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Amazon To Close China Online Store As Intense Rivalry Hits It

Amazon To Close China Online Store As Intense Rivalry Hits It
Instead of selling goods over its e-commerce platform, e-commerce giant Amazon wants to concentrate on the profitable businesses of selling overseas goods and cloud services in China and has thus announced the closure of its online stores in the Chinese market which has the largest population in the world.
This decision is a clear indication of the level completion foreign e-commerce companies are forced to face in China from local and domestic companies there which had made it very difficult for Amazon to expand market share in the country. Last year, 82 percent of the Chinese e-commerce market was dominated by Alibaba Group Holding's Tmall marketplace and, according to data from consumer research firm iResearch Global.
Sellers are being notified by Amazon about its decision of stopping selling on its online a marketplace and no sellers services would also be provided, said an Amazon spokeswoman to the media. "We are working closely with our sellers to ensure a smooth transition and to continue to deliver the best customer experience possible," the spokeswoman said in a statement. "Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling."
According to reports, users of Amazon app and website would no longer be able to purchase third party products from the website. However users would be able to order from the United States, Britain, Germany and Japan via the global store of the company.
Within the next 90 days, support for domestic-selling merchants in China would be stopped by Amazon and the impact on the fulfilment centers in the country would also be reviewed by it. Reports said that some of the centers could also be closed down.
"They're pulling out because it's not profitable and not growing," said analyst Michael Pachter at Wedbush Securities.
There was no major competitive advantage in China that Amazon enjoyed in comparison to its rivals in the market, said Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya. Typically except in situations where Chinese consumers are looking to purchase a very specific imported product which can be found no where except on Amazon, "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.
Amazon would however continue to invest in China and look to for growth by doing business through its Amazon Global Store, Global Selling, Kindle e-readers and online content, said the Amazon spokeswoman. Amazon would also retain in China its Amazon Web Services which is the cloud computing business unit of the company engaged in selling of data storage and computing power to companies.
In recent times, there has been a slowdown in the e-commerce sale and growth in the Chinese market. While has announced staff cuts as a response to the change and slowdown, slowest quarterly earnings growth since 2016 was reported by Alibaba in January.

Christopher J. Mitchell

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