US-based tech giant Amazon.com Inc plans to shut down its third-party seller services on its Chinese online marketplace in July as it shifts its focus to the more lucrative businesses of cross-border e-commerce, cloud services and e-reader devices in the country.
Starting from July 18, customers logging in to Amazon's Chinese web portal will only see a selection of overseas goods from its global store, rather than products from local third-party sellers.
"We are working closely with our sellers to ensure a smooth transition and will continue to deliver the best customer experience possible. Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling," Amazon said in a statement.
Amazon emphasized it won't exit the Chinese market and will continue to invest and grow in China across its cross-border shopping business Amazon Global Store, Global Selling, which helps Chinese merchants sell products abroad, cloud service platform Amazon Web Services, Kindle devices and content.
"Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales," Amazon said, adding that it continues to make operational adjustments to focus its efforts on cross-border sales in China and to keep improving the experience for both Chinese customers and global selling partners.
The US tech heavyweight is facing increasingly fierce competition from homegrown e-commerce rivals such as Alibaba Group Holding Ltd and JD, as well as group buying app Pinduoduo Inc, which went public in New York last year. Statistics from market consultancy iResearch showed Alibaba's Tmall marketplace and JD controlled 81.9 percent of the Chinese market last year.
Amazon entered China in 2004, when it bought a local online shopping website Joyo.com for $75 million. Since then, it has invested in warehouses, data centers, and programs to teach Chinese sellers how to get their goods to Amazon customers.
Amazon launched Amazon Prime in China, the first unlimited free cross-border shipping membership program globally in October 2016, in an attempt to lure the rising number of quality-conscious Chinese buyers to buy foreign products.
A Chinese third-party seller who sells books via Amazon China's online marketplace said he hasn't got the notice on closure of the third-party seller service yet, and his sales revenue at Amazon is lower than that from Tmall and JD.
"Amazon did not gain an upper hand in China. The Chinese e-commerce business is a small part in the company's global layout and its competitive edge in China mainly lies in its abundant overseas products from its global e-store," said Yu Jian, general manager of shopper behavior specialist from Kantar Worldpanel China.
Amazon is struggling to contend with local leaders including Alibaba, JD and NetEase Kaola, which have ramped up their efforts in cross-border shopping, Yu added.
Chen Tao, an analyst at the Beijing-based consultancy Analysys, said Amazon has strong competitiveness and a good reputation in its global logistics, warehouses and supply chain, but it faces some challenges in its localization efforts in China.
"Amazon lags behind its rivals in marketing promotion and business operations in China. If its Seattle headquarters gives more operating and decision-making power to the China unit, the situation might be much better," Chen added.
Chen also said compared with Amazon, domestic online retailers have a better understanding of local consumers' needs and how to operate in accordance with local market conditions.