according to research firmer eMarketer. The US market is worth just over one quarter of that.The Chinese market is dominated by Alibaba, which accounts for more than half of all transactions, and local rival JD.com (JD), eMarketer data shows.”There is too much domestic competition and Amazon lacks the kind of brand awareness that Tmall or JD.com have,” said Ben Cavender, an analyst at China Market Research Group. “That leaves Amazon in a position where it has to spend a lot of money to acquire customers while also competing aggressively with multiple strong players on price.”Singles Day, Alibaba’s annual online spending blitz, regularly racks up bigger sales than Black Friday and Cyber Monday combined.Users logging onto Amazon’s Chinese site after July 18 will see products sold from its global store, the company said.
“Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we’ve seen very strong response from Chinese customers,” Amazon said.It will retain its other operations in China, such as cloud computing services. It will also continue to sell its Kindle e-readers and content in the country.”Amazon’s commitment to China remains strong. We have built a solid foundation here in a number of successful businesses and we will continue to invest and grow in China,” the company added.