How to compete with Chinese sellers on Amazon?

The Chinese sellers absolutely have a lot of advantages. Most of the world’s production is in China, so if a factory is going to sell on Amazon directly, they’re going to have lower costs. So, how to compete with Chinese sellers on Amazon

Almost 35% of top Amazon sellers are based in China. Amazon marketplace pulse has calculated this on the basis of a common average of five European Amazon marketplaces, namely the UK, Germany, France, Italy and Spain.

The share of Chinese sellers in Amazon USA is even higher, according to industry estimates.

Many Chinese Amazon sellers use FBA (Fulfillment on Amazon). Over 70% of Chinese sellers use fulfillment on Amazon. In comparison, the quota of FBA sellers from Europe is below 50%.

 compete with Chinese sellers on Amazon

Unfair shipping rates from China to FBA and/or directly to Customer

As you browse through the listings on Amazon or eBay it is almost impossible to imagine how cheaply Chinese companies are selling products for: iPhone covers for $5, simple kitchen gadgets for $10 with free shipping option.

The cost to ship a one-pound package from Georgia to Texas would run approx. $6; from Beijing to NYC: $3.65

It’s actually no secret as to how the Chinese are able to ship products abroad so cheaply. The reason/s is actually simple:

  1. Chinese sellers get massive subsidies for shipping overseas by the Chinese Government however it’s not only Chinese government these super low shipping rates are being also subsidized by the U.S. Postal Service.
  2. A 40 feet container will cost between $1,500 and $2,500. But Chinese postal service sends thousands of containers every day, , so you they can bring down the cost of a small parcel to a few cents.

To send a letter domestically; the rate of first class mail is 50 cents in US, not to mention higher prices to send anything heavier.

Tag: How to compete with Chinese sellers on Amazon. Strategies

  • Source Locally

The more local you shop the bigger the chance you can order smaller quantities. Another advantage is the fast delivery time, meaning you can reorder in a short time and you do not have to wait 8 weeks for a ship from China.

With this method you can also test products and later order in China if you are sure whether the effort is worthwhile.

Especially things like toys, food or wood products are often easier to shop in US because all directives are complied with. In China, it requires more effort and sometimes also discussions and costs to induce the supplier to comply with US guidelines.

  • Search niche suppliers & source niche products

If you still want to source in China, it makes sense to choose suppliers that produce more than just a product in your niche. So you can get better prices and maybe negotiate smaller MOQ. Your supplier would like to have the MOQ 300 pcs or even 1000 pcs but what if you like to try 5 products which your finances do not match.

But, if you’ve already established a relationship with this supplier through your first product, you can talk to him and ask if he’s getting a minimum order. So you say your budget would be $5000  and you would like to order that. Not a single product but smaller quantities of different items, but in total you pay as much as in a larger order.

Since the Chinese also like to work and grow with you in the long term, your chances here are quite good. I’ve already successfully used this tactic and it makes sourcing a lot easier as you have fewer manufacturers to communicate with. However, this does not mean you should put all the eggs in a basket, it is always advisable to find alternative manufacturers for the same product if one fails for some reason.

Avoid it, if at all possible:

  • Phone cases
  • phone accessories
  • Screen protectors
  • Or similar products
  • Don’t say “Amazon”

Don’t mention anything about Amazon or your online business plans, don’t ask them to ship the products to FBA

You can say that you are in cooperate gift business 🙂

  • Trademark Your Brand

Take advantage of the Amazon Brand Registry program. Create your brand-awarness and protect your product pages from unauthorized sellers.  Chinese competitors spend virtually nothing, have no strategy and have the same limited chance to succeed. If you are not competitively priced, and have nothing else will go for you but also low price is not going to make you succeed. Amazon is a search engine, you can offer your product/s even for $1 , no one will know until your product is visible and/or your brand-awarness is somewhere.

What do you bring to the party? And how does that differ from your Chinese competitors? How to compete with Chinese sellers on Amazon?

Boost your brand cache by making sure you have unique brand story that attracts Amazon customers who are looking at more than just sticker price.

  • Try to find a mid-size products

Please read again “Unfair pricing – Shipping from China to FBA or directly to Customer” part of this article “How to compete with Chinese sellers on Amazon” if you don’t understand the reason.

  • The oldest trick in the world:

Use Aliexpress instead of Alibaba to order just a few units and take a test. Don’t expect any profit.

The downside is this is against my branding suggestion, that you probably will not get customized items with your logo, only generic units without branding. But since it is only a first market test if the article is sold that should be enough. Alternatively, you can also attach stickers yourself or transfer the products into printed bags as soon as you have them in your hand.

On Aliexpress, you can often already order from a unit and so test different products at once. Later, you can easily scale because usually the same manufacturer also offers private label versions of this products.

  • Source your products from other countries

China is able to serve the majority of companies looking for overseas manufacturing. However, with many thriving big economies offers excellent products.

India, Germany, Spain, Turkey, Italy, South America.

  • Strive for better customer reviews on Amazon.

Customer loyalty is far more valuable in the long term. Better ratings that were legitimately earned have the added benefit of improving your product Amazon ranking in search results. With Amazon cracking down on fake reviews, this will matter in the long term.

  • Do research to increase your understanding of your customers needs from competitors product page reviews.

Use the information you gather to find the right products as well as to optimize your ads, titles, bullet points, descriptions and photos and to better serve your customers’ needs

  • Find products where the quality and craftsmanship matter to customers.
  • Offer superior customer service with a personalized touch, take advantage of the Chinese sellers’ language barrier.

Thanks for reading the article “How to compete with Chinese sellers on Amazon”

 

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