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Amazon’s E-Commerce Adventure in China Proved Too Much of a Jungle

18 April 2019

From The Wall Street Journal:

 Amazon.com Inc. is checking out of China’s fiercely competitive domestic e-commerce market.

The company told sellers on Thursday that it will no longer operate its third-party online marketplace or provide seller services on its Chinese website, Amazon.cn, beginning July 18. As a result, domestic companies will no longer be able to sell products to Chinese consumers on its e-commerce platform.

The decision marks an end to a long struggle by America’s e-commerce giants in the Chinese market. The firms entered the Chinese market with great fanfare in the early 2000s only to wither in the face of competition from China’s faster-moving internet titans.

. . . .

In a statement, Amazon said it remains committed to China through its global stores, Kindle businesses and its web services.

Amazon China’s president will leave to take on another role within the company, the company confirmed. The China consumer business team will report directly into the company’s global team.

. . . .

When Amazon first entered China in 2004 with the purchase of Joyo.com, it was the largest online vendor for books, music and video there. Most Chinese consumers were using cash-on-delivery as their top form of payment. Today, Amazon China chiefly caters to customers looking for imported international goods like cosmetics and milk powder and is a minuscule player in the booming Chinese e-commerce market.

Amazon China commanded just 6% of gross merchandise volume in the niche cross-border e-commerce market in the fourth quarter of 2018, versus NetEase Kaola’s 25% share and the 32% held by Alibaba Group Holding Ltd.’s Tmall International, according to Nomura Securities Co.

“Everyone has merged with someone,” said Chris Reitermann, chief executive for Asia and Greater China at Ogilvy, which advises Alibaba. “It became clear that as a Western internet company you wouldn’t be able to succeed at scale without a Chinese partner.”

Link to the rest at The Wall Street Journal 

Amazon, Non-US

6 Comments to “Amazon’s E-Commerce Adventure in China Proved Too Much of a Jungle”

  1. “It became clear that as a Western internet company you wouldn’t be able to succeed at scale without a Chinese partner.”

    And there we have the money shot.

    • A lot of tech companies are realizing partnerships over there are one way streets. The return isn’t worth the price of admission.

  2. All signs are that Amazon’s Kindle venture in China will continue for the foreseeable future.

    That won’t make much difference to most indies, as KDP does not offer a route into the Kindle CN arena, but for those who have found a workaround Kindle China remains a lucrative market opportunity even if the Kindle store is one of the smaller players.

    A 2018 report suggested China’s reading apps collectively have 300 million MAUs – close to the entire online population of the USA.

  3. I’m wondering if this will impact how many counterfeit name-brand products show up in other markets. (And if that was a consideration in shutting down the third-party listings.)

  4. Sadly China is not the only market like this, nor is the US the only Country whose companies experience this type of treatment. Outside the major Western Democracies few countries have a rule of law sufficiently robust so as to allow foreign corporations a fair go in their legal and regulatory systems. No local partner, no success. Local partner, local partner will often end up with it all if they can.

    As Amazon has found, size doesn’t necessarily help. Free trade has much to commend it, but also many disadvantages, not least of which is the myth of the level playing field.

  5. […] internet has created an enormous number of new copyright issues. See yesterday’s post about Derivative Works, Fair Use and Appropriation […]

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