Chinese sellers don’t want to rely on Amazon

0

Chinese sellers are looking to reduce their reliance on Amazon. Although Amazon is the primary channel for Chinese brands and sellers to reach consumers in Western markets, there is a growing trend in China to “de-Amazonize” cross-border e-commerce.

“In the future, Chinese foreign trade enterprises should avoid dependence on Amazon,” wrote Hong Yong, an associate researcher at the Ministry of Commerce. Hong Yong published an editorial in the foreign edition of People’s Daily titled “Defusing the Risk of ‘Chokehold’ in China’s Cross-Border E-Commerce Channels.” People’s Daily is China’s largest newspaper; it provides direct information on the policies and views of the CCP.

The article lists high and rising fees (due to advertising), the closing and freezing of funds of hundreds of seller accounts, and the lack of access to customer data as reasons for Amazon’s diversification. This is just the most recent example of similar articles over the past year. When Amazon’s seller suspensions sent shockwaves through China’s e-commerce industry, sentiment grew stronger. (These sellers were suspended for paying for fake reviews and other violations, which many in China continue to view as unwarranted)

Walmart takes advantage of this. Since opening its marketplace to international sellers last year, it has added more than 10,000 new sellers from China. Many of those hanging on Amazon are now selling on Walmart.

But the goals are more important than selling in other markets – building direct-to-consumer websites seems to be the preferred path. According to the South China Morning Post, the Commerce Bureau in Shenzhen was even offering 2 million yuan ($310,000) grants to local cross-border sellers to set up e-commerce websites. Earlier this year, JD.com and Shopify announced a partnership where “JD will help quality Chinese brands set up their DTC channels through Shopify.”

With the exception of the seller suspension scandal, US sellers are trying to branch out from Amazon for the same reasons. Chinese sellers only started thinking about it when Amazon remembered it had policies to enforce, but sellers, in general, have been trying to develop other channels for years. The challenge is that Amazon is bigger than the other marketplaces combined, and selling through a direct-to-consumer website isn’t directly comparable.

Percentage of top Amazon sellers based in China

For more than a year, American sellers have been gaining market share on Amazon, reversing the multi-year trend of losing to predominantly Chinese sellers. But there are still as many Chinese sellers on Amazon as American sellers. Despite the growing negative sentiment in China towards Amazon, chances are nothing will change significantly anytime soon. But it’s an important signal anyway, in part because the drive to “de-Amazonize” is part of government policy.

“One of the themes is that the Chinese factories that have been making things for Walmart and others for the past 20 years are now realizing that they’ve managed to brand themselves and sell directly to the world, without intermediary… and we [Amazon] are that vehicle,” Sebastian Gunningham, senior vice president of Amazon Marketplace at the time, wrote in an internal email from 2015. That’s still true today.

Share.

Comments are closed.