Amazon to Close China Marketplace and Focus on Cross-Border E-commerce, Kindle and AWS
Key Points
Amazon plans to close its China domestic marketplace on July 18, according to company representatives.
- Amazon entered China via its $75 million acquisition of Joyo in 2004, which was rebranded as Amazon China in 2011.
- The company plans to continue its cross-border e-commerce operations, sell Kindle e-readers and operate its Amazon Web Services (AWS) business.
- Amazon’s decision to exit China reflects the acceptance of the intractability of its minimal market share of e-commerce in China, which is dominated by Tmall and JD.com.
Amazon plans to close its China domestic marketplace on July 18, according to company representatives. The company hopes to move existing China customers to its Amazon Global Store and Amazon Global Selling businesses.
In February, the company was reportedly considering a merger with China e-commerce company Kaola, a subsidiary of NetEase, however, no agreement appears to have materialized.
Although Amazon China/Joyo owned 15.4% of the China B2C market in 1Q08, according to iResearch, its market share declined to 0.6% in 4Q18, according to Analysys. In that quarter, Tmall and JD.com jointly controlled more than 85% of the $227.6 billion market.
Using these figures, we estimate Amazon’s 4Q18 China e-commerce revenue at $1.37 billion, which annualizes to $5.5 billion, or about 2% of Amazon’s 2018 revenues. Amazon’s revenues from rest of world were $23.5 billion in 2018 (up 43%), which includes countries in Africa and the Middle East; the Americas; Australia, Asia and the Pacific; and Europe. Amazon breaks out revenues for the US, Germany, UK and Japan.
The company plans to continue its cross-border e-commerce operations, sell Kindle e-readers and operate its Amazon Web Services (AWS) business.
