In a major setback to the biggest e-commerce platform, Amazon is planning to stop its e-commerce business in China from July. Instead, it wants to shift its focus on providing the mainland consumers top quality overseas goods from around the world. This means that they will not be selling goods from the local traders or sellers anymore. This surely is a huge blow to Amazon but its CEO, Jeff Bezos, is known to be a businessperson who takes a few losses in order to make huge gains in the long run.
Amazon intends to continue its business with its other platforms like Amazon Web Services and Kindle E-books. Through Amazon’s online e-commerce platform, local consumers can get goods from around the world and they will also allow Chinese sellers to sell their goods to the outside world.
Image courtesy: Amazon.com
Amazon got into China by acquiring a Chinese online books portal for $75 Million back in 2004. It is from here that Amazon expanded its business in the biggest retail market in the world. It built innumerable warehouses and data centers across the country to aid their expansion. They even came up with multiple programs to teach the local Chinese sellers how to connect to their online platform. However, all of it is coming to an end with them ending their operations in just over two months. This is another example of an American company failing to capitalize on the Chinese market. This failure has been credited to the local e-commerce platforms like Alibaba and JD, who have captured the Chinese market significantly, leaving no space for even big players like Amazon. According to iResearch, Amazon has less than 1% market share in China, which justifies it pulling out of the e-commerce business in the country.
Many analysts believe that Amazon has pulled out of China to focus on the equally good Indian market. Amazon has invested billions of dollars in the Indian e-commerce market, ever since it started its portal in 2013. If it plays its cards right, Amazon does have the capability to be the biggest e-commerce platform in India, overthrowing Flipkart from the top. Amazon also has to vary of other platforms like Alibaba as well, as they too are setting up base in India. Alibaba has already started investing in local startups like Paytm and BigBasket to create a footprint in India.
Amazon currently has more than 50 warehouses in India to aid their operations in the second largest retail market in the world. With Flipkart in a bit of trouble with its ownership, it is the right time to hit the bull’s eye for Amazon to trump their direct rival. Anyway, it would be interesting to see how the move of stopping their e-commerce business in China impacts the other variables in the near future.
