Failure Case Study: Amazon China

Failure Case Study: Amazon China

Summary

A global e-commerce giant that failed as it could not adapt to the tastes and preferences of Chinese consumers.

Amazon entered China through the acquisition of Joyo.com, China's largest online book-seller, in 2004.

With a market share of less than 1% even 15 years after its launch in the country, Amazon China failed to strike a chord with Chinese consumers and hence it decided to withdraw its online market place. Chinese consumers, already accustomed to free and rapid deliveries from local players, failed to see value in Amazon's offerings.

The company also failed to offer convenient shopping experiences.

Scope

• Amazon's strategy of bringing key aspects of the supply chain in-house led to escalation of operating costs.
• Price-sensitive Chinese consumers shunned Amazon's system of charging for delivery. Amazon China lagged behind JD.com and Alibaba in terms of delivery speeds as well.
• Owing to their extensive distribution network, powered by several smaller local logistic firms, these two Chinese counterparts offer delivery within one day, sometimes within a few hours.
• Amazon's Prime Day lacked the connection with consumers that Alibaba has been able to maintain.
• The company's key decision-makers in the US failed to understand Chinese consumers, which led to its downfall in China.

Reasons to buy

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