Do you hear that sound? That’s the sound of the landscape of Amazon selling changing as more and more Chinese sellers enter the game.
According to a recent study by Marketplace Pulse, 36% of sellers on Amazon are now based in China.
In fact, one could argue that Amazon is even tipping the scales in their favor as Amazon is holding free training courses for sellers in China.
As you know, I’m based on the ground in Shanghai, China.
Recently I was invited to attend a training course held by Amazon. This is completely different from the Amazon conferences and summits put on by 3rd parties such as the Global Sources Summit for Online sellers, for example.
No, these courses are put on by Amazon’s own team. Hundreds of sellers were in the room and the excitement and energy was palpable!
Having spent the past 10 years living in Shanghai and working with hundreds of Chinese suppliers as well as having 30+ years experience dealing with Chinese people in my family and immediate circle, I’d like to share “The Mindset of Chinese Sellers” and what you can learn from it.
I’ve distilled it down to 7 lessons learned:
1. Quick to copy what’s (best)selling
Chinese sellers are very fast to copy what’s selling.
This applies both in the retail business - fake Apple shops, fashion - fake Yeezy shoes, and in the Amazon business - tons of Chinese sellers combing through Amazon listings to find the bestsellers, so they can sell them to.
My theory is that Chinese culture in recent history has not placed an emphasis on design and creativity. In fact, students are taught at a young age to copy poetry and texts to learn them. But, at the same time few students are offered courses that will build up artistry, creativity and other classes that strengthen the right brain.
In fact, you can fault the education system since all of their classes, homework, and exams are geared towards one entrance exam that will determine which University they will get into. It’s all riding on the one test.
That’s why traditionally the lack of creativity and habits of making mistakes mean that few people have the chutzpah or even desire to create something different.
Why do that when you can copy what works?
Obviously, there’s a major downside to this in that if you’re selling a me-too product. Most times you will default to competing on the price, which leads to a price war, which makes no one happy.
TAKEAWAY: Rather than invent the wheel copy what’s working,
2. Source locally
When you look at the map of China you’ll see that there are over 30 provinces, municipalities and other regions.
Each one of these regions is drastically different. They may speak a different dialect, have totally different foods (mild-flavored Cantonese food versus spicy Szechuan anyone?), and totally different lifestyles.
This applies to the manufacturing sectors in China as well. Not all regions in China are created equally and Chinese Amazon sellers are keen to take advantage of this.
Sellers in the Shenzhen or the “Silicon Valley of China'' have the natural advantage of having thousands of electronics manufacturers at their disposal. They can quickly visit multiple factories within a 1-hour radius of downtown Shenzhen.
But, if you were to look for jewelry or Halloween costumes in Shenzhen, you might be out of luck. Yiwu would be your best bet.They have a whole supply chain of jewelry makers from raw material to end product and packaging.
So, smart Chinese sellers focus on their home field advantage and source locally so that they have quick access to the source and can turnaround quickly.
Imagine asking for a sample to be delivered the next day versus waiting for weeks for it to arrive from China to New York City.
TAKEAWAY: Many sellers overlook the manufacturing in their home country. Sure, it may be priced higher, but there are benefits in getting it quick to market (shorter delivery times), speaking the same language, have the same business style, and being in the same time zone.
In addition, many sellers are not aware of this and may not be able to source the same items you’re selling as if you had sourced it from Alibaba, which is available to everyone in the world at a click of a button.
They say that the pace of life in Shanghai is like New York… on STEROIDS.
That’s not an exaggeration folks. You think New Yorkers walk fast - wait 'til you visit Shanghai. Even the grannies on the bus will give you a short elbow to the ribs if you’re in their way.
The speed of doing business in China tends to move faster as well. Amazon sellers expect a faster turnaround time from their suppliers and in getting samples. They will literally visit the factory and meet face to face with the owner and have a meal with them to sort out problems when the time arises.
This will be much more efficient than trying to play email hockey or WeChat back and forth. ( For those of you who are not aware, WeChat is the Chinese version of WhatsApp).
TAKEAWAY: Visit China at least once or twice a year to meet with suppliers, visit trade shows, develop new products, build relationships and guanxi (social networks) to speed up the process.
4. PRICE PRICE PRICE
The #1 competitive edge of Chinese sellers is the PRICE.
They are closer to the source (they can even be the factory!), they speak the same language, they are in the same time zone and can probably get a better price than you.
But, would you want to compete on the price? Think as a consumer why you’re willing to spend up to $1,000 on the latest iPhone when a cheap $50 phone will do the trick.
He who wins on price doesn’t necessarily win the battle.
