Amazon to close domestic marketplace business in China — sources

Kindle, cross border e-commerce, cloud business to stay

By Reuters - Apr 18,2019 - Last updated at Apr 18,2019

The logo of Amazon is seen at the company logistics centre in Boves, France, on January 19 (Reuters file photo)

SAN FRANCISCO/SHANGHAI — Amazon.com Inc. plans to close its domestic marketplace in China by mid-July, people familiar with the matter told Reuters, focusing efforts on more lucrative businesses selling overseas goods and cloud services in the world's most populous country.

Amazon shoppers in China will no longer be able to buy goods from third-party merchants in the country, but they still will be able to order from the United States, Britain, Germany and Japan via the firm's global store. Amazon expects to close fulfillment centres and wind down support for domestic-selling merchants in China in the next 90 days, one of the people said.

The move underscores how entrenched, home-grown e-commerce rivals have made it difficult for Amazon's marketplace to gain a foothold. Consumer insights firm iResearch Global said Alibaba Group Holding Ltd.'s Tmall marketplace and JD.com Inc. controlled 81.9 per cent of the Chinese market last year.

"They're pulling out because it's not profitable and not growing," said analyst Michael Pachter at Wedbush Securities.

Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, said Amazon had no major competitive advantage in China over its domestic rivals.

Unless someone is searching for a very specific imported good that cannot be found elsewhere, "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's customers in China will still be able to purchase the firm's Kindle e-readers and online content, and the company's local website, amazon.cn, will continue to exist, said the sources, who spoke on condition of anonymity. Amazon Web Services, the company's cloud computing unit that sells data storage and computing power to enterprises, will remain as well.

The US-listed shares of Alibaba and JD.com rose 1 per cent on Wednesday after Reuters first reported the move, before paring gains later in the day. Amazon's shares closed flat.

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