Is Amazon the answer for outbound Chinese e-commerce?

When considering the global expansion of Chinese brands, one cannot overlook the power and reach of Amazon. Alibaba is certainly a significant player, but its reach only covers China and parts of Southeast Asia, while Amazon covers everywhere else. According to e-commerce analysts, there are 200,000 third-party sellers from China on Amazon and the number is growing every year. They are also some of the most innovative sellers in the e-commerce space, and their reach cuts across a variety of categories—from black dresses, kitchen knives to everyday gadgets. The largest of these sellers record nearly US$500 million on Amazon alone.

While these numbers sound fantastic, a closer look reveals that most of the goods sold on such global marketplaces are commoditised, low-cost, and replicas of established brands. This may be great for short-term gains, but in the long term this not only does a disservice to such Chinese brands, and is fraught with risks as complaints may lead to delistings of the products. 

But there are notable exceptions of Chinese brands who are successfully cracking the global e-commerce marketplace. Shining examples like Anker, considered one of the pioneers of Digitally Native Vertical Brands (DNVB). DNVBs are maniacally focused on the customer experience and they interact and transact with consumers primarily on the web. Dollar Shave Club and Casper Mattresses are great examples.

Anker sells its mobile chargers on Amazon. Instead of focusing on low-end models, Anker put its emphasis on using data to understand the demand gap on Amazon. Anker’s story is often told as one of deep search analysis, comparing search volume to available products at the deepest level of categorisation to find kernels of opportunity.

Instead of peddling another cheap power bank, the brand is obsessive about its image, proud of its innovations, believes in giving a great shopping and learning experience and helps consumers choose the right product. 

It’s no wonder that its premium-priced products get some of the highest quality scores on Amazon with great reviews and very vocal advocates. The product pages are pinnacles of Amazon marketing prowess.

Not surprisingly, Anker reached #7 in the 2018 WPP BrandZ Chinese Global Brand Builders Study, increasing 22% from 2017.

Today, Chinese manufacturers can harness global marketplaces such as Amazon either through creating DNVBs or learning from them: by creating great consumer experiences to build sustainable, profitable businesses. Amazon remains the cheapest, and the largest option available. What will it take to spawn many more Chinese DNVBs like Anker?

Create a nimble team: First, have a mindset shift from being a supplier of cheap options to an informed brand innovator. This will require creating a nimble team of e-commerce, product development, marketing, supply chain and customer service experts working together.

Follow the data: Once the team is in place, the next most critical task is using data. By understanding search, brands can understand demand. By combining demand with the current product portfolio, gaps can be identified and filled. Who needs a colour consultant for product development anymore when we can look at what colour thousands of users picked last month?  DNVBs are doing this and monitoring product reviews to continuously iterate product development via mass data gathering in a giant, ongoing feedback flywheel.

Engage in growth hacking: It’s not enough to list the product and wait for it to become successful. Growth hacking requires strategies that make the product discoverable, drive traffic to your listings, ensure conversions and manage reputation by constantly listening to customer reviews and tweaking the marketing mix. The key challenge is identifying the right partners that not only understand Chinese brands and businesses but are also experts in global marketplaces and have competent in-market teams. 

China has a long history of being a country of innovators and global traders. Modern China has a world-class, agile manufacturing ecosystem. With perseverance, building powerful e-commerce brands outside of China can now become a reality.

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Anurag Gupta is chief growth officer at Wunderman Asia-Pacific and Eric Heller is CEO of Marketplace Ignition.