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Amazon Calls it Quits in China
After over a decade of trying to make its mark in China, Amazon has announced that it will be closing Amazon.cn, focusing its efforts elsewhere.
Since it first tried to crack the Chinese market in 2004, Amazon has decided that it’s no longer feasible to keep the marketplace running at a local level. It announced last week that it would be closing its domestic presence in China.
“[W]e 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,” a spokesperson from Amazon said. “We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible.”
Amazon will instead shift its focus in China to cross-border trade. “Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling,”Amazon said in a statement. “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 in a statement. “Their demand for high-quality, authentic goods from around the world continues to grow rapidly, and given our global presence, Amazon is well-positioned to serve them.”
Even with its lengthy (relatively speaking) presence in China, Amazon had failed to gain traction, despite the booming e-commerce market. If anything this may have worked against Amazon, with many Chinese shoppers reliant on Alibaba (which claims the market share) and JD.com. It is predicted that by the end of 2019, 33.6 percent of all retail sales in the region are expected to come from digital channels. According to Amazon’s financial reports, sales in China make up such a small percentage of its total sales that is doesn’t actually break them out. The smallest market included in its report is Japan, which makes up only 6 percent of Amazon’s global sales.
Amazon first entered China with its takeover of Joyo.com for $75 million. It rebranded to Amazon China seven years later, yet it failed to compete with local competition. Elements of pricing, delivery and payments didn’t resonate with local Chinese shoppers, and despite its early entry and lack of restrictions giving it a front-foot compared to entrants today, its strategy never brought success.
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