Amazon'S Main Business To Quit China? But Ali, Jingdong And A Lot Of Frustration?

Amazon has withdrawn from China recently.

Another strategic analyst revealed that the information will be announced tomorrow, and some businesses will be retained in the future, including Kindle and global cross-border businesses.

For this matter, Amazon China has not yet made a public response.

The news shows that Amazon will retain only two businesses in China in the future: first, Kindle and two, cross border trade, and all other businesses will be abolished.

In other words, Amazon's main business e-commerce provider will be withdrawn from China.

Public information shows that Amazon was founded in 1994 and listed on NASDAQ in May 1997.

The first textile network reporter today's data shows that as of April 17, 2019, Amazon's stock price reached 1863 US dollars, or 0.98%. In terms of operating income, the company is the world's leading Internet retailer and cloud computing leader. The results show that in 2018, Amazon realized operating income of 1 trillion and 552 billion 580 million yuan, an increase of 30.93% over the same period last year, and the net profit attributable to the parent company's shareholders was 67 billion 153 million yuan, up 232.11% over the same period last year.

From the perspective of sales content, Amazon sells all products that can be sold, including daily necessities and commodities.

At the same time, the company also sells music, food, e-books and other digital production content.

In order to assist in the sale of digital content, the company has also developed hardware devices such as Kindle and FireTV.

After the company acquired total WholeFoodsMarket in 2017, it began to sell offline entities.

For developers, Amazon provides Amazonalexa (Amazon's AI assistant), AmazonAppstore (Amazon app store), AmazonWebServices (AWS, Amazon cloud) and AmazonDashServices (Amazon Dash service on devices).

The industry believes that powerful technology is the most powerful weapon for Amazon to compete with its rivals.

In the view of Founder Securities analyst Ni Hua, the development history of Amazon is a history of the impact of the electricity supplier on traditional commerce. Reviewing its history can help the public understand the change of the channel pattern. At the same time, Amazon is also a case of "crossing from excellent companies to excellent companies".

Amazon started its online book 13 years after its establishment. In 2007, the book industry revenue reached its peak and began to decline.

In 1999, 3C electronics began to make a huge impact on the two major 3C chain giants. In 2009, the 10 year span electric city went bankrupt. In 2010 (11 years span), best buy reached its peak of revenue and began to pform the whole channel against Amazon.

In the 2002-2005 year, the department stores of clothing, sports, shoes and so on began to build. In 2015, the scale of Messi's department store reached its peak in the span of 10 years or so.

Every time Amazon begins to infiltrate a category, the next few decades are just the time when industry giants are under great pressure.

1994-1996: Bezos sniffed the rapid outbreak of the Internet and set up Amazon. The company entered the consumer's line with the image of an online bookstore, and quickly became the "biggest bookstore on the earth" with a convenient online shopping experience (24 hours online and staying indoors).

At the end of 1996, there were over 2 million 500 thousand different books on Amazon, including 1 million 500 thousand in English books and 1 million out of print books.

Amazon does not own a lot of inventory, but rather flexibly orders orders online.

As of March 1997, Amazon has sold more than $32 million worth of books, serving over 34000 customers, covering 100 countries, with more than 80 thousand hits per day.

1997-2002: the proportion of electronic consumer goods and other commodities has gradually increased, and international business has gradually expanded.

2003-2016: the proportion of multimedia services has gradually declined, and the introduction of third party services, Prime members, AWS and other high Maori service businesses.

2014 to date: Amazon's service business continues to increase, and diversified layout looks for the next high growth point.

Ni Hua believes that China's online and offline layout is also very similar. Just because China's population density is higher, infrastructure and other infrastructure are developing vigorously, the scale economy of e-commerce logistics is obvious, which is more suitable for the development of e-commerce.

Therefore, China's electricity providers are growing faster, and the impact on the line is more intense, and the impact time is shorter.

