In a rare occurrence, Amazon, the e-commerce giant, announced closure of its local marketplace in China. This July onwards, the company plans to shift its focus to overseas products rather than local goods. However, other affiliated businesses like Kindle, Amazon Web Services, and cross border operations will continue. As a result, customers logging in to Amazon.cn will see products from the global store only, and no third part sellers.
This comes as a huge setback to the retail market giant. The struggle to compete with established local vendors like Alibaba and JD.com is strikingly clear in this scenario. These local vendors, with a strong understanding of the Chinese market, hold a lion’s share in the e-commerce industry.
Amazon Still Holds Less than 1% Market Share
Since its entry in in the Chinese market in 2004, Amazon started by buying out a local online book vendor. The long journey saw Amazon launch Prime in China in 2016. Even with the promise of free international deliveries, the company holds no more than 1% market share.
Local vendors, in a bid to compete with Amazon, too ramped up their offering, accelerating their own growth. Chinese local players are also venturing into Indian markets, allying with Big Basket and Paytm. If Amazon’s decision to bow out of China was in order to focus on India, a similar situation prevails.
Meanwhile, Amazon promises to remain committed to China. They report that the company is simply shifting its strategy to boost cross-border sales. A strong response from the Chinese customers is a stimulus for this change.
