Image Source @视觉中国
Titanium media note: this article is from WeChat official account PingWest Paintplay (ID:wepingwest), author: Xuan Ning, titanium media issued by authorization.
Amazon's billions of dollars in revenue each year come from China's "small and medium-sized cross-border sellers" - they have become the most cross-border seller group that the global e-commerce giant relies on. But now, the relationship between many Chinese sellers and Amazon is in a deadlock.
They accuse Amazon of using covert tactics to infringe their interests and "discriminate" against Chinese sellers. Amazon has designed a separate "punishment" system for Chinese sellers over the past two years, using its own platform and rules to accelerate the harvest of high-quality Chinese manufacturing resources and strengthen its own brands. In the game between the two sides, the hope of making a breakthrough in the past contract mode in China has become even less promising.
In the summer of 2017, a toy product that had been tepid has suddenly become popular on Amazon. The e-commerce company from Xue Chang from China is the first seller of this toy.
When the supply of goods was in short supply, Xue Chang immediately began to replenish the goods. Soon, new shipments from Chinese factories worked overtime to their rented Amazon American warehouse. Amazon advised that the inventory had been completed.
Such a process takes place every day. Tens of thousands of Chinese e-commerce like Xue Chang spread across China, selling large quantities of goods to the United States every day through Amazon. Amazon earns revenue from them by collecting commissions, sales rebates and providing warehousing and logistics services.
Amazon FBA services selected by most Chinese sellers, sellers’ warehousing, logistics, etc. are all undertaken by Amazon.
But this time, things are going differently.
Just two days before the launch, Xue received an e-mail from Amazon when he asked Amazon to count the goods. They were informed by e-mail that the new shipment was "all missing".
Xue Chang and his colleagues were instantly confused. The team, which has been working overtime for a week in a row, can only watch sales close to zero. "without a buyer waiting for you, the fashion has nothing to do with us ever since."
And then, more condolences happen.
Just a few days after the notice was lost, Xue Chang discovered that a new seller started selling the same product, and this seller is Amazon's own – a self-owned brand of Amazon. Their selling price is also much higher than the price of Xue Chang, but the sales volume has not been affected, and it is still hot.
"Before we have never seen this store in Amazon selling this product. And this has always been a very small product, how many factories can do it right away?" Xue Chang said. Thinking about it, he can only think of an explanation: "We and many of our peers suspect that this is Amazon taking our shipment and selling it ourselves."
The reason for their suspicions is that Amazon is the platform's model: Amazon is both a platform and a self-owned brand that sells goods on the platform. "Amazon often helps self-help suppress other three-way sellers," Xue said.
But Xue Chang can not find strong evidence to prove his conjecture. What's more, Amazon has made it clear in the rules of the platform how to deal with "lost goods": Amazon will pay full compensation for lost goods. Of course, the warehouse charges that have been paid, and the advertising fees paid for the consignment, will not come back.
"this kind of thing has happened to every small and medium-sized seller. If you think about Amazon's size, it's inevitable to lose your stock. " In different parts of the country surveyed by PingWest, there are more than a dozen sellers of different sizes, and almost everyone is accustomed to losing their goods.
They believe that "stealing goods" is not the most common way Amazon uses its own self-employed third-party hot-selling products. The more they encounter it is "forcibly recycling returns and then selling them."
Unlike Taobao, Amazon played down the concept of "store" and emphasized "goods," the same product with the same sales page (listing), only the best or the highest authority seller can determine the content of listing, and become the default seller. Other sellers are folded and displayed. "follow-up" refers to selling good products that others have already sold, which often eliminates the cost of early user cultivation and promotion, and is a common strategy used by some commuters when they start business.
On the listing page of a product on Amazon, most customers will directly select the merchant that occupies the default buy box, while other sellers will be folded (other sellers in the lower right corner). Users need to click on the open list to select, in operation A lot more cost. (Source: Cross-border e-commerce driver xiaoliang)
But when Amazon decides to sell, it becomes the default seller and gets the right to modify listing. In other words, forcibly take away your customers.
A batch of home improvement products sold by Shenzhen seller Chen Pan at the beginning of this year was returned due to damage during the outer packaging transportation. When the goods were returned to the Amazon warehouse, Amazon told Chen Pan that they decided to buy the goods.
