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In rare defeat, Amazon retreats from its China business

  • Amazon is pulling the plug on its Amazon.cn site, which sells Chinese-made goods in China.
  • The ecommerce giant has struggled to grow its marketshare in China in the face of fierce competition from domestic players such as Ailbaba and JD.com.
  • Amazon will continue selling goods in the world's second-largest economy via its global stores and online services.

Amazon.com said it will no longer host a third-party online marketplace or provide seller services in China at its website Amazon.cn, a rare misfire for the retail behemoth.

The retreat suggests the company wasn't able to gain a foothold in an online market dominated by Chinese rivals Alibaba and JD.com. Amazon said it would instead focus on selling to Chinese consumers through its global stores and its web and Kindle services. 

Amazon entered the Chinese market over a decade ago, buying a web retailer called Joyo.com for $75 million. At the time, Amazon CEO Jeff Bezos expressed optimism over the company's entry into what he called "one of the world's most dynamic markets."

But Amazon's share of online sales never grew to match that of home-grown rivals like Alibaba, which accounts for 32 percent of China's online sales. By comparison, Amazon has 6 percent, the Wall Street Journal noted, citing Nomura Securities. 

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"We are notifying sellers we will no longer operate a marketplace on Amazon.cn, and we will no longer be providing seller services on Amazon.cn effective July 18," the company said in an email sent to CBS MoneyWatch. "Sellers interested in continuing to sell on Amazon outside of China are able to do so through Amazon Global Selling."

Amazon, which operates fulfillment centers in China, didn't specify what will happen to the warehouses or the workers that staff them. The Seattle-based retailer said it will focus on selling goods to Chinese consumers from other countries. 

"Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we've seen very strong response from Chinese customers," the company said. "Their demand for high-quality, authentic goods from around the world continues to grow rapidly."