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The future of Amazon and Ecommerce: China-sourced products
At last year’s Catalyst Europe 2017 Conference, ChannelAdvisor CEO David Spitz made five predictions for the future of Amazon and ecommerce. This week marks the first anniversary of his predictions so each day we’ll examine one prediction and see if it’s holding true. Today we look at China-sourced products.
If you’ve missed the other articles in this series they are:
1. The future of Amazon and Ecommerce: Growth
3. The future of Amazon and Ecommerce: Private label products
4. The future of Amazon and Ecommerce: Amazon Logistics
5. The future of Amazon and Ecommerce: Ad spend on Amazon
2. China-sourced products will account for the majority of Amazon’s unit volume
According to the ONS, in 2016, UK imports from China were £42.3bn (UK exports to China totalled £16.8bn) and they are our fifth largest trading partner. With that in mind it would be no surprise to discover large quantities of Chinese products on marketplace and that is indeed the case.
A staggering figure released by Marketplace Pulse in April 2017 is that 25% of Amazon sellers in the UK are Chinese (of which 47% use FBA). The number a year later may be much higher and, as the most advanced ecommerce country in the world in terms of average spend per head of population, one can assume that the majority of Chinese sellers target the UK. With 194,715 sellers currently having products listed on Amazon UK, there could be close to 50,000 Chinese sellers active on the platform.
It’s worth noting that HMRC received 27,550 applications to register for VAT from overseas online sellers between March 2016 and the 31st January 2018. Not all of these will have been from Chinese sellers but we suspect a large proportion are.
Across all sellers, about 35% are using FBA but a massive 50% of Chinese sellers are using it as it gives them the ability to compete with domestic sellers on an equal footing with fast deliveries. It also means that in many cases, Amazon Prime customers won’t even notice that they’re trading with a Chinese seller as the goods will arrive in Amazon packaging the following day.
There is little doubt that large volumes of product are being sold by Chinese sellers on UK marketplaces including Amazon, but this is just part of the picture. There are also plenty of UK sellers who are either sourcing direct from China or who are sourcing locally in the UK but with goods produced in China. Just about any electonics product you care to name will either be manufactured in China, or in near neighbours such as Japan, Taiwan or Korea.
It’s hard to estimate just how much China-sourced products may be being sold on Amazon, but by all indications it’s massive and growing fast.
Read about David’s third prediction here.
I think there will be a shift from China products to made in India. Amazon has a better relationship with India and wage costs are cheaper in India. Amazon last year opened up Indian sellers to its global marketplace and Amazon now has 32,000 Indian sellers selling globally. Indian sellers can undercut China sellers because of wage pricing, there for Chinese sellers in the future will have stiff competition from India.
Amazon would have also recognised this and I would expect Amazon in the future to move its own brand manufacturing to india.
Whilst this works on paper, the infrastructure and bureaucracy in India is what is stopping it happening already or why it hasn’t happened, and the reason i cant see it happening.
It is a real shame because India has some really talented workers, who can achieve amazing things with simple tools earning very poor wages. They would be a huge benefit to manufacturers.
In the meantime, these skills remain exploited by a select few very expensive fashions houses or those that see the value in this craftsmanship. If anyone has seen swooneditions, i find the hand crafted tables and tv stands very beautiful. But maybe not to everyone’s tastes or perhaps budget. its as close to bespoke as you can get with being so. Hence why your expensive fashion labels can do well in this region.
For your mass produced garbage, I can never see India completing here.