The peak time of China's offline business is in 2012, home appliances 3C, department stores, 2015-16 years of business super.

According to Euromonitor statistics, the scale of Internet Retailing in the world in 2018 amounted to 17176 billion US dollars, up by 20% over the same period last year, except for the growth rate of the financial crisis in 2009 only 7%. In other 2004-2018 years, the growth rate basically remained above 15%.

According to Euromonitor statistics, Amazon accounts for 25% of the world's Internet retail sales, Alibaba accounts for 15%, Jingdong accounts for 12%, and the top three accounts for 52%, which is 5 percentage points higher than that in 2017, and the global Internet retailing is highly concentrated.

Continuous high growth industries, leading concentration is rising.

Super Company, such as Amazon and Alibaba.

According to Ni Hua, Amazon plans to enter the Chinese market in 2004. Amazon has developed earlier, and its products are abundant, reasonable in price, high in reputation and popularity, and enjoys an advantage in warehousing, logistics and operation experience.

Amazon also had few competitors in China's B2C field in 2004.

In 2003, Alibaba Group invested 100 million yuan to set up Taobao, and eBay purchased eBay's remaining 67% shares for 150 million dollars to complete the merger of eBay. The two were focused on C2C at the time, and Dangdang and excellent network were the main products in B2C.

Dangdang uses the "Amazon mode" to provide consumers with as many categories as possible. When Amazon hopes to enter the Chinese market through the acquisition of local e-commerce, Dangdang is undoubtedly the most suitable.

Unlike Dangdang, excellent network takes the "quality discount" route, provides less commodity category, discounts 3-5 discount, and relies on the huge volume of shipments and suppliers to pick up the rebate, that is, the "excellent mode of selected varieties, full field inventory and quick delivery". It selects standard products, bulk purchases and high discount sales, and reaches 99% users in the north to 24 hours.

Amazon initially negotiated with Dangdang, hoping to buy Dangdang 70% stake for $150 million, but Li Guoqing's bottom line was to sell 20%-25%'s stake, and the two sides did not reach cooperation because of differences in ownership ratio.

Amazon then contacted excellent network. In August 2004, Amazon bought the excellent network with a $75 million agreement, which involved about $72 million in cash and employee options.

After the completion of the acquisition, Amazon began to copy American experience in China, focusing on investment in warehousing and logistics infrastructure construction.

In June 2004, the warehouse with an area of 30 thousand square meters was officially put into use. The call center with 200 seats has raised the customer to call rate from 30% to 96%.

The overall upgrading of the IT system has significantly improved the excellent network shopping guide system.

However, the dominant Chinese Amazon (Zhuo Yue) has been losing ground in the Chinese market.

In 2007, Wang Hanhua, vice president of Motorola Asia Pacific region as president of excellence, became the president of Amazon China. Wang Hanhua entered Amazon China (Amazon). The warehouse of Amazon was fully automated. The pick up clerk was equipped with battery car and scanning gun. The route of the battery car was designed by computer. The warehouse was purely manual, and the product was placed from the door to the warehouse according to the frequency of sale. But Dangdang gained the advantage of half a day because of the express delivery of 24 hours and two hours than Amazon 24 hours.

In 2007, Amazon completed the system pformation of excellent network and renamed the excellent network as "Amazon".

In 2011, Amazon changed its name to "Amazon China" again.

In 2009, Amazon's market share in China's Internet retailing sector was 8.4%, down to 3.7% in 2010.

In 2012, Taobao mall was renamed "Tmall mall" into the B2C field, Jingdong got financing, and local e-commerce promotion Festival continued.

In 2014, Alibaba and Jingdong went to the United States to market. The market share of the two suppliers in China reached 46.3% and 14.4% respectively, while Amazon only had 1.4%, which could be said that Amazon did not succeed in the Chinese market.

Ni Hua believes that Amazon's setback in China is due to:

(1) Amazon's localization in China is not enough, and its path depends on shackles.

