Why Amazon Is Shutting Down Its Online Marketplace in China

Amazon is pulling its marketplace business out of China.

The e-commerce behemoth has confirmed that it would be ceasing operations of its third-party online services on its Chinese website, Amazon.cn, starting July 18. As such, customers will no longer be able to purchase products from merchants and other sellers on the platform.

As it works on shutting down its domestic marketplace business in the country, the Seattle-based retailer will shift its focus to selling items shipped from the United States, Germany, Japan and United Kingdom into China. Its global stores, web services and Kindle businesses will continue to function as usual. (As part of the transition, Amazon China Consumer Business manager Elaine Chang is departing her role for another position within the company.)

“Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we’ve seen very strong response from Chinese customers,” an Amazon spokesperson said in a statement to FN. “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.”

Despite its commanding reputation in retail, Amazon has long been facing stiff competition in the world’s second biggest economy. It made its entry into the Chinese market 15 years ago upon its acquisition of domestic online vendor Joyo. However, the company has continued to struggle against rivals JD.com and Alibaba — the latter of which commands a nearly three-fifths share of overall retail sales in the country.

Additionally, both JD and Alibaba take part in the shopping extravaganza known as Singles Day. The annual festivities, held on Nov. 11, generated $30.8 billion in gross merchandise volume for Alibaba alone — a gain of 27 percent over the prior year. That same month, the Chinese online giant pledged to import $200 billion in international goods to China in the next five years.

Comparably, Amazon’s Prime Day last summer recorded revenues that surpassed Cyber Monday, Black Friday and the same event the previous year, with members buying more than 100 million products. According to the e-tailer, small- and medium-sized businesses that sold on Amazon exceeded $1 billion in sales.

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