Amazon to close online local marketplace in China
E-commerce giant Amazon announced on Thursday it would close its domestic online marketplace in China later this year, as it seeks to focus more on cross-border commerce in the country.
On Thursday, the company notified sellers that it would stop operating its third party marketplace in the country on July 18.
"We are notifying sellers we will no longer operate a marketplace on Amazon.cn, and we will no longer be providing seller services on Amazon.cn effective July 18," the company said in a statement.
Merchants interested in continuing to sell on the site are able to do so through Amazon’s global marketplace, the company said.
The decision restricts the ability of Amazon’s China-based third-party sellers to reach shoppers in the country, one of the largest online markets in the world. Instead, the company said the site – Amazon.cn—will feature products from its global store.
Retail expert Bob Phibbs, CEO of “The Retail Doctor,” told FOX Business that he is skeptical of the narrative that Amazon is growing tired of pouring money into its Chinese operations.
“It’s odd to see a white flag of surrender from Amazon. They don’t retreat easily,” Phibbs said. “They have the money to spend, so there must be a reason they don’t want to spend it. With Amazon’s global brand name and access to capital, investing in the world’s biggest consumer market should be a no-brainer.”
According to research from PwC, the online retail market in China is expected to expand to 25 percent of total retail sales by 2020, from 17 percent in fiscal 2017. Moody’s Investors Services estimated that about 15 percent of U.S. sales are completed online.
As of fiscal 2017, the country had more than 750 million internet users, a penetration rate of just 55 percent.
Alibaba remains the dominant player in the Chinese e-commerce space. Alibaba’s Singles Day last November saw $30.8 billion in sales, a 27 percent year over year increase. For comparison, Amazon’s Prime Day saw about $4 billion in sales. Even on Cyber Monday, U.S. online sales were about $7.9 billion.
Meanwhile, in its statement, Amazon said it remained committed to China, but noted that it has shifted its retail strategy to emphasize cross-border sales, with which it claims to have seen a “very strong response from Chinese customers.”
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Phibbs said the focus on cross-border selling is not a solution to its challenges in the country.
Amazon first entered the Chinese market about 15 years ago.