1), "reasonable inventory" did not take full account of the local reality.

In 2008, Wang Hanhua and his team got the underwriting qualification of the bestseller "those things in the Ming Dynasty" at a very good price, but Amason headquarters thought that the product didn't need so much inventory and finally cancelled the cooperation so that even when the product was sold, Amason even needed to buy it from Dangdang.

2) strict censorship has led to the loss of large numbers of suppliers.

Amazon will take the "bad assessment rate below 1%" and "24 hours no reply below 3 times" as the supplier's assessment standard. The system detected that the shops could not shut down automatically when they failed to meet the standards, and the manual could not be modified.

3) ignoring the differences between Chinese and American consumer groups has failed to attract Chinese consumers effectively.

Amazon's development of the recommendation engine wants to create "surprises and discoveries", with the aim of "helping consumers make better purchasing decisions", focusing on letting consumers find more products that are interesting but not yet understood. Promotional discount information is distributed to members, while Chinese consumers are mostly pformed offline, and still can not get rid of the "department store" shopping habits, hoping to intuitively see information about discount promotions.

Chinese consumers are also more difficult to adapt to the payment methods of credit cards and the way of e-mail communication.

(2) Amazon headquarters failed to give full authority to China.

Wang Hanhua, President of China, has only sales authority. Although Amazon and China (Amazon) have introduced Amazon's advanced warehousing and logistics network, the logistics and operation matters of the Chinese market need to be decided by Amazon headquarters. Wang Hanhua can not even decide to change the marketing budget and product packaging of the market.

In 2018, Amazon's share of China's Internet retail market was only 1.1%, while China's local electricity supplier was rising. In 2018, Alibaba accounted for 41% of the total market share, while Jingdong rose from 12.9% in 2013 to 34.2% now.

Similarly, the public can see the failure of Amazon China from another perspective.

Why is the first industry in the US Amazon model industry, while China is the largest, Jingdong, and market share?

The Amazon model is characterized by its self built logistics system. Its service is expensive but its experience is good. The income level of the United States is relatively high, and its acceptance of "good service and high price" is even higher. While the distribution of China's 1 billion 300 million population income is uneven, the "Jingdong mode" can cover high-end customers, which is difficult to cover for 345 lines or even for rural residents.

This is China's consumption stratification. In the future, the competition pattern of China's e-commerce logistics is slightly different. The US Amazon occupies more than 50% of the electricity supplier, and the scale industry of e-commerce logistics links is the first, while China is Ali controlling the logistics information of 60-70%.

Theoretically, the larger the sample, the better the optimal solution of an equation.

Marginally, the efficiency of Ali logistics system is still improving. Jingdong needs to build a barrier to heavy assets logistics through external financing and leverage.

Ni Hua said that Amazon China should play an international advantage and develop cross-border electricity suppliers in the face of China's current competition pattern. Amazon's advantage in cross-border e-commerce business lies in its rich international sites, rich brand partnership and huge cross-border logistics system. In 2015, Amazon has established 14 major sites in the world, with more than 100 global operations centers.

2019M1 Amazon overseas purchase has been able to realize the docking of the United States, Britain, Japan and Germany, and also provides the option of bonded warehouse.

Here, there are media reports, NetEase koala will merge Amazon China's overseas purchase business, the two sides or take the way of stock exchange.

It is reported that NetEase and Amazon are promoting a major restructuring of China's electricity supplier business, NetEase koala will merge Amazon China's overseas business, the negotiations lasted for months, initiated by NetEase koala and promoted, the two sides or take the way of exchange.

The deal was signed at the end of 2018, but the progress was not smooth.

The insider said, "both sides have made some conditions during the negotiations, and have experienced all the difficulties that can arise in the commercial negotiations". This is because Amazon is a strong big company, not a direct buyer or seller.

Up to now, Amazon and NetEase have replied "no comment".