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What Is Fueling the Growth of Chinese Sellers on Amazon?
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While 47% of the top Amazon.com sellers are based in the U.S., an increasing number — 38% in 2019, up from 24% in 2016 — are based in China, according to new research from Marketplace Pulse. Chinese brands, retailers, and manufacturers have been galvanized to sell on Amazon, particularly the company’s U.S. and European marketplaces, for the following reasons:
- To reach these audiences on the platform where they are frequently shopping, as 66% of consumers in the U.S. begin their search for new products on Amazon
- For exposure to high-value, loyal Prime subscribers. By utilizing an FBA model to sell on the U.S. marketplace, for example, Chinese sellers can still provide two-day Prime shipping and their products become Prime-eligible.
- They have the exporting experience. For years, Chinese manufacturers have been selling products to distributors and retailers who have, in turn, sold the products on Amazon. Now, many are joining the marketplace themselves to sell with a direct-to-consumer strategy and, as a result, bypass the middlemen which allows them to sell the products at extremely competitive prices. A primary goal of Amazon’s is to provide price value to its consumers, so it makes sense that the company is seeking out Chinese retailers.
- Amazon shut down its Chinese marketplace — amazon.cn — in July 2019, so for Chinese sellers to continue reaching shoppers on Amazon, they must do so via alternate marketplaces.
- International expansion is still a priority for Amazon, as evidenced by its launch of marketplaces in Israel and Singapore in 2019, both of which indicate the company’s priority on driving cross-border sales.
The Guangdong province in southeast China is estimated to be home to 40% of Chinese sellers, with the major city of Shenzhen at the forefront of manufacturing and industrial production. In December 2018, Amazon hosted the Amazon Global Store Seller Summit in the Zhejiang province in eastern China to equip Chinese brands, retailers, and third-party sellers alike with the tools and expertise to effectively build a cross-border business, launch new products, build a brand and cohesive reputation, and so on.
Despite the seemingly unending trade war between the U.S. and China, it is clear that consumer demand for Chinese-made goods is not going away, so brands and retailers need to decide whether they are going to pass on the increase to shoppers or absorb the cost of the tariffs themselves. Given this steady demand, it makes sense that Chinese manufacturers are continuing to innovate — 60% of Chinese sellers’ sales are generated from new products created in the past 12 months.
This year, eMarketer estimates that nearly one-quarter of digital buyers in China are expected to buy on cross-border sites. This information, combined with the low cost of manufacturing for Chinese sellers, only reinforces the notion that these stakeholders are going to continue fortifying businesses both in their native country and beyond.