The company was unable to compete with the mammoths of the local e-commerce, slaughtering Amazon.cn in mid-July.
On July 18, Amazon will close its online store in China, Amazon China, and will only sell overseas cloud products and services in China. The reason for the rapid retreat is that well-integrated domestic e-commerce competitors have made a Amazon-like company gently cool: according to iResearch Global's 2018 data, the entire e- 82 percent of retail sales.
In a statement to Reuters, Amazon spokesman also said it would start notifying sellers of the discontinuity of the market and the closing of commercial services on Amazon.cn in the next 90 days. Amazon Global Selling continues to offer international sales opportunities as Chinese customers can no longer solicit their domestic merchants from Amazon China, but can now buy from the US, Germany, the United Kingdom or Japan through their international business.
In a difficult situation, local forces are much harder
According to analysts in the news agency's report, Amazon's Chinese businesses were not profitable and did not grow – and in the second case they also overshadowed their future prospects that they could not gain competitive advantage in virtually any area against local rivals . Except in exceptional cases, when looking for a special imported product, Chinese buyers simply have no reason to choose Amazon – especially that Tmall or JD overtakes Amazon even in terms of delivery time.
The Amazon spokesman says that Reuters is not yet abandoning the Chinese market; While it's obvious, it's also important to mention that the Amazon Web Services (AWS) cloud infrastructure is not affected by this step at all. Amazon's share price soars in a few days of exodus so far has had little effect, while Alibaba and JD's US traded papers showed a symbolic gain.
So it seems that the slowdown in growth of the Chinese economy, including e-commerce, was also the largest online retailer in the world. In January, Alibaba has been releasing weaker quarterly growth results for years, while JD.com has announced the downsizing of staff with an adverse business environment. However, what domestic companies are doing on their feet is not necessarily acceptable to American companies. Prior to Amazon's announcement, Walmart had already redeemed its Chinese e-commerce platform (the buyer was JD and paid for its own shares) to focus on developing the physical store network.
So much, Amazon can now comfort you in India
In the news agency's report, analysts also point out that the Chinese market is currently not as promising as other US technology giants such as Netflix, Facebook or Google. Incidentally, Amazon itself has been in China since 2004, when it bought the online market Joyo.com for $ 75 million. The Amazon China brand occurred in 2011, but the cart did not start spectacularly: it had such obvious signs that Amazon opened its own store on Tmall.
However, the company is expanding in the area with the usual aggressiveness, so it is currently dealing with the large local competitor Flipkart in India which has the greatest potential for development. In China, however, it has been defeated, at least among the online markets that cater to local traders, from previous cases such as Google's example that we know that after such a retreat, future returns would hardly be working.