An essential ingredient for Amazon’s success is the explosion of businesses based in China that sells products through its vast digital mall.
But more than a year ago, Chinese businesses have been steadily selling a smaller share of stuff that Americans buy on Amazon. Merchants based in the US are gaining ground.
Experts told me they didn’t have a satisfying explanation for this shifting balance of Amazon merchants in the US and China. Nor could they say whether it was a blip or a lasting reversal of what had been a long trend of growing market share for Chinese merchants.
At the moment, most shoppers did not notice that Chinese merchants are selling less stuff on Amazon. And this may be another example of unpredictable shifts in shopping prompted by the pandemic.
But Amazon’s aggressive efforts to court Chinese merchants over the past half decade have led to a profound and trendsetting change in online retail and the global economy. If that phenomenon has lost steam, it’s worth watching for what it might mean for shoppers, international trade and millions of businesses that earn their living from selling livelihood on Amazon and elsewhere online.
I ‘ll step back to explain how Amazon works: The company operates as a traditional store that resells products bought from manufacturers and is obviously like eBay. More than half of the products sold on Amazon come from this eBay-like approach to independent businesses that list their products alongside those that Amazon sells. When we buy a child’s game or a phone charger on Amazon, odds are that it actually came from a Texas toy company or a large Chinese electronics conglomerate.
Starting around 2015, Amazon made it far easier for merchants based in China to list products for sale. It has been copied by other retailers including Walmart and the Chinese clothing company Shein, and has transformed the experience of shopping online – in both good and bad ways.
Chinese merchants have been a source of Amazon’s power and the company’s biggest headaches. They are a great reason you can find almost any product on Amazon, and they probably helped lower prices for shoppers. But Amazon’s critics also say that the company has done enough to protect shoppers from dangerous or subpar products and manipulated customer reviews from Chinese sellers that may be out of reach of US consumer protection laws.
Over the past few years, Chinese merchants sold a growing percentage of what Americans bought on Amazon until there was a roughly 50-50 split between sellers based in the US and China. The percentage sold by Chinese merchants, however, has declined to about 42 percent in May from about 48 percent in late 2020, according to the e-commerce research firm Marketplace Pulse.
Merchants based in the US are capturing a bigger chunk of sales instead. Domestic Amazon merchants are also selling more relative to Chinese merchants in Britain and Germany. (An Amazon spokesman declined to comment on the changing mix of Chinese and domestic merchants.)
I asked Juozas Kaziukėnas, the founder of Marketplace Pulse, whether this shift away from Chinese merchants was due to the factories of temporary closures in China related to the pandemic and the increased costs and complexity of shipping products from Asia. He said maybe not. Most merchants based in the US buy and ship from manufacturers in China or elsewhere in Asia, too.
Kaziukėnas said that it is difficult to know exactly what is changing, but some merchants have been frustrated with the rising costs and Byzantine rules on Amazon. There have been news reports from China of product sellers hoping to find websites other than Amazon to sell their goods to the world. Those gripes about selling the downsides on Amazon are definitely not new, however, and are most commonly expressed by merchants outside China, too.
Yaniv Sarig, chief executive of Aterian, a US-based merchant that sells products on Amazon, is among e-commerce experts who believe that some Chinese businesses may be gravitated away from Amazon because they were spooked by the company’s crackdown last year. Some merchants based in China, apparently for manipulating customer reviews.
The shake-up of Amazon’s marketplace could be an opportunity for merchants based in the US, including those like Molson Hart, the Texas toy retailer I posted last year, who believed that US laws and policies would give an unfair advantage to online product sellers. China.
Finding out that sales mix of Chinese and domestic merchants has been shifting for a year left with burning questions: If the flourishing of product sellers from China was a profound change in online shopping, why did it seemingly not affect shoppers when the trend reversed? ?
I’d be surprised if we overstated the benefits of opening Amazon to millions of product sellers. Maybe having 20,000 choices of blenders on one site doesn’t really help anyone.
Before we go…
“The war broke so many of those ties.” For several years, Russian-speaking technologists from countries that were once part of the Soviet Union shared a townhouse in San Francisco. My colleague Cade Metz reports on how Russia’s war in Ukraine has tested the dreams of the community’s homemates from countries including Ukraine, Belarus, Georgia and Russia.
Social media does not have the answer to baby formula shortages: Facebook, YouTube and other social media websites have been flooded with recipes for homemade baby formula that experts warn are unsafe, writes Bloomberg News. (A subscription may be required.)
What was wrong with BUTTONS on the dashboard? Jay Caspian Kang, who writes a newsletter for The New York Times Opinion section, writes about all that wrong with the touch screen in his car and the long knobs and buttons that used to set the temperature and control the audio system.
Hugs to this
Rescuers helped release a 400-pound (!!!) stingray that had been caught on a fisherman’s line in the Mekong River in Cambodia. Humans managed to avoid the stingray’s venomous barb, which is capable of piercing bone (!!!), Jason Bittel wrote for The Times.
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