However, the management mode of Amazon China Buddhist group deviates from the fact that China’s e-commerce competition is fierce, and buddhist group management also shows some “unenterprising”. As a result, Amazon will stop providing services for third-party sellers on its Chinese site on July 18, 2019, shutting down its e-commerce business in China. After 15 years in The Chinese market, the international e-commerce giant is ending its retreat.
Back in 2004, when Taobao and JD.com were still figuring out how to survive in the e-commerce market, Amazon entered China with the title of “The largest e-commerce company in the United States” and acquired Joyo.com. When many people thought that Amazon would set off a “bloody storm” in China’s e-commerce market, Amazon responded to the market, is the light of thunder and rain.
If you don’t break out in silence, you die in silence
Amazon bought Joyo.com for $75 million in 2004, less than two years after Alibaba’s Taobao was founded and before taobao’s war with eBay ended. At that time, Amazon had plenty of time to capture the market, but it took three years to complete the integration of the joyo.com backend.
In the following 15 years, China’s e-commerce market has undergone tremendous changes. Alibaba and JINGdong have become the first group of e-commerce companies, and vipshop, Netease Kaola and other cross-border e-commerce companies have also risen to stability. It is worth mentioning that pinduoduo, a dark horse that broke out in three years, has become a success. The e-commerce track is packed with runners and the competition is as fierce as ever.
But like a bystander, having lurked in the e-commerce market for 15 years without making a big move, Amazon China never seems to have entered the fray. However, amazon China eventually went the other way, either breaking out in silence or dying in silence. It’s a shame, but even more so, amazon seems to have walked away with nothing.
According to public data, In terms of market share in China’s e-commerce market, Amazon China had 15.8% market share in 2008, which was the only peak for Amazon China. Subsequently, the market share decreased year by year, from 2012 to 2018, respectively: 2.30%, 2.70%, 1.50%, 1.20%, 1.30%, 0.80%, 0.60%.
When Amazon’s e-commerce share drops to 0.60%, tmall’s, JINGdong’s and Pinduoduo’s market shares are 55.00%, 25.20% and 5.70% respectively. The data fully confirms that Amazon China is being squeezed by China’s radical e-commerce, leaving less and less space for amazon China’s development, but the three-way structure formed by Alibaba, JINGdong and Pinduoduo is becoming more and more stable.
Years of declining market share have forced Amazon China to reconsider its decision to expand its presence in other countries rather than continue to languish in China. Therefore, Amazon aims at the Indian market, presumably thinking of the Indian market, where the e-commerce pattern is not yet mature, in order to make up for its regret in the Chinese e-commerce market.
However, in China’s e-commerce market, the only constant is always changing. Amazon’s failure in China has something to do with its lagging market awareness. In fact, its slow judgment of the Chinese market has long been tractable.
High status is incompatible with aggressive market competition
If the market was still a blue sea when Amazon first came to China, then from the blue sea to the red sea, Amazon has “overturned” in the Chinese market which should have been full of talents. Interestingly, there are different opinions on the withdrawal of Amazon. Some netizens even joked, “Amazon China is just a trial and error cost for Bezos in China. After all, Amazon headquarters is rich, and deprives a Chinese market, which will not affect Amazon’s international ranking at all.”
All in all, but there’s a point. The core of e-commerce services is users, yet Amazon has not paid enough attention to Chinese consumers. Fifteen years can make a baby grow into a teenager. Amazon’s 15 years in China also gives it enough time to understand Chinese consumers, but Amazon China shows more disdain.
Amazon is known to have a huge influence on midea’s e-commerce brand, so its business capacity is beyond doubt. So Amazon will be in the United States that set of methods in China directly copy paste, and with a high posture proudly stand in the market. But its American-style website design and almost non-existent marketing festivals have disappointed many Chinese consumers. This reflects that Amazon China has not done a good job in market research.
At that time, Ali and JINGdong created various promotional festivals to cater to consumers’ demands of favoritiing benefits, such as Tmall Double 11 and JINGdong 618. These marketing effects, which were based on sufficient market research, further increased the commercial value of Ali and Jingdong.
To be honest, the above low price promotion is barbaric and crazy, but it is exactly what Chinese consumers want. However, The noble status of Amazon seems to be incompatible with the radical market, unable to accept the “degraded” competition, Amazon China had to choose to watch the promotion competition. Thus, Amazon missed the head-on market competition with domestic e-commerce companies, and avoiding the competition also meant that Amazon China lost the opportunity to occupy the Chinese e-commerce market.
In addition, copying Amazon’s strategy in the United States has caused “discomfort” among Chinese consumers and thus failed to grasp the core needs of Chinese consumers.
