Amazon to close Chinese domestic marketplace business in major e-commerce setback
- Mainland shoppers will no longer be able to buy goods from third-party merchants, but can still make overseas orders via Amazon’s global store
- Closure underscores how home-grown rivals have made it difficult for US retail giant to gain local foothold
Amazon.com plans to close a Chinese online store that caters to mainland consumers by mid-July, people familiar with the matter said on Wednesday, focusing efforts on its more lucrative businesses selling overseas goods and cloud services in the world’s most populous nation.
Shoppers in China will no longer be able to buy goods from third-party merchants in the country, but they still will be able to order from the US, United Kingdom, Denmark and Japan via Amazon’s global store. Amazon expects to close fulfilment centres and wind down its support for domestic-selling merchants in China in the next 90 days, one of the people said.
Pulling out of Chinese e-commerce represents a significant setback for the company and its chief executive officer, Jeff Bezos, who is known for his willingness to weather losses to achieve long-term gains.
The closure underscores how fierce competition by China’s home-grown e-commerce rivals have made it difficult for Amazon’s local marketplace to gain a foothold. Consumer insights firm iResearch Global said that Alibaba Group Holding’s Tmall marketplace and JD.com held 81.9 per cent of the Chinese market last year. Alibaba is the owner of the South China Morning Post.
“They’re pulling out because it’s not profitable and not growing,” said Michael Pachter, an analyst at Wedbush Securities. “The domestic Chinese online retailers just have huge advantages that Amazon can’t compete with.”