Amazon.com Inc plans to close its domestic marketplace in China by mid-July, people familiar with the matter told Reuters, focusing efforts on more lucrative businesses selling overseas goods and cloud services in the world’s most populous nation.
Amazon 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 United States, Britain, Germany and Japan via the firm’s global store. Amazon expects to close fulfillment centers and wind down support for domestic-selling merchants in China in the next 90 days, one of the people said.
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 Alibaba Group Holding Ltd’s Tmall marketplace and JD.com Inc controlled 81.9 percent of the Chinese market last year.
“They’re pulling out because it’s not profitable and not growing,” said analyst Michael Pachter at Wedbush Securities.
Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, said Amazon had no major competitive advantage in China over its domestic rivals.
Unless someone is searching for a very specific imported good that can’t be found elsewhere, “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,” he said.