This is a guest post by Growth Hack Consulting HK
If we look today at the top sellers on Amazon, the largest online marketplace in the U.S.A. and Europe, you will find that many of them are Chinese. Whilst Western sellers find it so difficult to tap into the Chinese market, the Chinese on their side have managed to dominate the Western markets.
So what is their secret, given the huge differences in culture, business mentality and environment? Even amidst the uplifting Trade War between the United States and China, Chinese sellers are still coming out on top and beating many Western sellers.
Doing a great job at selling on Amazon today is definitely harder than it used to be just a few years ago, but it is also going to pay much more in the mid-long term as the market is growing at an insane rate, and there’s a new hot trend in the private equity market, that sees a lot of investors buying successful Amazon sellers businesses.
So let’s take a deep look into what Chinese sellers are doing and how others can learn from their success to scale their business as Amazon Sellers.
1. Make Marketing Decisions Primarily Based on Data
This might seem obvious, and we've heard countless of times that trusting data is the best way to make strategic decisions, but the vast majority of small to medium eCommerce businesses don’t do this nearly as much as they should. Sellers in China have an obsession with researching and collecting data from their competitors, from the market and their customers. They hire full time staff whose sole job and purpose of existence in the company is to research and know their competitor’s every move and laser-target update-optimize their own data as listings, keywords, back end search terms, PPC strategy, customer research, product selection, etc. They report all of this back with large spreadsheets and technology so they’ll know within minutes when their competitors have dropped their price by a dollar, changed their listing or updated their features.
Every business decision Chinese sellers make is made through what the data is telling them. There’s no guessing or any assumptions. Too often, we make important business decisions based on what we think our consumers want. We have a made up idea in our heads that what we’ve produced is what our customers will want; that our competitors don’t matter, because our product is superior, or at least this is what we think.
Running your business this way will run it to the ground. Know what your competitors are doing at all times. Analyse your customers and target market at all times. Making informed decisions based on data will pay off in the long run. You cannot afford to make your decisions any other way.
2. Move Quickly
The key for moving quickly is to never get attached. The trial and error approach dominates the culture many Chinese sellers have. In China, anything goes. Businesses will give almost any idea a shot. If it works, they’ll continue to build on it. However, if it doesn’t, they’ll shut it down immediately and move onto the next product.
If you find a winning product, proven by data and actual sales then you should invest as much money into it as possible. The moment it stops working, move on.
“In today’s highly competitive online business environment , speed can beat flawless quality. By the time a Western company has researched the market, worked on a sales strategy, and made a marketing plan to support an upcoming product, a Chinese company will have either moved onto the next product or will be launching the follow up product to their original one. This means Chinese companies can constantly flood the market with new products in a way that Western counterparts cannot.”
Too often, we’ve become too attached to an idea or a product. Even when it isn’t profitable, we spend all our time trying to make this idea work even though the market is telling us there is no product-market fit. And by the time we realise it, it’s too late. Our competitors have already moved onto the next product, and have won again.
Moving quickly means you’ll always stay on top of new trends. Do not stick to a product that doesn’t sell well anymore. Clean the stock in your seller centre with some heavy promotions to avoid (also) extra FBA fees and move on to the launch of the next one.
3. Obsess Over Your Competitors’ Performance
In the competitive world we live in, it’s crucial to know your competitors inside and out. There’s no such thing as ‘no competition’ nowadays, no matter how unique you think your product is. Even if you think you’re the pioneer with a product you’ve created, your competitors are watching you and will replicate or re-create your product quicker than you have time to look back. Think about platforms like Indiegogo or Kickstarter, they are often home for copycat businesses who try to get exposure and investment from users who have never seen a particular product before.
In order to stay ahead of the game, you need to obsess over your competitors. This means, watching their every move. If your competitor lowers their product price, you will probably need to lower yours, or make sure that your competitive advantage is well visible, or add some extra value to you post-sales service and packaging. If your competitor adds a new feature or variation of their product, you better make sure you also keep up or your product will soon be seen as a B or C variation.
This is the mentality many Chinese Amazon Sellers have. Whilst some might try to re-create an entirely new product, it’s only a matter of time until other sellers catch up and either replicate your product or make it even better, given closer relationships with factories and suppliers, for obvious reasons. Keep your eyes peeled and know your competitors better than your customers do. Only this way, will you be able to stay on top of the game.
