Amazon sign on a building

Amazon plans to close China’s online store

Image credit: Reuters

Amazon plans to close its domestic marketplace in China by 18 July, so the US e-commerce giant can focus its efforts on the more lucrative businesses of selling overseas goods and cloud services in the populous nation.

An Amazon spokeswoman said that the company is notifying sellers that it will no longer operate a marketplace, nor provide seller services on its Chinese web browser

“We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible,” the spokeswoman said in a statement.

“Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling.”

Sources said that Amazon shoppers in the country will no longer be able to buy goods from third-party merchants but will still be able to order from the USA, Britain, Denmark and Japan via the firm’s global store.

In the next 90 days, Amazon will wind down support for domestic-selling merchants in China and review the impact on its fulfilment centres in the country, some of which may close, a person close to the matter said.

Amazon broke into the Chinese market back in 2004 with the purchase of online book retailer, but the company failed to establish the dominant market position that it enjoys in other nations.

According to a report by Reuters, however, the move underscores how entrenched, home-grown e-commerce rivals have made it difficult for Amazon’s marketplace to gain a foothold.

Consumer insights firm iResearch Global said Chinese-based rivals to Amazon such as Alibaba Group Holding Ltd’s Tmall and Inc controlled 81.9 per cent of the Chinese e-commerce market in 2018.

“They’re pulling out because it’s not profitable and not growing,” said analyst Michael Pachter at Wedbush Securities.

Ker Zheng, a marketing specialist at Shenzhen-based e-commerce consultancy Azoya, also added that Amazon had no major competitive advantage in China over its domestic rivals.

However, the Amazon spokeswoman has said that the company will continue to invest and grow in China through its Amazon Global Store, Global Selling, Kindle e-readers and online content.

The company’s cloud-computing unit, Amazon Web Services, which sells data storage and computing power to enterprises, will also remain.

At the start of April 2019, the company announced plans to launch 3,236 satellites into Earth’s orbit to provide internet to ‘unserved and underserved communities around the world’, joining SpaceX, One Web and Facebook in the race to create space-based internet services.

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