The eCommerceer Podcast: Chinese Acquisitions of eCommerce sellers
China’s growing acquisition of eCommerce sites
This month Amazon has seen an extraordinary increase of Chinese-based entities acquiring top eCommerce sellers to their ranks.
Throughout the COVID19 pandemic, Amazon and eCommerce in general has boomed, as online retail provided both essentials and a little comfort to those isolated by lockdowns. Now as the world returns to normality, the practicality of eCommerce has stuck with consumers.
Chinese Capitalisation
China has capitalised. As of January 2021, 75% of new sellers on the platform originated from the Middle Kingdom, according to MarketPlacePulse. Now every 1/50th of a second a new listing is uploaded by a Chinese vendor.
The big conglomerates of the people’s republic are on the hunt to acquire more sellers, typified by merchants of the Chinese mass manufacturing sector.
Intriguingly, these conglomerates have now set their eyes and pockets on international sellers – crossing borders via eCommerce in a quest for global commercial domination.
Amazon Crackdown
Simultaneously, Amazon moved to clamp down on Chinese sellers after a data breach indicated customer reviews had been synthetically manufactured, or in some cases even free merchandise issued to individuals to stimulate the 5 stars.
One of the principal Chinese retailers on Amazon, Shenzhen Youkeshu Technology, was reported to have $20 million in funds frozen and roughly 340 stores closed, according to Global Times.
Blackhat tactics are not uncommon among these big organizations. Fierce domestic competition in China has catalysed the implementation of such tactics to drive both sales and reputations.
In May the WSJ reported that federal agencies in the US uncovered over 10,000 non-compliant listings including unapproved or prohibited products unsuitable to the US market.
Continuing the Chinese-US Commercial Conflict
Not unsurprisingly, Amazon has fixated on suspending Chinese sellers, whereas similar breaches among western sellers went relatively unchecked - exemplifying the ongoing Chinese-American commercial rivalry.
Allegations of data theft have also been circulating, sold by mid-level Amazon employees in China to get the low-down of consumer shopping habits and access to personal data.
What will happen as the Chinese funds acquire more and more international sellers?
One can only postulate, the sums involved in the acquisitions are so large, where then is the value for the buyer. What is the plan to reap the financial benefit of acquiring Amazon sellers across the globe?
What could this mean for the eCommerceer?
For authentic self-grown online sellers competing against such high volumes of cheap merchandise may seem like a mammoth task. But while Amazon continues the crackdown, hope remains.
Selling communities such as “Made in China, Sold on Amazon” have suggested they’ll be moving away from the platform if the giant continues these punitive measures. As a result, by the book sellers may see an increase in traffic when further non-compliant Chinese sellers and listings are suspended.
Amazon clearly still wants Chinese sellers, and Chinese sellers and conglomerates clearly want to be cemented on the platform.
Will it get harder for the regular seller to compete against a mass of vendors listed in multiple huge corporations? Or instead, will the authentic customer relationships and organic reputation that the conglomerates seem intent on buying win the day?
TradeBridge CEO and Co-Founder Mark Coxhead commented:
“The hard part of the model to replicate is that those intangible assets of online companies to a successful online seller, whether that's the networks of influence, or the authentic reviews, or their repeat purchases from happy customers. All the stuff that successful sellers work so hard on, that's the real value in a lot of those businesses.”
“There is still an element of magic there and that magic comes from the entrepreneur, the founder, who has the feel for his or her product, who has the feel for the market and who has a feel for how things work on Amazon and probably to be honest has a bit of luck.”
Sellers need the working capital to seize their opportunities
Entrepreneurs need to put their magic into action to compete, for the eCommerceer, working capital that fits your needs is vital.
Being without quick and flexible access to cash can really cut an online seller’s chances of capitalising on the big opportunities, and risk missing out on explosive growth.
Don't forget to subscribe and keep an eye out for our next episode, coming soon.
Also available on Spotify and Apple Podcasts:
Don't forget to subscribe and keep an eye out for our next episode, coming soon.
We will be talking to TradeBridge's CEO and Co-Founder about whether the rise of eCommerce has finally ended the reign of high-street shopping?
If you have any questions or would like to get in touch, contact us at tradebridge.com/ecommerce