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Amazon to Pull Plug on China Retail Operations as it Faces Entrenched Rivals

The US e-commerce pioneer will maintain other operations in China such as Amazon Web Services (AWS), Kindle e-books and cross-border teams that help ship goods from Chinese merchants to customers abroad.


Updated:April 18, 2019, 1:16 PM IST
Amazon to Pull Plug on China Retail Operations as it Faces Entrenched Rivals
Amazon logo. Image used for representational purpose. (Photo: AFP)
Shanghai; Amazon plans to close down its online retail operations that cater to consumers in China in an apparent admission of defeat to local e-commerce rivals such as Alibaba and JD.com, a report said on Thursday.

The US e-commerce pioneer will maintain other operations in China such as Amazon Web Services (AWS), Kindle e-books and cross-border teams that help ship goods from Chinese merchants to customers abroad, Bloomberg News said, citing unidentified people familiar with the plans.

Beginning on July 18, the company's Chinese website, Amazon.cn, will featured only diminished offerings sourced from its global network, the report said.

An Amazon spokesperson did not explicitly confirm plans to throw in the towel on domestic e-commerce, but said the company was looking to focus more on cross-border sales.

"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 a very strong response from Chinese customers," the spokesperson said in a statement emailed to AFP.

The company was making "operational adjustments to focus our efforts on cross-border sales in China", the statement said.

Founded by Jeff Bezos 25 years ago, Amazon in January became the world's biggest publicly traded company by market value and dominates in the United States and other markets.

E-commerce is just as popular with consumers in China -- if not more -- than it is in the United States, due to cheap delivery costs and a less-developed bricks-and-mortar retail landscape.

But Amazon has struggled to make headway in China, where a host of nimble rivals led by Alibaba and JD.com have capitalised on domestic supplier networks and a deeper understanding of Chinese consumers to gobble up market share before Amazon could gain a foothold.

Amazon has tried to make a go of it on China retail, investing in logistics and acquiring Chinese online book seller Joyo in 2004.
But it has barely made a dent.

The firm occupied just 0.6 percent of Chinese business-to-consumer online retail in the fourth quarter of 2018, with Alibaba's Tmall taking 61.5 percent, and JD.com 24.2 percent, according to China-based Internet consultancy Analysys.

Li Chengdong, founder of the Beijing-based internet financial research house Dolphin Think Tank, said Amazon was hurt by not adapting to what works in China.

"Amazon has been unwilling to localise in China, which feels kind of arrogant," Li said.

"They still insist on American-style web pages and do not promote merchandise during the 'Double 11' shopping season, in which Chinese e-commerce companies Alibaba and JD put a lot of effort."

"Double 11", also called "Singles' Day" refers to an annual shopping extravaganza that takes place each November 11 and in which tens of billions of dollars worth of merchandise is bought, in China's answer to the US "Black Friday" shopping day.

The Amazon statement said that "we will continue to invest and grow in China across Amazon Global Store, Global Selling, AWS, Kindle devices and content".

Bloomberg News called the move the latest sign that Amazon, due to the difficulty competing with Chinese rivals, would focus its overseas attention on India's growing market.

Amazon opened an India website in 2013 and has invested heavily in logistical infrastructure.
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