Instead, as first reported by Reuters and Bloomberg, Amazon intends to focus its efforts on selling imported goods to Chinese consumers and on its lucrative cloud business.
It means Amazon shoppers in China will no longer be able to buy goods from third-party vendors in the country, although they can still place orders from merchants in the US, the UK, Germany and Japan via Amazon’s global store.
“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 seen by the Financial Times.
“Over the past few years, we have been evolving our China online retail business to increasingly emphasise cross-border sales, and in return we’ve seen very strong response from Chinese customers,” the statement added.
The partial retreat comes 15 years after Amazon first entered the Chinese market in 2004 with its purchase of Joyo.com, an online book and video retailer, for $75m. Joyo was later rebranded to Amazon China in 2011.
While Amazon made some initial headway with Chinese consumers, the company has struggled to compete with the likes of Alibaba and JD.com, which often offer a wider range of goods and can deliver them faster. Amazon also has faced growing pressure from smaller domestic rivals, such as Pinduoduo and VIP.com.
According to CNBC, Amazon has not been “as aggressive on the marketing front” as its Chinese rivals, which host massive sales promotions on Singles’ Day, the biggest online shopping event in the world.
In addition, Amazon failed to localise its operations, according to some analysts. “[Amazon ended] up with people who don’t know the local markets well [and] who are trying to compete with extremely well-capitalised and aggressive local players,” said Shaun Rein, MD of Shanghai-based China Market Research, in comments to the Financial Times.
But for all its difficulties in China, there is little sign that Amazon plans to scale back its activities in India where it is locked in battle with Walmart-owned Flipkart.
Amazon is already committed to investing $5.5bn on e-commerce in the country and just last year unveiled a Hindi-version of its mobile website and Android app to extend its reach to approximately 530 million Hindi-speaking consumers.
Sourced from Reuters, Bloomberg, Financial Times, CNBC, CNN; additional content by WARC staff