Amazon is pulling the plug on its domestic business in China after it was soundly beaten by Alibaba (AMZN)
- Amazon is closing its domestic business in China, people familiar with the matter told Reuters.
- Fulfillment centers will close, and third-party seller partnerships will be discontinued.
- The company will instead focus on selling Chinese goods elsewhere and digital services and Kindles to consumers in China.
- China is home to Alibaba and its many websites that are popular with Chinese consumers.
Amazon.com Inc plans to close its domestic marketplace business in China by mid-July, people familiar with the matter told Reuters on Wednesday, focusing efforts on its more lucrative businesses selling overseas goods and cloud services in the world's most populous country.
Shoppers in China will no longer be able to buy goods from other third-party merchants in the country, but they still will be able to order from the United States, United Kingdom, Denmark and Japan via Amazon's global store. Amazon expects to close fulfillment centers and wind down its support for domestic-selling merchants in China in the next 90 days, one of the people said.
Consumers in China will still be able to purchase Kindle e-readers and online content, the sources said on condition of anonymity. Amazon Web Services, its cloud unit that sells data storage and computing power to enterprises, will remain as well.
The company's China marketplace, which has stocked products from Chinese as well as overseas merchants, struggled to gain a foothold in the country's fiercely competitive e-commerce market.
The company's operations were first known as Joyo, which Amazon purchased in 2004 for $75 million. Over the next 15 years it rebranded a few times before eventually landing on Amazon China, but it struggled to gain market share in the face of giants like Alibaba and JD.com.
Amazon China accounted for only 0.9% share of the Chinese market as of August 2018, according to a report by Brazilian financial services firm BNG Pactual. This would make Amazon China the eighth largest seller of goods in the country. Among all countries Amazon has operated in domestically for more than a year, that's by far the worst performance.
Alibaba's Tmall has the lion's share of the market with 51.7%, according to BNG, while JD.com follows that with 32.9%.
(Reporting by Jeffrey Dastin, Brenda Goh, Cate Cadell, Pei Li and Josh Horwitz; editing by Leslie Adler and Meredith Mazzilli)