Amazon Makes All the Wrong Moves in China

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Amazon’s big bet on the Chinese eCommerce market has yet to bear fruit as the company continues to try to lure Chinese shoppers away from local favorites Alibaba and JD.com.

Amazon believed that by offering authentic Western goods with free international shipping, Chinese buyers would quickly come to know and love the brand that has taken America and many other Western countries by storm. Unfortunately, Amazon has fallen a bit short of its goal in China.

Where Amazon’s Gamble is Falling Flat

Currently, Kantar Worldwide, a consumer research firm, estimates Amazon has about a one percent share of China’s fast-moving consumable goods market, which is no different than it was a year ago.

Amazon launched Prime in China last fall, but it seems that the retail giant failed to completely assess the situation at hand. For example, free shipping isn’t much of a perk in China. Overseas shipping was already low or free through Alibaba’s Tmall or JD’s platform.

Another fairly large failure on Amazon’s part is the app itself. Chinese consumers overwhelmingly use their phones to do their shopping, with over 60 percent of China’s eCommerce, over $720 billion worth of sales, projected to come from mobile this year. Not only is the Amazon app more difficult to use than the app of its competitors, it completely fails to appeal to its Chinese audience.

Chinese shopping apps are a riot of color and attention-grabbing details, Amazon’s app, by comparison, is a white and boring wall.

Even with Deep Discounts, Amazon’s Chinese Ventures Troubled

In October 2016, Amazon slashed Chinese Prime to just $30, which any American member would jump at compared to their regular $99 renewal.

The Chinese weren’t moved, largely because membership programs have had a rocky history in China, with scandals involving beauty chains and health clubs still fresh in the national memory. And, of course, the competition already knew this and is doing membership better. It’s just another embarrassing blow for Amazon China.

JD is the only site that has a charge for their membership program, which is just $22. It comes with free, unlimited eBook access, free exchanges and returns and free shipping. Alibaba’s membership only requires a sign-up and rewards frequent shoppers with discounts on merchandise and free concert tickets. Amazon can’t even offer Prime video in China due to strict censorship laws.

If Amazon wants to succeed in the Chinese market, it needs to take a step back and actually look at the differences between this group of customers and its original American market. If it can adapt its platform to fit its audience, offer something of substance to set itself apart from the competition and bring a real value to the Chinese consumer, maybe it will find space in the Chinese eCommerce world.

 

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