Abandoning Chinese third-party sellers? Amazon officially responds!

Just yesterday, major media outlets including Bloomberg and Reuters broke the news that Amazon is about to abandon its retail business in China.

You have to know that my brother-in-law is a businessman who can bear short-term losses for a long-term goal.

If the news is true, it means that my brother-in-law and Amazon have no chance of recovery in the Chinese market . Is this definite news?

Just this morning, Amazon China responded to the news of closing its retail business in China.

What signal did the official send in this response?

The response did not directly address the issue of "giving up retail business in China" in the revelations.

The statement and the leaked information also mentioned that Amazon will retain other businesses such as cloud computing. Amazon's non-direct rebuttal is equivalent to acknowledging the authenticity of the leak.

Subsequently, according to domestic media reports, Amazon China convened a staff meeting of employees from various departments at 11 a.m. today, and at the meeting,

Officially announced that Amazon China will soon adjust its business and lay off employees , and Zhang Wenyi, president of Amazon China, will soon leave.

However, Amazon later stated that Zhang Wenyi would not leave Amazon, but would take up another position within Amazon.

Amazon China’s self-operated retail business will be closed, and future work focus will be placed on overseas shopping business .

At the same time , Amazon will officially stop serving third-party sellers on the Chinese site on July 18, 2019.

At this point, Amazon has completely decided to withdraw from the Chinese market, leaving only overseas shopping, cloud computing, global store opening and Kindle businesses.

It is not new for us to see foreign technology companies fail in the Chinese market and then exit.

However, unlike Google, Amazon China’s withdrawal was hardly affected by policy this time. It was completely due to pure competitiveness failure and was squeezed out of the Chinese market by local e-commerce platforms.

It can be said that Amazon had a good hand, but was overtaken by Alibaba and even its own imitator JD.com , resulting in a bleak ending.

Back in 2004, Amazon acquired Joyo.com for $75 million and entered the Chinese market as a global e-commerce leader . At that time, Alibaba had just launched Taobao and JD.com was still just a multimedia website.

Amazon, which acquired Joyo.com, did not immediately make drastic changes. Even the name of the mall was not changed to "Joyo Amazon" until 2007.

Before this, Chinese buyers knew nothing about the global e-commerce giant’s actions in China. This year, JD.com was officially established after its redesign.

Amazon China achieved its best market share in the second year after the name change. In 2008, Amazon's share of China's retail e-commerce market reached 15.4%, and it was renamed "Amazon China" in 2011.

However, with the rise of 2C e-commerce platforms such as Taobao, JD.com, Suning and Vipshop, Amazon's market share has been continuously eroded by competitors. By last year, Amazon's market share in China was only 0.6%.

Data source: Analysys

With such dismal results, it is only a matter of time before they give up the Chinese market. Why did the global e-commerce giant stumble in China? My brother-in-law himself summarized the reasons at the shareholders' meeting.

First, the policies implemented in China are not radical enough

We can also see from the name change incident we mentioned above that Amazon China’s transformation was too conservative and slow, giving younger companies such as Alibaba and JD ample time to develop.

Second, the issue of localization

This is actually the direct reason why Amazon failed. My brother-in-law himself said frankly, "We mostly copied the successful experience in Germany, Spain, the United Kingdom, the United States and other markets directly to China. In fact, we should have more tailor-made for the Chinese market."

We sellers can see these things. In order to pursue consistency on the search page, they force everyone to use white background as the main picture. The shopping and payment process is completely American, and even the friendliness of the backend to sellers is far inferior to Alibaba. It is reasonable for them to exit the market dismally.

Third, the Chinese team has no real power

This is also the reason for the second problem. Didn’t the Chinese team know about these localization problems? Although the Chinese team was responsible for operations, the actual decision-making power still belonged to the US headquarters. The distrust and stubbornness of the Chinese team led to Amazon’s current exit.

Although Amazon has not been well accepted in China, its market share in the United States, Europe and other countries is still unshakable by latecomers such as Alibaba.

Sellers on the affected Chinese site can still choose to conduct their business in Amazon’s home turf, such as the United States and Europe, which has greater potential for development compared to the domestic red ocean market.

I have compiled an Amazon overseas sales guide to help you make money overseas . Scan the QR code below to get it from me~

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In addition, in order to provide an effective and timely solution platform for Amazon sellers to solve the operational problems they encounter on a daily basis, we gathered together big sellers from various industries in June last year to operate an exclusive knowledge sharing circle.