It is reported that Amazon’s market value reached 1,002.4 billion DOLLARS on September 4 this year, which is the world’s second technology company after Apple to break the trillion-dollar mark. But soon, according to relevant media statistics, The market value of Amazon began to decline in October, and by November, it had dropped from less than 820 billion DOLLARS to 739.4 billion dollars, a decline of more than 260 billion dollars.
Thus, the outside world has such a discussion, “Amazon continues to expand craziness, to ‘swallow up the world’, but has been unable to take China’s e-commerce market.” What makes It so hard for Amazon to make money in China?
Prime members failed to make waves and failed in localization
Amazon launched its Prime membership service in the U.S. market in 2005, and USA Today reported that the number of Prime members reached 54 million by the end of 2015.
According to public data, the adult population of the United States was about 246 million in that year, and amazon prime membership users reached 20% of the adult population, and some media estimates that means amazon Prime membership service has covered more than 46% of the families in the United States.
The success of prime membership in the United States has been a sweetener for Amazon, which is tempted to continue trying to open up the wider world. So, in October 2016, Amazon began a new attempt to bring Prime membership, which has been successful in the United States, to China, hoping to sell millions of overseas goods to Chinese consumers.
It is reported that The Prime membership launched by Amazon in China provides unlimited free shipping service for cross-border orders throughout the year, which is the first attempt made by Amazon in the world. It wasn’t much, but it worked. The number of Amazon China Prime members in 2017 has tripled over the same period in 2016.
The growth rate is indeed very fast, but there is no base, to talk about how many times, it seems to have little significance. And until this year, Amazon China hasn’t disclosed the number of Prime members in China. Thus, the development of paid membership may not be as good as Amazon China thought. On the one hand, Amazon China is actually the first group of e-commerce companies to launch the paid membership system, which was not mature in China at that time. On the other hand, jingdong launched at the same time, and the following major e-commerce companies in China, will undoubtedly make Amazon China look dim.
In addition to Prime membership not making much of a stir, Amazon China has been criticized for its localization capabilities.
Take Amazon’s web design. An obvious feature is that the product information on the whole website of Amazon, including the function introduction, is almost in the form of pictures and text, without the product video introduction function. However, the demonstration part of product video happens to be the most important part of domestic e-commerce, and according to the consumption habits of the people, the product function introduction of manual is easier to understand and accept than the video demonstration.
In general, since Amazon has introduced members to China, in order to better improve the stickiness of users, maybe Amazon can make some changes in the website design according to the consumption habits of Chinese consumers. For example, add video or live broadcast functions to face consumers in the way of screen interaction and understand consumers’ needs more intuitively, so as to promote the brand better.
So if Amazon doesn’t adapt itself to Chinese painting soon and adapt to consumer habits, it may find it increasingly difficult to move forward as local competitors gain ground.
The rise of competition forces, Amazon China feel pressure
There is no denying that Amazon’s introduction of membership services to China is a relatively successful case, but it is also true that local competitors are on the rise.
After entering the Chinese market 14 years ago, Amazon China has not conquered the Chinese market as expected, but its market share in China is getting smaller and smaller. Rumor has it that Amazon is waiting for Chinese consumers to mature, for the Chinese e-commerce market to become rational, and for consumers to recognize the Amazon brand. However, the market did not remain stagnant. In the process of waiting for Amazon in China, domestic e-commerce enterprises emerged and continued to grow. Alibaba and JINGdong are the most direct examples.
Interestingly, as the cross-border e-commerce industry has entered a period of rapid growth, the current e-commerce market can be divided into three groups: the first group is foreign e-commerce represented by overseas purchasing, namely Amazon China; The second group is China’s traditional e-commerce giants represented by Tmall International and JINGdong Overseas shopping. The third group is xiaohongshu and Yang Wharf and other entrepreneurial brands based on their own characteristics in the market. Various resources have come into the market, all want to get the biggest benefit in this incremental market.
As an e-commerce platform APP, the significance of monthly independent devices to the brand is roughly as follows: the higher the coefficient, the more users. In September, according to iresearch data statistics, amazon China’s monthly independent equipment 1.73 million units, and the nation’s largest competitors Tmall monthly independent equipment 51.86 million units, let alone jingdong, jingdong monthly independent equipment number is amazon and Tmall added up to four times as much, the number of 224.96 million units, and rose 44% month-on-month.
