Once its store is closed, Amazon shoppers in China will no longer be able to buy goods from third-party merchants in the country. Instead, they will only be able to order products from Amazon’s global store.
The announcement doesn’t mean one of the world’s most valuable companies is completely withdrawing from China, though. The company intends to focus more on selling overseas goods and cloud services in the country.
However, since Amazon now has about 2,000 employees in China, pulling the plug on its China marketplace will likely incur layoffs, according to the China Business Journal. Amazon China president Elaine Chang is also reportedly leaving.
The move doesn’t seem to be a complete surprise in China. Chinese netizens said they expected Amazon to shut down its Chinese marketplace because it failed to adapt to local tastes, which it had 15 years to do.
“No kidding. Amazon came into China with guns blazing, but it didn’t try hard enough,” a Chinese netizen wrote. “It failed to adapt to the local market and the preferences of Chinese consumers. Who is going to buy from them?”
The most common example of Amazon’s failure to adapt is the company’s website design. It turns out Chinese consumers don’t care for the relatively clean web design Amazon deploys on all its sites. In China, ecommerce sites like Taobao and JD.com are much more cluttered, cramming more goods onto a single screen.
“Amazon’s UI is as shit as Newegg’s,” someone wrote in a popular comment. “The moment I see it, I lose all desire to make a purchase.”
In fact, Amazon’s Chinese employees are also aware of how the site’s user interface has little appeal in China. “American companies want to stick with just one UI style across the globe,” an unnamed source told China Business Journal. “But that makes customizing the Chinese webpage very difficult.”
Amazon’s Chinese site has already seen a lot of changes, according to the employee, but getting those changes done was difficult and took a long time.
“That’s unlike China’s other 996 ecommerce companies,” the person said. “In those companies, as soon as the boss requests a new feature, the staff burns the midnight oil until it’s launched.”
Amazon isn’t the first US ecommerce company to fail to adapt to China. Online auction king eBay, which was the first major ecommerce firm in China, failed for a similar reason 13 years ago.
Many attributed eBay’s downfall in China to its reluctance to change at a time when Alibaba was proving more adept at providing a shopping experience better suited to Chinese consumers.
Today, Chinese ecommerce companies dominate the domestic market, with Alibaba and JD.com taking up more than 81% of it.
(Abacus is a unit of the South China Morning Post, which is owned by Alibaba.)
While many blame Amazon’s obstinance for its failure in China, some consumers sympathize with the Seattle-based company. They note the many challenges that Amazon faces in the country, including endless price wars that eat into profits and the constant battle against knockoffs.
Although it is common to see Western tech companies struggle in China because of cultural differences, Chinese consumers don’t blindly prefer local brands.
In fact, a recent poll showed that more than 85 percent of internet users in China would choose Google over local search engine Baidu should Google make a comeback to the country.
Another case in point is Valve’s Steam. The digital game store from the US has 30 million users in China. Gamers’ affection for Steam dwarfs what they feel for homegrown services such as Tencent’s WeGame and Perfect World’s Steam China.
So maybe there is still a chance for Amazon. The company’s statement said, “Amazon’s commitment to China remains strong. We will continue to invest and grow in China across Amazon Global Store, Global Selling, AWS, Kindle devices and content.”
If Amazon carves out a successful niche, there’s plenty of money to be made in China’s thriving ecommerce market.