The internet retail giant Amazon may be shutting down its online store in China by July 18, according to Reuters. The report says that the company is unable to “gain traction” in the country due to 82 percent of the marketplace being controlled by the likes of JD and Alibaba’s Tmall marketplace.
While Amazon shoppers in China will still be able to purchase their online goods from the U.S, U.K, Germany, and Japan, they will no longer be able to do so from third-party sellers in China itself. The company has also said that they will still be investing in some of its services, such as Kindle e-readers and its cloud storage tool, Amazon Web Services.
Amazon bought the website Joyo in 2004 for $75 million before rebranding it as Amazon China in 2011.
Speaking to the source, a spokesperson for Amazon has said that the company will no longer be providing “seller services on Amazon.cn,” adding that sellers wishing to continue using Amazon outside of China will be able to do so through Amazon Global Selling, which allows people to sell on global marketplaces.
“We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible.”
Analysts are saying that Amazon’s China store has no competitive advantage other domestic rivals. Michael Pachter, from Wedbush Securities, said that the company is “pulling out” because it’s “not profitable and not growing.”
Ker Zheng, a marketing specialist at Shenzhen-based e-commerce consultancy Azoya said that domestic companies that China currently has are able to offer a fast service that Amazon can’t easily replace.
“There’s no reason for a consumer to pick Amazon because they’re not going to be able to ship things as fast as Tmall or JD,” Zheng said.
The shutdown of the Amazon store in China follows a string of other Western companies that have also withdrawn business from the country. Other such companies include Walmart, which sold its Chinese shopping platform to JD in 2016. Netflix and Facebook are also said to be struggling to gain traction, according to Pachter.
Amazon’s withdrawal also comes amid reports of lower earnings for China, with Alibaba reporting one of its “slowest quarterly earnings growth” since 2016. JD has also responded to the slowdown in e-commerce by cutting jobs.
Amazon was founded in 1994 by Jeff Bezos. It is the world’s biggest online retail marketplace, with a turnover in 2018 of over $232 billion. As of December 2018, Bezos is considered the richest man in the world, according to Business Insider.