Essay Sample on Amazon Withdraws from Chinese Market after 16 Years of Struggle

Introduction

Amazon withdrew from China after several years of struggle in the Chinese market, given that it first entered the market in the year 2004, a period when Chinas GDP was growing each year tremendously. However, Amazon was not successful in the Chinese market, and as a result, it learned a lot. For instance, the amazon learned that moving quickly is very significant in that anything goes in the Chinese market as businesses tend to give an idea. If it works, then it builds up, but on the other hand, if it does not, it will immediately shut down and proceed to the next product. Moving quickly implies staying on top of new trends.

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Obsession over competitors' performance is crucial. Given that we live in a competitive world, it's essential to be aware of competitors inside out as core competition exists no matter how unique our product is. Competitors are always on a watch and replication, and recreation process takes place each day, and to stay ahead of the game Amazon learned to watch over their competitors move. For example, if competitors lower their prices, as well it requires them to reduce their costs to ensure competitive advantage is always visible. If a competitor adds a feature of their product as well, Amazon has to provide their product as a variation as compared to those of its competitors.

Amazon did not make sensible choices in its emerging market entry strategies in various ways.

Market Entry by Acquisition

Amazon made a mistake of assuming that their typical market entry strategy would be successful in the Chinese market. The buying market share strategy has been frequently blocked with the acquisition of Joyo as its latest strategy has fallen flat. For instance, Amazon purchased Twitch, the world's largest platform for watching video game competitions with the hope that it will find youthful new audiences; however, Wang Sicogon launched Penda TV that directly competes with Twitch as Asia is a home with a most significant population of e-sport fans that watch tournaments

Price Sensitivity

Price sensitivity is the first consumer that Amazon did not take into consideration as it was susceptible to the China market. Amazon had its prices higher as compared to its close competitors. High competition made merchants communicate and listen to consumers while big companies like amazon did not; hence it made many consumers make direct orders from cheap merchants, thus allowing the merchants to innovate highly. Amazon has not been successful in adapting to an ever-changing market.

Payment System

Amazon failed to implement a convenient payment system for its local consumers in the Chinese market. Amazon faced payment difficulties as many Chinese consumers were reluctant to make their advance payments with the credit card

Differentiation of Products

Amazon did not differentiate its products. That has made Amazon perform well in the United States because it offers affordable, fast shipping around the country. Still, in the case of China, local companies can as well ship goods quickly as Amazon thus taking away the appeal of Prime membership. It's evident that in china, the ecommerce competitors can offer overnight delivery plus free shipping services, and Amazon can offer the service, but only individuals who meet a minimum order requirement. That makes many consumers prefer local competitors over the Amazon. Amazon offered less appealing services in terms of costs; therefore, it did not adequately differentiate itself in the Chinese market.

Amazon Should Localize

Amazon had a regular inventory model and did not try things the local way as per the Chinese location. The brand could not compete with the local competition without having a clear understanding of the Chinese business cycle.

Emerging markets can be measured by both the economic and social advancement of a country; hence a perfect way of measuring success can relate to the socio-economic performance of the emerging markets. The social progress index of the markets can be used as it considers various aspects in life as it measures the social progress across many issues like needs, foundations, and opportunities. Fast expanding markets play a significant role as they help identify substantial growth and understanding of various social trends that originate from socio-behavioural perspectives.

Amazon should not enter into an emerging market immediately since it’s evident that its latest expansion plan came to a halt as it has given up its ambitions in the china market. For instance, in 2015, it opened a store on Alibaba's platform where it now pays some fees to Alibaba to run its store. However, Amazon should focus on the existing markets to identify its weaknesses and implement differentiation strategies on its existing products. In addition to emerging markets of Brazil, India, and China, Amazon operates in many other countries, and Germany and japan account for a high percentage of Amazon's total revenue. The company should adapt its model in the lucrative middle east and stay focused on their current markets.

Trade wars are experienced in Amazon sellers and come along with various implications. The United States is the primary market concerning the users, and the war has an impact on business. With continuing the fight; it will imply a shift of orders to suppliers of other Asian states. Chinese ecommerce companies will be affected by the tariffs, and the American ecommerce merchants who sell online in China market will tend to be less competitive if the US goods become subject to Chinese duties.

Conclusion

Amazon has dramatically evolved from a small online seller of books into a global company serving its customers in any country around the globe. However, it has been seen to withdraw from the Chinese market due to existing competition from other companies. It is due to the market entry strategies that were implemented by the company, for instance, the acquisition strategy and payment system that contributed to its failure in the market.