TAKEAWAY: Obviously you want to negotiate the best pricing on your products from your supplier, on your shipping rates from your forwarder and on your cell phone bill from your provider, but do you want the lowest prices as your Unique Selling Proposition?
5. Make it a Family Affair
In Chinese culture, family ties are critical. Blood is thicker than water. Traditional Chinese families will literally worship their ancestors and keep a shrine devoted to them.
Applied to the Amazon seller world - I’ve overheard successful Chinese sellers using their network of extended family members to help pick, pack, and ship a particularly large order.
Moreover, family members may be willing to loan money to the next generation to help them get their first “pot of gold”. It’s not uncommon for parents to gift or invest in their children’s businesses.
Even Anker founder Steven Yang, who is an ex-Googler and Chinese Entrepreneur of the Year resorted to borrowing a lump sum of money from his mother in China to startup his Amazon private label business.
The rest is history.
TAKEAWAY: Are there family members that can lend a hand in your business? Perhaps they may have some hidden talents such as design to help you create your next package or logo? Or maybe invite the kids and their friends to come over for a Pizza-and-Packing-Party? If done properly, this will help grow your family bond as well as your bottom line.
6. Be Flexible like a Fox
In China it’s not uncommon for a brand to venture into new product lines that seem to have no relationship with each other.
However, it seems that these risk-taking sellers do have an advantage in terms of not limiting themselves when it comes to new opportunities that come along.
Take for example the popular Chinese electronics brand Xiaomi: originally known for the low cost of smartphones, they were a smart option to the premium Apple iPhones for shoppers that wanted to pay a fraction of the price.
Now, Apple tends to stay minimalist and keep their product offerings narrow. Xiaomi, on the other hand has expanded beyond mobile phones into Air Purifiers, Selfie Sticks, Power Banks, Scooters, Digital Scales, and even Backpacks!
Does this sound familiar guys? Trading companies on Alibaba anyone?
Sure building a brand with a cohesive line of products in a single niche may pay off, however Chinese sellers are supremely flexible when it comes to deciding on what products to sell.
TAKEAWAY: Be more flexible in your product selection. Don’t limit yourself to just one vertical - consider whatever SKUs that may add to your bottom line.
7. Go Global
China’s domestic e-commerce marketplace is booming.
The one-day sales on Nov 11 or “Double Eleven”, China’s equivalent of Black Friday, trumps Black Friday and Cyber Monday sales… COMBINED.
But, Chinese sellers are not content with that. They are going global and selling in the US, Europe, Southeast Asia, and everywhere else they can.
Recently, I met a Chinese Amazon seller who modestly said that he only sells about 10 products a day on Amazon.com but he moves 1,000 units a day on Taobao (China’s equivalent of eBay).
On one hand you might think: ''Why should he bother selling abroad when he’s making a killing?'' On the other hand, the margins in the domestic market may be much lower compared to what he can sell for on Amazon. And he’s seeding the seeds for the future.
TAKEAWAY: Go beyond your home marketplace and sell internationally. Sure, Canada or Amazon UK sales may only be a fraction of Amazon.com, but you are not only seeding for the future but taking the oxygen out of the room by establishing a foothold now (before your competitors enter).
8. Black Hat vs White Hat tactics
There’s a saying by the famous Chinese leader Deng Xiaoping: “It doesn’t matter if it’s a black cat or a white cat. A cat that catches mice is a GOOD cat.”
This analogy was used to describe economic theory of a market economy versus a planned economy in China’s Reform and Opening rapid development period of the 1980s.
Fast forward 30 years, Deng’s undertones ring true to what’s going in the Amazon space today with black hat vs white hat tactics.
It may be rampant in China. But the bottom line is this - is it worth it?
If we look at Amazon sellers in China, it seems that the smaller sellers are the ones that are doing more of this on the whole. It may be intentional to get an upper leg, or it may be a lack of awareness.
But, on the other hand, with the big and successful Chinese Amazon sellers like Anker, you don’t see these black hat tactics come into play.
Why? Because they have more to lose. An 8+ figure business owner (regardless if they are Chinese or from the West) will look for ways to de-risk his business so it doesn’t suddenly go away overnight.
Do you think they will mess around with review groups and other fishy business? Not likely.
TAKEAWAY: Employ black hat tactics at your own risk. Just know that serious Amazon sellers and entrepreneurs will do all they can to de-risk their business.
In summary, we’ve looked 8 different lessons from Chinese Amazon Sellers.
Some are effective strategies and mindsets. Others may work more in certain markets like China more than in others. Some are very risky and may even get your business shutdown.
Hope these lessons will give you some additional tools in your toolkit in your e-commerce wars. Ultimately, you are the CEO of your business and it’s up to you to decide on the principles to operate your business by.
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