Chinese Merchants Find Opportunity on Amazon

By | November 22, 2016
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As the world’s largest electronic business platform,  Amazon has attracted countless sellers, and now as Amazon stretches across continents, the giant has tapped into the Chinese market, specifically with the Chinese seller. Toting the most well-known manufacturing descriptor, “Made in China”, the Chinese seller is also one of the most active of the Amazon platform. However, the influx of Chinese merchants to the United States has caused a tremendous pressure on price and sales.

When searching on Amazon for “phone charger”, the Chinese electronics manufacturer Anker appears at the top of the results, even above Amazon’s brand AmazonBasics and 34 other international brands listed in the US version of Amazon.

Anker’s charger is priced at $ 12.99, with over 23,000 ratings and reviews, the vast majority being positive. Anker is even is part of the Amazon prime subscription, meaning its products can be shipped anywhere in the US within two days.

Anker is just one of many Chinese merchants like this on the Amazon platform. In fact, according to a Chinese third-party survey, in Shenzhen alone, there are about 10,000 cross-border electronic sellers, using platforms such as Amazon and eBay, reaching customers in North America, Europe, and around the globe.

Since the emergence of the cross-border seller model, Chinese manufacturers have taken a strong grasp of this opportunity. Before this form of globalization, Chinese sellers could rarely reach consumers in the US, Canada, or UK. Because of multi-seller platforms like Amazon, these Chinese sellers are able to capitalize on the global market, selling low to mid-range electronics.

So many Chinese companies have realized the opportunity Amazon presents, and have continued to search for opportunities overseas. Anker founder Steven Yang in 2011 realized this opportunity and in 2011 set up business in Shenzhen. This is where he developed the Anker product line, and eventually broke into the European and American markets. Four years later, Anker’s global revenue reached 193.1 million US dollars, and is considered one of Amazon’s best-selling brands.

To Amazon, Chinese sellers present both a great opportunity and a strong threat.

Since 2012, the number of Chinese sellers has doubled, and Amazon has encouraged such growth. Amazon in 2012 began to recruit Chinese sellers stationed in the United States. Last year, Chinese sellers on more than tripled in number by 2014, more surprising is that the sellers then increased ten times in 2015. The question is, how much does this impact other types of sellers from around the globe, and what are the long term effects?

The increase in the number of sellers in China has led to fierce competition on the platform, posing a huge challenge to US sellers. Ultimately, US sellers cannot keep up with Chinese prices, as commodity prices in China are objectively cheaper, and consumers often choose low-priced goods. Low commodity prices in China triggered resentment by US sellers

“The Chinese sellers do have a lot of advantages,” says Marshall Taplits, founder and Amazon seller of Amichai LLC “The vast majority of manufacturing comes from China, so if a factory can sell directly at Amazon, the cost is definitely lower.” If you’re an American seller, this problem is substantial.

But simply lowering prices is not necessarily effective. Online retailer “Do It Wiser” learned from first hand that reducing prices in the current fierce competition alone cannot stimulate growth. Do it Wiser mainly sells ink and ink cartridges in the Amazon, has nearly 10 years of sales history, 20 million last year, more than half of the turnover is from Amazon. The retailer’s CEO, Alejandro Velez, said that the number of Chinese sellers who sold ink on Amazon in the past two years has grown significantly, limiting the development of Do It Wiser.

“At first we tried to cut prices with them, and then we thought we could not sell them, and we were in a panic,” Velez said. But the price does not help them increase sales, because many competitors are also conducting price cuts, resulting in a more intense price war. Do It Wiser then began to change strategy, mainly on maintaining customer satisfaction and improving search rankings.

With this influx of Chinese sellers, there has been a growing amount of outrage. American sellers have expressed outrage, pointing to the negative results these Chinese sellers have caused. They point to the fact that many Chinese sellers have problems with customer service, legitimacy, and most dangerously, fraud. This has led to many consumers becoming victims, but nowhere to voice their concerns.

Amazon introduced a series of measures to solve this problem

For these problems, Amazon has prohibited the exchange of praise for product, in other words, sellers cannot ask consumers to give them a good review for some material gain in return. MPO Global Chairman David Rifkin said the measures are good news. He said the Amazon platform will grow 30% this year, but if there is no competition from Chinese sellers, revenue growth will be at 50%.

Lindsay Baublitz, founder of Near and Deer, another Amazon retailer, says Chinese goods are worth at least $ 30 less than theirs, so the company competes with better services and wider options. “If you understand the market and your needs, optimize your photos and pages for your goals, you get the same advantage,” says Baublitz, “the influx of Chinese sellers is because they see the opportunities that Amazon offers, and the opportunity is still open to American sellers.”

“Amazon is a very open platform, anyone has a chance, so it makes your business easier to ben taken over by others.”

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