Amazon.com Inc. says it has stopped shipping products sold on its retail website to customers based in Russia and cut off access to its video streaming service there.
The moves, announced in a blog post updated late Tuesday, ratchet up the company’s pullback following Russia’s invasion of Ukraine. Earlier Tuesday, Amazon joined the ranks of companies suspending some operations in Russia by announcing it was halting new sales from its Amazon Web Services cloud-computing arm.
Russia wasn’t a major market for the Seattle-based company, for either physical products or software services. The world’s largest online retailer doesn’t operate dedicated web stores for the country, but shoppers there could have products shipped from Amazon’s retail outpost in Germany or other storefronts.
“We’ve suspended shipment of retail products to customers based in Russia and Belarus, and we will no longer be accepting new Russia and Belarus-based AWS customers and Amazon third-party sellers,” the company said in the blog. “We are also suspending access to Prime Video for customers based in Russia, and we will no longer be taking orders for New World, which is the only video game we sell directly in Russia.”
Sony, Uniqlo join global brands disappearing from Russia
Sony’s Playstations, Uniqlo attire, McDonald’s burgers. The list of global brands disappearing from Russian outlets keeps growing as some of the world’s biggest businesses, from energy to consumer goods and electronics, suspend operations in the country.
International sanctions, the closure of airspace and transport links, financial restrictions on SWIFT and capital controls have made it difficult if not impossible for many companies to supply parts, make payments and deliver goods in Russia. Added to that, the potential consumer backlash against any company perceived as supporting Vladimir Putin’s two-week-old invasion of Ukraine has turned the corporate exodus into a stampede.
The rout reverses three decades of investment in Russia by foreign businesses after the Soviet Union broke apart in 1991. Those that pull out could lose their investments. The Russian government is supporting a proposal by the dominant United Russia party to consider the sale or even nationalization of operations of foreign companies that leave the Russian market, according to Kommersant.
On Tuesday, McDonald’s Corp., Coca-Cola Co. and Starbucks Corp. all announced they would temporarily halt operations in Russia. Some companies’ withdrawal makes it easier for others to do the same, said Gene Grabowski, a partner at communications firm KGlobal. McDonald’s action, for example, deprives Coca-Cola of a major client in the country.
Kraft Heinz Co., maker of Oscar Mayer hot dogs and Philadelphia cream cheese, suspended exports and imports of products to and from Russia as well as new investment in the country. Pizza chain Papa John’s International Inc. said it has stopped all support to the Russian market, where it has 188 franchised restaurants. The company said it isn’t receiving any royalties from these stores, which last year accounted for less than 1% of its sales.
Some firms have suspended international dealings with Russia but continue to operate within the country. Cereal giant Kellogg Co. suspended shipments into Russia and investment there, but said it will produce food locally at its three Russian plants, which represent just over 1% of the company’s business.
Imperial Brands Plc became the first major cigarette maker to stop all operations in Russia after halting production at its Volgograd factory as well as all sales and marketing. The maker of Kool and Gauloises cigarettes said its 1,000 employees in Russia will continue to be paid. Rival Philip Morris International Inc. is scaling down manufacturing in Russia amid supply-chain disruptions and evolving regulations. The company has halted investments and new product launches in Russia.
Uniqlo reverses decision
Fast Retailing Co.’s Uniqlo apparel chain said it will temporarily suspend operations in Russia, where it has 50 stores. The move marks a reversal after Fast Retailing founder Tadashi Yanai earlier this week said clothing is a “necessity of life” and that Russians have “the same right to live as we do.” Rivals, including Hennes & Mauritz AB and Zara’s Inditex SA, had previously stopped selling there.
Fast Retailing, which found global success with its Uniqlo clothing, entered the Russian market in 2010. The Tokyo-based retailer operated 50 stores in the country as of Feb. 28. That is its largest number of outlets outside of Asia, according to its website. The clothing brand generates 30% of its European revenue (including revenue from Russia) through ecommerce, according to its fiscal 2021 report released in August. The company set up a joint venture with Mitsubishi Corp. in 2017 to further expand in the Russian market.
