Amazon closing online store in China for tough competition by local rivals

Amazon closing online store in China for tough competition by local rivals

SHARE Inc has scheduled its China online store to be closed by July 18, trimming its business in most populous nation of the world where the retail giant remained focused on lucrative businesses of selling overseas goods and cloud services.

The decision highlights the tough competition imposed by the established, home-grown competitors making it difficult to compete with them in local marketplace even for the world-fame giants like Amazon to gain traction in Chinese e-commerce market, where last year, 82 percent of the business share was held by Alibaba Group Holding’s Tmall marketplace and, said the consumer research firm iResearch Global.

Amazon started notifying seller that company will no longer be operating a marketplace not it will be providing seller services on its website, an Amazon spokeswoman told Reuters on Thursday.

In a statement, spokeswoman for Amazon said that company is ensuring a smooth transition by working closely with its sellers and will remain delivering the best customer experience possible. And those interested in continue selling on Amazon outside of China is available with Amazon Global Selling to do so.

Shoppers in China will no longer be able to order goods from local third-party merchants but from the United States, Germany, Japan and Britain through Amazon’s global store.

Support for domestic-selling merchants in China will be wind down by the Amazon in the next 90 days while company will be reviewing the impact of shutting down the business on its fulfillment centers in the country, some of which are likely to be closed, said the sources.

Amazon is pulling out because it was not making profits and also not growing in China, said analyst Michael Pachter at Wedbush Securities.

Amazon had no edge over its domestic competitors in China, unless some has to order a very specific imported good that is not available elsewhere, otherwise there is no reason for a consumer of choosing Amazon as it is not able to ship orders as fast as JD or Tmall, said Ker Zheng, a marketing specialist at Shenzhen-based e-commerce consultancy Azoya.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.