Amazon is pulling the plug on its e-commerce marketplace for third-party sellers in China. The decision follows a long struggle by American e-commerce companies in the country, who have fallen behind China's faster shopping rivals.
According to a statement from Amazon, it will no longer operate its third-party online marketplace or provide seller services on Amazon.cn from July 18th. As such, domestic companies will no longer be able to sell products to Chinese consumers on the platform. However, the company did say it remains "committed to China" through its Amazon International Shopping platform, Amazon Global program, Kindle business and web services.
Further, The Wall Street Journal reports that Amazon is in merger talks with Chinese competitor, NetEase Inc's Kaola. A potential deal could see a stock-for-stock transaction, although neither company would comment on the status of those talks.
Amazon arrived in China in 2004 with the purchase of Joyo.com, where it was initially the largest vendor of books, music and video. But over time the platform came to be used predominantly for imported international goods, and despite its booming presence elsewhere, Amazon is now a very small player in China's e-commerce market. In quarter four 2018, the company accounted for just six percent of gross merchandise volume in the cross-border e-commerce market, while NetEase Kaola and Alibaba commanded 25 percent and 32 percent respectively.
While it would be feasible for Amazon to continue its operations there, getting ahead would mean spending big to unseat its competitors, or dropping prices even further -- evidently its executives have made the decision to quite while its ahead.