"there is no problem with this shipment, just a little bit of damage to the outer package. But Amazon has to buy it at a low price and sell it on its own. You can't say no. He's not talking to you, he's just telling you. Because it's written in the rules they make. "
After that, Amazon self-service quickly returned the goods for sale, and quickly sold out. In the meantime, none of Chen's goods were sold.
"Amazon does use a variety of means to suppress third-party sellers to support self-operated brands." A person close to Amazon China said to PingWest. "Sometimes you don't need to steal your goods. Instead, you create a time difference by throwing goods. E-commerce sells goods. When the time window passes, nothing is gone."
Many cross-border sellers interviewed said that they had experienced the sudden loss of goods due to Amazon’s sudden notice of lost goods. Who do they think they will ultimately benefit from these processes?
"Amazon's own brand."
"there have been more and more unexplained losses these years. That's when you know it's wrong. " Chen Pan said.
I'm on my own. You supply it.
The reason why these cross-border sellers suspected Amazon for the first time was because the American technology giant has never concealed support for self-operated brands. The model of both athletes and referees is the place where Amazon is the most criticized by merchants.
Founded in 1995 by Bezos, Amazon started as an online bookstore, then expanded to other products and opened up third-party sellers. For the first time in 2017, third-party sellers outsold proprietary products. These more and more third-party goods, while increasing sales to the Amazon platform, have also become Amazon's "mice"-those that sell badly will naturally be eliminated, and those that sell well, Amazon is ready to harvest. It monopolizes sales by its own business.
Earn commission from third-party sellers, compared with their own direct sales of goods, the latter obviously a lot of profits. In particular, with previous trial and error risks being borne by third-party mice, Amazon's proprietary business only needs to harvest profits.
"for e-commerce, data is the most important. And now the data is in the hands of the platform, what to sell them better than anyone knows. " A five-year veteran seller said of PingWest's game analysis. "in addition, the traffic ranking is his call, as long as he does it himself, you will never get ahead of him for how much you spend."
Amazon's own brands will mark "amazon basics," and when searching for products, they will basically appear at the top of the search results. And for users, with Amazon endorsement, the product will be more popular. More importantly, according to many sellers, Amazon's algorithms for determining recommendations, rankings, etc., are no longer applicable here for self-employed goods.
"I went to see a self-operated charging cable. The homepage is a one-star bad review. It is all over the place, but it is useless. It is still sold in thousands of pieces a day." One is engaged in 3C cross-border e-commerce in Shenzhen. The senior seller said to PingWest, after which he stopped his own products. "It's like going to a convenience store next to Wal-Mart. How could you possibly compete?"
"in fact, Amazon will tell us from the beginning that it will consider all products to be self-employed." He said. "it is tantamount to signing an unequal treaty from the very beginning."
Since all products are considered to be self-employed, what Amazon needs most is not a cross-border independent seller, but a pure manufacturing supplier. It can use the data capabilities of "God's perspective" to find those that are slower to update. Hot products with less (SKU), large sales volume and relatively stable sales, launch the same model with self-operated brands, monopolize sales with huge traffic advantage; it can also directly find hot sellers and “naturalize” them into self-operated brands. Supplier.
Things are sometimes ugly when merchants found by Amazon refuse to cooperate.
At the end of 2018, He Ping, the founder of a medium-sized e-commerce company in Hangzhou, suddenly received an email. “We invite you to be our supplier and work with our own brand.” The email comes from Amazon's US headquarters, and they are looking at her high-end car accessories. The conditions of cooperation mentioned in the mail were significantly lower than the profit margins of her own sales and operations at the time.
She quickly refused to accept the offer after reading the email. The reason is very simple. "I don't want to hand over the profits to Amazon." He Ping's father is running a furniture factory in Zhejiang. She knows the drawbacks of the traditional foundry business and knows how to upgrade China. “Without my own brand, I can’t enjoy the brand premium. I have to rely on the upstream company for the hard work, and the pricing power is no longer in my own hands.” Amazon’s products have been effective for many years after she has been operating for many years. She wants to keep the brand and make it bigger.
But what happened next was beyond her expectations.
About six days after formally rejecting Amazon's invitation, she was sitting in her office and suddenly heard the cry from outside the house in charge of operating staff: the accessory, which Amazon liked, had been forced off the shelf on the platform for "infringement."
He Ping immediately started to contact customer service and investment manager. After a month of inefficient mailings, she found that the reason given by Amazon was that there was a word in the product description allegedly infringing, but in fact the word was just the English word for the product.