4. Focus on What Works
When it comes to the average small-medium enterprise, the Chinese approach to business is completely different from everything a seller in the West would do to grow their brand: they simply stick to whatever works, now. This means, don’t get too attached to your brand and the original product selection, try instead to focus on which products the consumers really want now.
We’ve seen companies like TaoTronics (from Sunvalley Tek, Shenzhen) sell lamps, bluetooth audio, selfie sticks, pet products and a range of other products all under the same brand. We’ve seen RAVPower from the same group, a battery brand, sell swiss knives. There’s absolutely nothing these products have in common, but they’ve made their branding so broad that there’s nothing that doesn’t make sense for these sellers. Would the final user really care if a brand that they already know is trying to expand into a different product category? Not much, considering that what really matters, is the fact that the purchase is happening on Amazon, and they are protected by the Amazon system of reviews, quality control, quick delivery, refunds, etc. And, it saves a lot of time for the seller to build a new brand and a whole new marketing strategy.
In this way as a seller you aren’t branding your company to be specific in one category, rather you’re building a brand that is known to sell and manufacture quality goods. You can be completely flexible and have the ability to brand whatever products consumers are asking for, in a market that constantly changes.
5. Build a Relationship with Your Manufacturers
The reality of it is, China has money. A lot of it. The Chinese government incentivizes sellers and manufacturers to grow their businesses overseas. In addition to this, they have access to millions of manufacturers at their doorstep.
Being so close to suppliers means Chinese sellers are going to get their products faster and cheaper. While cost is always going to affect your margins, so will time. “The key advantage here is not only cost, but the speed and personal relationships that come from being in the same city as the supply side. I would argue it’s an even stronger advantage than being close to your customers! Sellers in China are able to take a quick taxi ride to the factory to check on production, but solo sellers located in the West have to hire specialized inspection and QA companies. When your supplier can remember your face or even get dinner with you, your relationship will be much stronger, and you will definitely get priority or better prices.”
Speed to market could be a matter of make or break for you. You could find that after months of going back and forth with your manufacturer, someone else has already produced your product. You’re then forced to compete solely on price, which as you know is a slippery slope.
Being as close to the action as possible is of course an advantage. And if you can’t, take regular trips to China to make sure you’re not lagging too far behind. Either find an agent who you can trust to do this for you or you might be in trouble.
6. Constantly Improve and Evolve
Of course with all of this in mind, there are also some very clear cultural differences. In the West, we love to relax and work only when necessary. The typical week for a European or American working at an e-commerce company might look like a 40 hour, 5-day week from Monday to Friday. And once it clocks 5pm on a Friday, work is over. Job is done, there’s nothing else to think about until Monday.
The typical week for a Chinese Account Manager at an eCommerce company would probably look a lot more like a 9am - 9pm job, Monday to Saturday, sometimes on Sundays too - as China has the right to request their workers to go to the office on weekends too. In addition to this, employees might willingly spend their spare time researching or studying about how they can improve their job. They might even have work-arranged workshops or training sessions to attend on the weekends.
Not only is it part of Chinese culture to work hard and study hard, they’ve also grown up with a lot of competition in everything they do. The mentality is that you have to work 10 times harder than your co-workers to ‘make it’. There is a very early entrepreneurship mindset among Chinese workers that we can all learn from. You can read more about this culture on the book “Battle Hymn of the Tiger Mother” by Amy Chua.
This constant strive for success and the countless amount of training workshops that exist in China make it incredibly hard for the West to compete, even in their own market.
This blog post has been the fruit of an in-depth research and a lot of interviews with Western and Chinese experts in the eCommerce field and experienced Amazon sellers. We understand that these points might not apply to each and every business, but they offer good inspiration to understand the cultural and economic reasons behind the rising success of Chinese eCommerce sellers.
This article has been provided as guest blog post by Growth Hack Consulting HK, a Digital Marketing consulting agency based in Hong Kong, that helps multiple clients from all over the world to success in their Amazon and eCommerce business - authors: Joannah Hon & Davide Nicolucci.