One of the beautiful things about e-commerce is that it knows no borders. One of the drawbacks of e-commerce is that it knows no borders. Recently, Chinese sellers have become substantial threats in the Amazon marketplace, impacting the bottom line of American sellers.
With Chinese brands rapidly expanding, you may be wondering what is driving this growth, and what steps you can take to win back the customers who are leaving you for them.
Understanding the strategies that contribute to the success of Chinese sellers (like intense market research) or the tricks that frustrate their competitors (like malicious software and other black hat technologies) will provide you with the insight you need to best improve your own practices.
Here’s a look at how Amazon sellers in China succeed, and the steps you can take to compete:
How They Do It
There are many factors that are helping Chinese sellers stay ahead of their competitors.
One of the things that successful Chinese amazon merchants are doing is market research. The amount of time and effort they put into this task borders on obsession. Large businesses have multiple full-time staff dedicated to research while smaller businesses generally use their sales managers in this role on a part-time basis.
While pricing and keyword research are important, the most significant chunk of research delves more deeply into competitors and their products.
This in-depth market research often leads to lower pricing and higher parity from Eastern sellers. Many will track their competitors’ prices and features so they can try and undercut and over-promise -- offering a similar product at a lower price point.
Because these companies often have greater external investment and a more streamlined supply chain (more on that later), they have the financial resources to slash prices and improve products more quickly and in ways that North American sellers cannot.
Easy Access to Supply Chain
The very fact that these businesses are located in China offers them a distinct advantage. This geographical location means they are closer to suppliers and manufacturers, making it easier to assure product quality and make necessary adjustments quickly.
They likely also share the same language which allows for more effective communication. The majority of North American and European sellers are forced to hire outside agents to act on their behalf when dealing with Chinese manufacturers to get past the barriers created by language, culture, and proximity.
Chinese sellers are often able to get products to market faster than their western counterparts because, frankly, it takes them less time to receive the product. What takes you nearly a month to receive can be delivered to their warehouses on the same day. Not having to cross an ocean makes a real difference in timing!
It is also important to note that the Chinese government has been working overtime to promote Chinese businesses and startups. This significant government investment means these businesses have a longer runway and, ultimately, a better chance of survival. This gives them a chance to grow their market base until they are able to turn a profit. They can bottom out prices without fear of going under.
The Chinese love to support their own people and most high-level jobs are filled with Chinese workers, but there are still many areas where foreign talent works to the advantage of these businesses.
In terms of content creation and social media management, foreign English-speaking workers dominate. This move has allowed Chinese brands to find rapid success in English speaking markets. Text that appears written in native English adds to the legitimacy of the listing in the minds of North American visitors and they know this.
This trend towards foreign talent is changing, however. Because this type of work is focused on keyword research, it is not necessary to be a native English speaker, and the more knowledge these companies gain on social media usage, the fewer foreigners.
Black Hat Practices and Technologies
Unfortunately, not all Chinese businesses behave in ways we deem legal or fair. Techniques used by malicious hackers, otherwise known as Black Hats, directly violate Amazon’s Terms of Service. These tactics include, but are not limited to, review hijacking, PPC click fraud, ASIN piggybacking, fake reviewing, and fraudulent copyright claims. Due to the need for smaller companies and risk for bigger companies, you are more likely to find these practices among smaller sellers, the big ones do not need them or the risk associated.
These tactics speak to the competitive nature of the Eastern market. In order to survive, these companies believe they sometimes have to bend the rules. While it is nearly impossible to completely defend against these underhanded tactics, the truth is, you may not really have to. Just as Amazon’s listing algorithms change rapidly, their security features grow and evolve to combat the evolving schemes used by Black Hats.
How to Combat and Compete with Chinese Sellers
Good branding across all of your touchpoints can win over potential customers. Use your logo, color scheme, images, language, website, and packaging to tell a cohesive brand story. Take advantage of enhanced brand content to show Amazon shoppers who you really are. This strong sense of your brand’s “self” should be clear across your social media pages and your website as well.
Clearly demonstrating your message and painting yourself as an authority on your product, or in your market niche, gives you an air of personality, credibility, and trustworthiness that is missing from many foreign operators.
It will be your brand voice that sets you apart from any and all competition.
The language you use on your product listings needs to make sense. This means clear, strong English on your listings. Having grammatically correct English on your page will create ease in your buyer by clearly signaling that you are different from cut-rate Chinese sellers. There is a sense, among North American buyers, that when things do not ‘sound’ or read quite right, something is suspicious. Suspicion does not inspire buyer confidence.
Similarly, it is important to demonstrate your humanity whenever possible. While using bots for customer service can be helpful in terms of time management, it does not take customers long to figure out that they are not dealing with an actual person. This makes them feel undervalued and underappreciated. One of the main goals of Chinese sellers is volume. They want to turn a profit and do so quickly - they are not taking the time to make sure their customers are satisfied post-purchase. If you take that little extra time to respond, human to human, you will create a buying experience that will hold you above the competition and make sure that people not only come back to your business but tell everyone they know about how wonderful you are!
Higher Quality, Higher Price
Chinese sellers are not overly concerned with quality. Again, the goal is to get products to market as quickly as possible and skim and siphon as many existing and new customers as physically possible. Products that are usually offered by sellers that cut quality corners are cheap, poorly constructed, and just, generally, do not deliver. Customers are often left with much to complain about. They may have saved on price but the product they got reflects those savings.
If you are able to spend your time concentrating on creating quality in all of your products, you will succeed. Higher quality products means you can charge a higher price. Yes, your costs may be slightly higher but you should be able to see a return on this investment and grow your profits with a higher price point.
Through the imagery and copy on your listing, you can convey the attributes of your product, justifying the price and reminding consumers that buying quality saves money in the long run. Buying cheap products means signing up for an unnecessary headache and buying lots of cheap replacements.
As frustrating as it can be to lose out to Chinese sellers, if you focus on your own listings by improving your branding, cleaning up your language, and concentrating on quality, you will create a strong, trustworthy, and sustainable business that will outlast and outsell all of your foreign competition!