Yanai, the billionaire founder of Asia’s largest retailer, said in an interview with the Nikkei newspaper earlier this week that clothing was a necessity and that “the people of Russia have the same right to live as we do.” While firms including Apple Inc. and McDonald’s Corp. pull back from Russia, Fast Retailing said last week it is donating clothes and other items to Ukrainians who’ve fled and $10 million to the United Nations’ refugee agency. Fast Retailing’s Uniqlo is No. 10 in the Digital Commerce 360 Asia 300.
There’s been a rush of U.S. and European companies boycotting sales and operations in Russia, but that hasn’t been matched in Japan and other parts of Asia. For Yanai, Russia’s war against Ukraine comes at a time when he’s seeking to expand Fast Retailing’s presence in Europe and reduce the company’s dependence on Japan, where the population is getting older.
Zara owner Inditex (No. 6 in the Digital Commerce 360 Europe 500) announced on Saturday the temporary closing of all of its 502 stores in the country, of which 86 are its Zara brand. The company said it “cannot guarantee the continuity of operations and trading conditions.” Swedish clothing retailer H&M (No. 10) also paused sales in Russia, where it operates 155 stores.
In April last year, the Fast Retailing CEO chose not to comment on the issue of sourcing cotton from China’s Xinjiang region. This came a month before it was revealed the U.S. had earlier blocked a shipment of Uniqlo shirts on concerns about using Uyghurs for forced labor. Uyghurs are a mostly Muslim ethnic group native to China’s northwest Xinjiang region. Yanai said it was a political issue and that the company was diligent about monitoring its factories to ensure that human rights aren’t violated.
Fast Retailing says it will continue working with the United Nations High Commissioner for Refugees.
In its statement from Friday, the retailer said, “Ukraine and many neighboring countries experience harsh winters, often with below-freezing temperatures” and that its donations include Uniqlo’s Heattech blankets and innerwear, as well as face masks.
Crocs, Inc. pauses business operations and importation of goods in Russia
The company will continue to pay corporate and retail staff within the country and has committed to supporting humanitarian relief efforts, it announced Wednesday in a press release.
Crocs, Inc. announced “it has made a decision to pause its direct-to-consumer business, inclusive of ecommerce and retail operations, in Russia. The company has also paused the importation of goods into the country.”
Crocs CEO Andrew Rees said in the release that the company is making a donation to UNICEF through Crocs Cares to support those the war has directly impacted. The amount was not disclosed in the press release.
More fashion brands suspend sales in Russia
Levi Strauss & Co. whose jeans were a coveted black-market item in the Soviet Union, also suspended commercial operations in Russia, where it gets about 2% of its sales, citing the “enormous disruption occurring in the region.” It said the business considerations “are clearly secondary to the human suffering.”
Nike Inc. is another that cited logistical problems as a reason for suspending sales in Russia. Spanish fashion retailer Inditex SA, which has 502 stores in Russia, including 86 Zara outlets, is temporarily closing its shops there and halting online sales, saying it “cannot guarantee the continuity of operations and trading conditions.”
German fashion brand Hugo Boss AG closed its stores in Russia on Wednesday and suspended its e-commerce website last week, CEO Daniel Grieder told Bloomberg TV Thursday. Russia and Ukraine account for 3% of revenue, he said.
U.K. mother-and-child retailer Mothercare Plc said Wednesday it has suspended business in Russia, including shipments. The company makes about 20% to 25% of its sales in Russia through a local partner. It said 120 stores will be immediately shut and online sales paused.
Others have divided the action for their product ranges. PepsiCo Inc. suspended soft-drink sales in the country but continues to sell daily essentials such as milk and baby formula. Danone SA’s general secretary, Laurent Sacchi, said the world’s largest yogurt maker would suspend investment in Russia, but will still sell dairy and baby food.
Danone Chief Executive Officer Antoine de Saint-Affrique was among the corporate leaders of some of France’s biggest companies who met with Emmanuel Macron on March 4, according to Le Figaro. The French president urged them not to leave Russia hastily, or without consulting the government, the newspaper reported.