Amazon will shutter part of its China e-commerce operations to focus on cross-border sales

Amazon will make “operational adjustments” to its China business to focus more on cross-border sales amid stiff competition from domestic operators in the world’s largest e-commerce market.

The US e-commerce giant said on Thursday it would stop providing services to third-party merchants on its domestic market place from July 18.

“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 very strong response from Chinese customers. Their demand for high-quality, authentic goods from around the world continues to grow rapidly, and given our global presence, Amazon is well-positioned to serve them,” Amazon said in a statement.

The move was first reported by Reuters, which cited people familiar with the situation saying the US tech giant would withdraw its domestic marketplace from China by mid-July and shift its focus to selling overseas goods and cloud services in China.

An Amazon spokeswoman did not confirm that the market place would be closed, only that support to third party merchants would be withdrawn.

Amazon users in China will not be allowed to purchase goods from third-party merchants in China, but they can still order goods from the US, UK, Germany and Japan through the e-commerce platform, according to Reuters.

Data from iiMedia Research showed that in the first half of 2018 Amazon accounted for 1.2 per cent of China’s business-to-consumer e-commerce market while Alibaba’s Tmall and JD.com together took 83.8 per cent of the market share.

“Amazon’s commitment to China remains strong,” Amazon said in its statement. “We will continue to invest and grow in China across Amazon Global Store, Global Selling, AWS, Kindle devices and content.”

In November 2015, Amazon China launched its Amazon Global Store service to enable Chinese users to buy goods directly from markets outside China through its online marketplace.

“Our vision is very clear: Helping China customers gain access to high-quality and authentic international products at fair prices, and helping China-based sellers to grow their business globally,” Amazon China President Doug Gurr told China Daily four years ago.

In October 2016, Amazon launched its Prime membership program in China, including free, cross-border shipping from the Amazon Global Store as well as no-cost domestic shipping. A subscription to Amazon Prime China costs 388 yuan (US$57.23) per year after the first year at the discounted rate. The service competes with local rivals like Alibaba Group, whose 88VIP loyalty program costs either 88 yuan or 888 yuan per year, depending on customers’ membership scores. This dual price provides an incentive for customers to write reviews, shop across a variety of product categories and interact with other Alibaba customers.

Alibaba is the parent company of the South China Morning Post.