Why Amazon Partially exit from China
Amazon is an E- commerce giant in the world and no doubt in saying this statement. It is an America’s no. 1 online store company.
Amazon’s initial target was correct to cover the Asian markets for online store business, India responded so well, but in China when Amazon actually directly entered in the year 2014, the life was never easy because the Chinese giant Ali baba was waiting with full of preparations.
Though Amazon also had shook hand with Joyo which was one of the leading online chain of China that time. However, the promoters and directors were still kept as non Chinese and somewhere this had been a problematic thing for Amazon.
Few Pointers responsible for Amazon’s failure in China-
1. Rivals grew faster- The rival companies like Alibaba, JD.com Tmall.com had been successful by applying the strategies as per buyer’s thinking but Amazon somewhere had struggles in China to understand their cultural based requirements. This resulted in to the rivals managed to generate more revenue and profit.
2. Amazon’s rigidness to built own in house distribution centre- Amazon spent so much money on creating its own domestic delivery infrastructure, whereas the rival companies dealt with local vendors and made them their distributor to make delivery process faster and reach to maximum customers.
3. Lack knowledge of local taste and non Chinese directors- Amazon struggles from the day one in terms of understanding the deep interest of Chinese wearing, food and life style, whereas the rivals had in house Chinese board of directors who worked with ground level team so closely to reach out to Chinese public for supply of their interest related things. In the year 2004, when Amazon just entered in China , from day one only they should have create a board of directors team completely from China, so that that could helped the board to make a right business strategy.
4. Early Expectations- Amazon entered in the Chinese market with Joyo and targeted the same pattern of business model just like America to seek early revenue and profit. The way worked well at the start, but later, it was quite cleared that the U.S based business policy will not survive here and Chinese are totally different in terms of culture and mood.
In the year 2018, the Amazon’s contribution in Chinese e-commerce world is only reduced to 1%. It means the scope is totally trashed, that’s the reason why Amazon has formerly announced the exit from China. As they now only want to focus on other populated countries to generate cloud based online store design and to cover those countries where E-commerce is not extremely famous. But this is confirmed that China have won over Amazon. Alibaba have been the number 1 company in China for E-commerce business and JD.com is equally meeting its shoulder. If Amazon once again think to re-try in Chinese market then first of all , have to fix the management purely belong to China the localized who can help in business activities suitable to their culture and choice.
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