In a rare retreat for Amazon.com Inc., the e-commerce giant plans to shut down its Chinese marketplace business in July as it shifts its focus to offering mainland consumers overseas products rather than goods from local sellers.
Amazon will keep running its other businesses in China, including Amazon Web Services, Kindle e-books, and cross-border operations that help ship goods from Chinese merchants to customers abroad. Starting on July 18, customers logging in to Amazon’s Chinese web portal, Amazon.cn, will only see a selection of goods from its global store, rather than products from third-party sellers.
Pulling out of Chinese e-commerce represents a setback for the company in the world’s largest retail market and for Chief Executive Jeff Bezos, known for his willingness to weather losses to achieve long-term gains. It’s also the latest example of an American tech company in China struggling to contend with local leaders such as Alibaba Group Holding Ltd and JD.com Inc., as well as group buying app Pinduoduo Inc., which went public in New York last year.
Amazon entered China in 2004, when it bought a local online book seller for $75 million. Since then, it’s invested in warehouses, data centers, and programs to teach Chinese sellers how to get their goods to Amazon customers. It launched its Prime membership program in China in 2016 with hopes of luring customers with promises of high-quality Western goods and perks including free international deliveries. But extra perks such as Prime Video, which has been used to woo customers in other markets, aren’t available to users in China.
Alibaba, JD and other Chinese platforms also ramped up their offerings of everything from American cherries to Australian baby formula with steep discounts. Amazon still has less than 1% market share in China, according to iResearch.
However, Amazon is not entirely pulling out of the country, according to a company spokeswoman. The Seattle e-commerce giant will shift its focus of its online retail business in the country to cross-border sales, which cater both to Chinese merchants selling to consumers abroad and to Chinese customers looking for high-quality goods from around the world.
The pullback is the latest sign that Amazon is ceding China so it can focus on India, where it stands a better chance of becoming a dominant player. The company has plowed billions of dollars into the India business since opening its website there in 2013, building more than 50 warehouses to support the business.
But Amazon still has to contend with Chinese e-commerce players in India, where Alibaba and others are building up operations or investing in local startups such as Paytm E-commerce Pvt and BigBasket.