"it says you infringe," she said. "in the end, it took us a month to prove that the word was neutral, but it was too late." The product has fallen from first place to 100. She interpreted the experience as "the price of rejecting Amazon," a warning Amazon gave her.
According to the observations of several Amazon sellers, Amazon registered a large number of self-operated brands last year, and the proportion of self-operated products on the platform also increased significantly. At the same time, more and more cross-border small and medium-sized sellers with large sales have received Amazon's self-invitation. Many of them have chosen to become Amazon's suppliers, and they will once again make profits.
In recent years, Amazon has rarely talked about the business in the Chinese market, and has never published data from Chinese sellers. However, based on some public data, we can roughly calculate the revenue contributed by Chinese sellers to Amazon.
Amazon generated $42.75 billion in revenue from third-party sellers throughout 2018. Bezos' previous shareholder letter revealed that 25 percent of sales from third-party sellers in 2017 came from cross-border sellers. Since that share of revenue is directly linked to business revenue, it is conservatively estimated that cross-border sellers contribute $10.6 billion in service revenue.
According to Pingwang's survey of cross-border merchants in China, it is widely estimated that at least 50% of cross-border sellers on the Amazon platform are from China. Roughly calculated, Chinese merchants contributed more than $5.3 billion to Amazon through Amazon's global store business.
At an event in 2015, Amazon introduced global store operations in China
"This does not include the big sellers who have been counted as US sellers because of American companies. The real contribution of Chinese sellers is definitely more than this." A Chinese cross-border big seller said.
However, with such a large revenue contribution, more and more Chinese sellers have found that they and Amazon do not even have a smooth channel of communication.
This is behind the stalemate between Amazon and Chinese sellers in the past eight years.
In 2012, Amazon launched a new business called "Global Store", immediately attracting Chinese manufacturers who have become "factories of the world". They rely on low-cost and supply chain advantages, rapidly growing into the platform's main seller. The number of Chinese sellers on Amazon's platform has risen 13-fold in just three years, according to data released by Amazon in 2015.
"when the global store business was launched, there was a clear sense that they wanted to attract more merchants, because Amazon was investing in lots of empty warehouses, and it would be wasteful not to use them. At that time, all kinds of costs were very low, and the entry threshold was also low, not to mention perfecting the management rules of the platform. " Chen Pan said.
"2012-2015 is a time when Chinese sellers are making money, and you can make money as long as you're not stupid." One seller, who now has billions of dollars in sales on Amazon, said. The most common model at the time was the Huazhuangbei model, "it would be ten times more profitable to put things in it, and it would be a huge profit."
The influx of Chinese sellers was followed by a familiar scene in which a large number of Chinese businesses began to exploit platform loopholes by swiping tickets, reviews, and buying and selling data, exacerbating the problem of counterfeit goods and counterfeiting on Amazon.
"at that time, a lot of Chinese businessmen were really messing with each other, hurting Amazon platform and, more importantly, completely destroying the image of the Chinese business community." The big seller sighed.
So from 2015, Amazon began to strengthen management for Chinese merchants. First, it dealt with issues such as counterfeit goods, focusing on raising the threshold for Chinese sellers to enter, but the rules are still not detailed enough, and the phenomenon of brushing orders still exists. "After 2015, there may be more need for you to have higher operational skills, but it is still easier to make money." Chen Pan said.
Bezos’s last visit to China was in 2007, when Amazon entered the Chinese market through acquisition excellence.
Also in 2015, Amazon's c-end business, which entered the Chinese market through its acquisition of excellence, grew worse after 11 years of growth, with market share falling to 1 percent. The desolation of the c-end business in china and the chaos of cross-border sellers all point to the same problem: Amazon, an American company, is not comfortable with china.
"Amazon has only found out in China that the subsidy and the original fight are not even for Ali Jingdong. I have never thought that there is a way to brush up to the top of the rankings overnight." A person close to Amazon China said. He revealed that behind this is Amazon China's position in the entire company.
"the entire company has never had the real power of the Chinese middle and high-level, China continues to expand the recruitment of a variety of investment and business personnel. Although it has landed in the Chinese market, it is still not easy to come by. "
The company has not improved, many Amazon Chinese employees rely on reselling resources for huge profits. Several sellers say in 2016, an Amazon Merchants Manager can earn tens of millions of dollars a year on grey income. This makes headquarters more dissatisfied with Amazon China.
