Amazon to shut down online store in China amid stiff competition from local players

Global retail behemoth Amazon has decided to shut its e-commerce marketplace business in China by July 18. The Jeff Bezos-controlled company will reportedly continue to run its other businesses in the most populous country of the world. With the closure of the online store, Amazon will focus on Amazon Web Services, Kindle e-books, and cross-border operations in China. Amazon entered China in 2004 with the purchase of online retailer Joyo.com for $75 million and rebranding it as Amazon China.

After Amazon shuts down its e-commerce platform, Amazon.cn, buyers will only see a selection of goods from its global store. Instead of products from third party sellers, buyers can order products from US, Britain, Germany and Japan. Sellers interested in continuing to sell on Amazon outside China could do so through Amazon Global Selling. This will cater to both the Chinese buyers looking to buy high-quality products from around the world, as well as Chinese sellers marketing their merchandise abroad.

ALSO READ: India's online retail market to cross $170 billion by FY30: Jefferies

Amazon Web Services, the cloud computing arm of the company which sells data storage and computing power to enterprises, will continue to operate in China. The Kindle e-book services will also remain functional in China. Before closing its e-commerce business, Amazon will also review the impact of this decision on its fulfilment centres in China. Some of them are expected to be closed with the e-commerce business.

Amazon's decision to close down its online business in China comes on the back of stiff competition from local e-commerce players. In terms of sales, Alibaba reportedly holds more than half the e-commerce market in China. The other significant players are JD.com and Pinduoduo. Amazon reportedly has less than one per cent market share in China.

ALSO READ: Amazon collaborates with banks to make premium smartphones affordable for Indians

Amazon was forced to withdraw from China as the scope for profit and growth in the country has grown slim. This comes in the backdrop of an overall slowdown in the Chinese e-commerce sector.

Amazon's exit from China might also help it to focus on its interest in India, where it is locked in a competition with home-grown e-tailer Flipkart. The company has invested billions of dollars here since its arrival in 2013. Amazon operates 50 warehouses to support its business in India.

But Amazon has to face competition from Chinese players in India too. Alibaba and others have started to build up operations in India or invest in local start-ups like Paytm and BigBasket.

ALSO READ: Walmart CEO Doug McMillon says committed to Indian market; lauds Flipkart's progress in e-commerce