In this sense, one of the main reasons for amazon China’s dwindling presence in China is its strategy of continuing its HEADQUARTERS in the U.S. and not spending as much on advertising. This is contrary to the “even loud” advertising front of domestic competitors jingdong and Tmall, and in the current Chinese market, low-key is not necessarily popular.
In addition, Amazon China is a customer-centric company, unlike most other companies, which focus on competitors, watch their strategies and then counter them. But in China, playing down your competitors is clearly not a very good idea. Amazon, in particular, is losing ground in China’s e-commerce market amid competition from local e-commerce companies Alibaba and JD.com.
Separately, amazon China’s market share in China fell from 15.4% in 2008 to less than 1% in 2017. Alas, the results come as no surprise to today’s consumers. As the market is constantly updated and iterated, Tmall and JINGdong have taken a firm position in the first echelon of e-commerce, and Vipshop and various overseas e-commerce companies have mushroomed (such as Netease Kaola.com, etc.). The growth of various forces makes Amazon feel like climbing a hill.
Despite its global fame, Amazon is one of the largest companies in the world. However, if Amazon China continues to implement the former strategy and does not pay attention to the opponent’s platoon in the market, it is estimated that the worst result will really be “cool” as the outside world said. So how can Amazon China save itself?
Can AI, blockchain and AD marketing give Amazon China a “rebirth”?
Now the e-commerce market is booming, so everyone sells domestic and foreign products, and everyone has membership. How can Amazon increase its market share of less than 1%? Recently, Amazon announced to launch blockchain-related services. We can make a bold assumption here. If Amazon China learns to put more technology into e-commerce business, and attaches more importance to advertising marketing, will it win back the game?
First of all, artificial intelligence, blockchain and other technologies are one of them. Now “AI”, “VR”, blockchain cloud…… A variety of hot search words popular science and technology, e-commerce + science and technology has long been inseparable. In fact, Amazon has already invested in the field of artificial intelligence. It is reported that it launched Echo smart audio in 2014, which is characterized by scene application and can be applied to TV, refrigerator, air conditioner and other daily intelligent equipment. According to foreign media reports, Amazon is developing an ARTIFICIAL intelligence chip that will be used in Amazon Ehco and other hardware devices based on Amazon’s Alexa virtual assistant. Amazon recently launched its blockchain service in conjunction with cloud computing.
AI, blockchain and other technologies are complex, but the greater the challenge, the greater the opportunity, so AI and blockchain may enable Amazon to evolve quickly. Amazon can also put AI, blockchain and other technologies into the operation and marketing of e-commerce, like its rivals JINGdong and Alibaba, such as AI posters, AI smart product recommendation, AI customer service, AI logistics, blockchain traceability and so on.
All in all, Amazon should slow down the pace of globalization and make proper use of AI, blockchain and other technologies to improve the efficiency and consumption experience of all aspects of e-commerce business, so that consumers can accept and pay for it.
Secondly, advertising is another way.
China’s e-commerce market is booming, but in fact it is already a battlefield of fierce competition. It is time for Amazon, which has been hiding its hide, to turn to the offensive and draw more attention to the domestic e-commerce market. Many points of view conclude that jingdong, one of the representatives of e-commerce giants, has done a good job largely because of its good marketing, and the promotion of various festivals and discounts on members’ days are good opportunities for it to dig gold. Therefore, Amazon China can appropriately take the essence of jingdong and other e-commerce marketing.
Moreover, with the rapid development of the era of science and technology, the pace of the people also accelerated, people spend more and more time on the Internet proportion. Therefore, Amazon China should let Chinese consumers know of its existence, after all, brand marketing communication is an integral part of corporate strategy. Therefore, it is time for Amazon China to think about how to work on advertising.
In addition, Amazon China may cooperate with domestic video APP platforms in the form of video advertising to accelerate brand communication through video apps and other carriers. Only when consumers know the existence of the brand, they are likely to consume. Before, Pindoduo, which was popular all over the Internet, also earned enough eyeballs with its “magic” advertisements and improved consumers’ awareness of the platform. In short, advertising is an old-fashioned but effective way to promote people.
In the end, the only constant in the market is “always changing,” and Amazon China, hiding its strength and obscurity, must move if it is not to drown in the Red Sea.
Article/Liu Kuang public number, ID: Liukuang110, this article first kuang Venture capital network