Amazon closed its online marketplace in China, but is not leaving the country. It changed its business model. Why is China vital for US based e-commerce giant business?
Amazon may dominate online shopping in the United States and Western markets, but in the world’s second-largest economy Jeff Bezos company faced competitor such as Alibaba and JD. Thus the decision to close the falimenture adventure of Amazon.cn. Amazon entered China in 2004 after it bought out local book-selling business Joyo for $75 million. In 2014, it started offering an overseas shopping service to capture Chinese consumers’ growing appetite for imported goods. Nevertheless Western e-commerce titan has devised various marketing gimmicks to lure shoppers, but the business was never able to establish a commanding position in China, where big guns like Alibaba and JD.com dominate.
Despite closing announcement, the company is still aggressively pursuing growth in the country with a new lending service that could help bolster its sprawling seller community there. Why China is vital for US based e-commerce giant business?
Amazon without China, and without Chinese sellers, would disappear. This is not a provocation, not at all, is just the truth. According to data, Amazon marketplaces 40% of sellers are based in China while third-party sellers from China dominate Amazon’s apparel offerings. And now Chinese sellers and building brands on Amazon. Last year, more than ten thousand Chinese sellers attended the 4th annual Amazon Global Store Seller Summit – 年亚马逊全球开店卖家峰会.
The event held in Ningbo, Zhejiang province, last December 6-7th. Twice as many are tuning in into the live broadcast online. The importance of China to Amazon has increased over the past few years. During the last two years the number of successful sellers from China on Amazon has doubled. The Global Store Seller Summit event is a great example of why.
In two years the number of successful sellers from China on the Amazon marketplace has doubled. 36% of the top sellers are now based in China, up from 15% two years ago.
US based giant e-commerce platform data shows that Chinese sellers will create a new product on Amazon every 0.02 seconds, 60% of Chinese sellers’ sales come from new products created in the past 12 months, and for Chinese sellers nearly 50% of the top 10,000 hot-selling items in sales are from new products created in the past 12 months. Actually, China is leading apparel sector on Amazon. Amazon’s top five apparel “brands” sell unbranded clothes shipped to consumers from China. One such brand, listed on the site as WSPLYSPJY, alone makes up 8.6% of all Amazon men’s and women’s clothing listings.
©Annie Spratt, New Dheli. 40% of the Indian population is digitized and the country has become the second digital market in the world, after China. And Alibaba already won.
This the reason that explain why Amazon not only is not leaving China, but is ready to launch a new lending service program called “ Lending Referral Program”, that according to the company, could help bolster its sprawling seller community in China. According to Amazon “the Lending Referral Program is a new program by Amazon Lending,” the post said. “Under this program you may be extended offers to apply for loans provided by local Chinese lenders to grow your business on Amazon.” In shorts words, instead of targeting Chinese consumers, the lending program is aimed at growing the number of China-based merchants who sell directly to Amazon consumers in the U.S. and the rest of the world, as Chinese sellers now account for a significant share of Amazon’s global marketplace sales.
On Amazon marketplaces 40% of sellers are based in China. Third-party sellers from China dominate Amazon’s apparel offerings.
After announcing the closure of its marketplace last month, Amazon’s new loan service is the company’s latest initiative in Chinese market and providing “If Amazon wants to build a bigger seller ecosystem in China — and grow its worldwide marketplace — providing working capital is a key factor due to build bigger seller ecosystem in China. At the moment Amazon will start its new program with a single lending partner, Shanghai Fuyou Commercial Factoring, although it plans to add more lenders in the future. But once again, american e-commerce titan will face Alibaba and Tencent. Chinese tech giants already have similar partnerships for their own online lending services, and they already have familiarity with Chinese business environment.
Is Amazon losing ecommerce battle in Asia? Maybe. Its alter ego Alibaba already is a winner in China, but is moving forward in emerging markets such as India and South-Asia.
Despite a weak presence in China, Amazon is trying to arise in other Asian markets, but Jeff Bezos company navigates in bad waters. Trough Lazada, e-commerce platform owned by Alibaba, the Chinese e-commerce firm is already ruling PRC market and now is winning in Malaysia, Indonesia, Singapore and other south-Asia countries. And Alibaba is once again well ahead in India. What’s new in the West, is already old in China. Now PRC exports its digital innovations. Are international social networks or e-commerce giang copying Chinese trends? Since Facebook, Amazon and Instagram introduced new e-commerce features, it really looks like it.
©123.rf. Instagram, Facebook, Whatsapp and now Amazon already copying Chinese e-commerce and tech trends such as live-streaming and social commerce
Let’s see for example the integration of online and offline. In the west, when Amazon acquired Whole Foods Market, everyone speculated how combined those two firms : an online brand with a brick and mortar one in order to produce a new generation of digitally-connected retail. Well, that future has already arrived in China years ago.
Alibaba and JD are rapidly opening retail outlets across the country, called Hema and 7Fresh respectively. Both brands offer a wide range of digitally-connected experiential shopping. First, clients customers can use their phone to scan the barcode of any item in the store to learn about the product’s source, nutritional information and price. Delivery is available at both stores in as little as 30 minutes after consumers have made their purchases. The future of e-commerce and online business is speaking chinese.
The future is in China and today Amazon is just copying Chinese e-commerce trends. Even not talk about how Chinese sellers are the basis of US based e-commerce giant. Without them Amazon would disappear and now Jeff Bezos needs a Chinese e-commerce platform such Kaola to go deeper in PRC market.
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