The proliferation of Chinese companies who sell their wares via Amazon’s large online marketplace is one of the most important factors contributing to the e-commerce giant’s success.
On the other hand, beginning a little over a year ago, Chinese enterprises have been gradually selling a lower percentage of the items that Americans purchase on Amazon. The competitive advantage of American-based businesses continues to grow.
The fluctuating proportion of Amazon merchants based in the United States and China was something that I inquired about to various authorities, and they informed me that they did not have a satisfactory explanation for the phenomenon. They also were unable to determine whether or not this was a temporary setback or a permanent reversal of what had been a long-term trend of increasing market share for Chinese merchants.
However, the persistent efforts that Amazon has made over the last half decade to woo Chinese merchants have resulted in a significant shift that has established a new standard for both the online retail industry and the economy as a whole. If this phenomena has begun to lose pace, it is important to monitor what this may imply for consumers, foreign commerce, and the millions of companies who make their living by selling items on Amazon and other online marketplaces.
Allow me to take a step back and go out how Amazon operates: The business works in part in the manner of a traditional shop that resells things that have been purchased from manufacturers, and in part in the manner of eBay. More than half of the things that are sold on Amazon originate from a strategy very similar to that of eBay, in which independent companies list their products alongside those that Amazon offers. There is a good chance that a Texas toy firm or a major Chinese electronics conglomerate produced the product that we purchase on Amazon, whether it be a game for children or a charger for our phones.
Around the same time in 2015, Amazon made it a great deal simpler for Chinese-based merchants to post items on Amazon for sale. This has been replicated by other companies such as Walmart and the Chinese apparel brand Shein, and it has completely changed the experience of buying online in both positive and negative ways.
Amazon’s relationship with Chinese retailers has been both a source of the company’s strength and one of its most significant challenges. They are a significant contributor to the fact that practically any product can be located on Amazon, and it is likely that they have had a role in bringing costs down for customers. But Amazon’s detractors also argue that the corporation hasn’t done enough to safeguard customers from purchasing harmful or substandard items, as well as from sellers in China who may not be subject to the consumer protection laws in the United States and who may manipulate user ratings.
Over the course of the previous several years, Chinese merchants have sold an increasing amount of what Americans have purchased on Amazon, to the point where the ratio of sales made by sellers headquartered in the United States and China is about equal. The proportion of goods sold by Chinese retailers, on the other hand, fell from over 48 percent in late 2020 to approximately 42 percent in May, according to the findings of an e-commerce research organisation known as Marketplace Pulse.
I asked Juozas Kaziuknas, the founder of Marketplace Pulse, whether this shift away from Chinese merchants was caused by temporary closures of factories in China related to the pandemic as well as the increased costs and complexity of shipping products from Asia. He said that it was possible that these factors were all contributing factors. He said that it was unlikely. The majority of U.S.-based merchants make their purchases and conduct their shipping from factories located in China or elsewhere in Asia.
According to Kaziunas, it is impossible to identify precisely what triggered the shift. However, some merchants have been upset with Amazon’s increased fees and Byzantine restrictions. There have been rumours coming out of China of product sellers who are looking for alternative websites to Amazon in order to offer their wares to customers all over the globe. However, those complaints regarding the drawbacks of selling on Amazon are not at all new; in fact, they are often voiced by merchants located in countries other than China.
Yaniv Sarig, the chief executive of Aterian, a U.S.-based merchant that sells products on Amazon, is one of the e-commerce experts who believes that some Chinese businesses may have moved away from Amazon because they were spooked by the company’s crackdown on some merchants based in China last year, apparently for manipulating customer reviews. Sarig is one of the experts who believes that some Chinese businesses may have moved away from Amazon because they were spooked by the company’
The recent reorganisation of Amazon’s marketplace could present an opportunity for businesses based in the United States. One such business is Molson Hart, the Texas toy seller about whom I wrote a piece a year ago. Hart is of the opinion that laws and policies in the United States provide an unfair advantage to online product sellers based in China.
After learning that the ratio of sales made by Chinese to those made by domestic merchants has been shifting for the past year, I was left with many unanswered questions. If the proliferation of product sellers from China was such a significant shift in online shopping, then why does it appear that customers have not been affected when the trend reversed?
I couldn’t help but worry whether we were being too optimistic about the potential advantages of opening up Amazon to millions of goods sellers. Perhaps providing customers with 20,000 different options for blenders on a single website is not really helpful to anybody.