Why did Amazon give up the huge Chinese market?
According to Reuters, the company, which has been in China for nearly 15 years, will close its domestic e-commerce business in July this year and will only retain the business of selling overseas goods and cloud services in the future. It will also gradually close its distribution centers within 90 days and cancel its support for Chinese merchants.
Many netizens who saw this news commented that he finally left. Amazon persisted for 15 years, but ultimately decided not to struggle anymore.
Judging from the e-commerce market share data released in recent years, Amazon's market share has remained at around 1%. In the latest announcement, the market share was only 0.6%. When it first entered China, this figure once reached 15.4%.
In addition to the old-fashioned problem of foreign companies having difficulty acclimatizing to the Chinese market, Amazon headquarters' excessive reluctance to delegate power in the Chinese market is, to some extent, the fundamental reason for this outcome.
Many Amazon employees have revealed that the headquarters has a very high degree of control over the Chinese region. Not only do ordinary senior executives need to report to the headquarters when they are interviewed, but even if there are unregistered visitors to the China office, they need to report to the headquarters, otherwise they will be questioned.
It's even more complicated in the details. The disclosure of data on the performance of certain products in China, the optimization of local product pages, and so on, all require lengthy reporting processes and many assessments. Often the result is rejection due to the headquarters' lack of understanding of the Chinese market, resulting in extremely high communication costs in internal management.
This has resulted in Amazon remaining on the traditional website page for a decade, and providing a very complex shopping experience that is extremely incompatible with current mobile consumption habits.
In this complex and lengthy feedback system, innovation is a luxury and efficiency is low. Not to mention strong competitors such as JD.com, Taobao, and Pinduoduo, compared with the currently popular community group buying with half-hour logistics, consumers can’t find any reason to shop on Amazon.
This desire for control also shows that Amazon itself is a company with radical management, and the rumors about Bezos' iron-blooded management are basically true.
In addition to internal management, Amazon also has a relatively tough attitude towards its merchants. Earlier this year, Amazon also announced a policy that if the products sold by suppliers and brand owners cannot allow Amazon to make a certain standard of profit, they will not be allowed to promote them on the site.
In fact, the reluctance to delegate power is the main reason why many foreign companies have difficulty doing well in China. The so-called "not being able to adapt to the local environment" often refers to the situation where the headquarters cannot clearly understand the domestic market, while the domestic team does not have sufficient authority to make decisions.
Interestingly, the long-term downturn in the Chinese market has not affected Amazon's rapid development momentum around the world. Amazon's stock price has risen another 20% this year. According to Amazon's latest financial report, in 2018, Amazon's annual revenue increased by 31% year-on-year to US$232.887 billion, exceeding US$200 billion for the first time; net profit increased by 232% year-on-year to US$10.073 billion, exceeding US$10 billion for the first time.
It can be seen that Amazon, the global cross-border e-commerce giant, has not made much waves in the Chinese market. The above is the content about Amazon e-commerce in this issue. If you want to get more information, please continue to pay attention!