Old-fashioned concept, can not catch the user consumption core
In addition, Amazon China has misunderstandings about users’ consumption concepts. The market is changing, and so are the customers. In the past, consumers may take the initiative to search for products to meet consumer needs, but times have changed. With the continuous improvement of the Internet recommendation mechanism and the upgrading of users’ consumption concept, Chinese consumers now prefer the product recommendation mechanism.
Moreover, for local e-commerce, the purpose is never limited to meet the needs of users, their real purpose also includes the creation of demand, to create endless demand. However, this is not seen in Amazon, nor in amazon China’s several ceos.
As Jiemian News once reported, Zhang jun said, “Amazon’s core concept is to let consumers take the initiative to search for things to meet their needs, which has always been the same purpose.” This directly shows that Amazon will carry out the strategy of “meeting demand” to the end, and also means that Amazon will not highlight product brands to guide consumers.
One wrong step, one wrong step. Amazon’s conservative values deviate from the consumer consumption concept fully educated by Taobao and JD.com in China, because creating consumer demand has become the mainstream of the domestic e-commerce market. Therefore, in the era of e-commerce live streaming and e-commerce kols continuously exporting PUGC, Amazon has gone away from this era, because Amazon does not conduct live streaming and even the information introduction of commodities is simple description with words and pictures, which is far less attractive than domestic e-commerce.
In general, the main reasons for Amazon’s failure in China are its lack of understanding of Chinese consumers and its inability to follow the changes in China’s e-commerce market. Amazon’s failure in China also has some lessons for foreign e-commerce companies still in the country.
A cautionary tale for Amazon in China
True warriors face up to the hardships of life, and amazon, an American warrior, is facing less than 1% of China’s e-commerce market. From avoiding competition in the market to disconnecting users from exploring their needs, Amazon is retreating from the Chinese market. For China’s e-commerce market, Amazon got an early start, but ended up walking away with nothing.
While lamenting Amazon’s departure from China’s e-commerce market, there are a few implications for foreign e-commerce companies still in China.
First, strategies should be tailored to local conditions. No one would deny Amazon’s success in the U.S. e-commerce market, but amazon’s armor in the U.S. has become a weakness in China. American consumers and Chinese consumers have different consumption thinking, whether it is marketing strategy or website design. Therefore, foreign e-commerce companies should change the implementation of their marketing strategies according to local conditions and consumers’ consumption habits.
In addition, when many foreign companies enter foreign markets, they are reluctant to delegate their rights, which leads to slow market feedback. This is a common problem of foreign companies, and also a problem of Amazon. So although Amazon has been in China for 15 years and has had several Ceos in China, it still hasn’t changed the fact that China is an operation center of Amazon, not a decision-making center.
Therefore, since foreign e-commerce companies have established the consciousness of sharing the pie in China’s e-commerce market, they should trust and authorize, and change their market strategies in real time according to the changes of the market. Foreign e-tailers should understand that holding hands is not prudent, and may cause companies to miss the best period of development.
Second, localization should be fast. On the one hand, Alibaba, JINGdong and Pinduoduo are engaged in a fierce battle with low prices and advertising marketing. On the other hand, Amazon is not in a hurry to watch them fight. The outcome can be imagined, the battle to the end of Ali jingdong people have written a myth in China’s e-commerce business, and the silent amazon finally lost in China. Amazon China is not deliberately moving too slowly, others are moving too fast.
The world’s martial arts can only be broken quickly. After entering the Chinese market, foreign investors should “do as the Romans do” and accept the Chinese e-commerce market, such as discounts, promotions, marketing festivals and other benefits that Chinese consumers are always happy with. Therefore, only the localization speed of foreign businessmen is fast enough to stimulate consumer demand along with consumer thinking, it is possible to raise brand awareness in a short time.
Third, put aside pride and prejudice. Amazon had the best chance of getting a head start in China when it first entered the market, before Alibaba and JD.com became behemoths. However, Amazon underestimated its competitors. Amazon, which has a pivotal position in the international market, was unwilling to lower its face and fight with taobao and Jingdong in the early stage, which gave Taobao and Jingdong enough time to grow in the competition.
Therefore, it is taboo for the business community to underestimate competitors in an arrogant manner. No matter foreign or local Chinese enterprises, they should put down their prejudice against competitors and users’ demands, and lower their attitude to conform to the market, so as to have a party in China’s e-commerce market.
In general, Amazon failed in China because it did not know enough about the changes in China’s e-commerce market, the changes in Chinese consumers’ demands, and amazon’s actual status in The hearts of Chinese consumers. Therefore, still in China’s foreign e-commerce should be noted, the withdrawal of the giant is not due to insufficient strength, but because of the delay in putting face and rivals, it led to a hasty exit.
Article/Liu Kuang public number, ID: Liukuang110, this article first kuang Venture capital network