But cross-border business has not failed as completely as the c-end business. Since 2015, Amazon has become the most important platform for Chinese cross-border sellers to enter the U.S. market. "by 2015, a lot of eBay sellers have abandoned platforms such as eBay and switched to Amazon because of cost issues, and Ari Express is starting to focus on markets outside the United States, and Chinese sellers who want to be in the United States have to rely on Amazon."
This objectively gives Amazon a monopoly and has enough voice to deal with Chinese sellers without really adapting to the Chinese market.
From the end of 2017 to around mid-2018, Amazon began to manage Chinese sellers and tailored a new set of rules for Chinese sellers.
According to a number of sellers to PingWest game introduction, first of all from the seller access, Chinese sellers need to provide more complicated information, the approval cycle lengthened. Secondly, all kinds of important indicators of Chinese sellers are directly limited by absolute value. For example, the customer retention rate must not exceed 3%. "that is, 100 people buy products, and if more than three people leave comments, whether they are real customers or not, they will follow the reviews."
And the biggest impact on Chinese sellers is the rule: Amazon rules that once someone reports infringement or swiping orders in business, Amazon will not do any verification, but directly "close the store, freeze the money, seize the goods."
"We know that things are now done by Chinese sellers themselves." Chen Pan said. "But after these regulations came out, the effect was actually the opposite. Those sellers who used to mess around began to make malicious complaints. These regulations of Amazon have given these people new weapons."
Amazon's sharp cutbacks on Chinese employees also make it harder for compliant Chinese sellers to defend their rights. At the end of 2017, Amazon moved a large number of customer service posts in the hard-hit areas selling internal data to India, and then reduced access to customer service, investment and other personnel in China, according to PingWest play.
"in the past, sellers with high sales had direct connections with account managers, and problems could be dealt with in a timely manner, such as malicious complaints, completion of complaints before being closed, and avoidance of loss. Well, they don't have that right now, and most of the Chinese employees are in charge of investment, and they don't know which department in the United States is going to deal with it. " He Ping said.
Amazon asked the complained store to prove that it had no infringement or comment, according to several sellers, but the problem was that the notification email would not tell where the violation had been, but only the types of violations. This led to many Chinese businesses in urgent need of rescuing their shops and had to obtain information through grey channels. And a "complaint letter" that can help get inside information and find out the specific reasons for violating the rules, the market price has reached 100, 000 yuan.
This counterproductive result has led many Chinese sellers to doubt the true intentions of Amazon.
On the issue of dealing with Chinese sellers, Amazon's idea is not to let the more "reliable" American employees take over, but to directly reduce the service to Chinese sellers. According to Amazon sellers, Amazon also adjusted the time for US customer service to serve Chinese sellers. It used to be in the morning in the United States. In the middle of the night, China could call the US customer service to solve the problem. Now Amazon has changed the time for the US customer service to match the Chinese sellers to the US afternoon, which is the morning of China.
"But as long as you are a Chinese phone call, you will always be directly connected to the Chinese customer service." Chen Pan said. "You can only send emails, and Amazon's emails are surprisingly slow. It is normal to return you one or three days."
Some of Amazon's next adjustments have deepened suspicions.
Amazon China has introduced a range of products packaged as upgrades after cutting Chinese employees' rights and reducing normal service support, offering services that could otherwise have been offered by China Merchants' managers.
"2500 dollars a year." Chen Pan revealed. Many sellers see this as a disguised protection fee. Amazon doesn't care about Chinese businesses at all. If it were a Chinese company, it would have been cursed to death. "
"that's what Americans think. You have to listen to me and follow my rules. He won't come to try to understand how you work. And he profited for himself through these rules without cover-up. " Chen Pan said. One Amazon Chinese customer service described PingWest as a day-to-day complaint, but the reality is, "70 percent of Chinese sellers are still at a stage where proof is not clear."
"The platform is in his hands, the rules are his set, we need to follow the rules of others." He Ping said.
Motivation: as long as it's made in China, it doesn't need a Chinese brand.
Amazon built a “punishment” system for Chinese sellers at the lowest cost, which made Chinese small and medium-sized businesses, which accounted for half of Amazon, enter a state of self-destruction. After all normal communication and service channels were closed, Chinese small and medium-sized businesses began to compete for some of the “privileged” resources that Amazon officially launched. Among them, the VC (vendor center) launched in 2015 has been eagerly awaited, and this is also in the midst of Amazon's “support for self-employment”.
VC is a "self-employed" account launched by Amazon. It takes an invitation system, which is invited by Amazon, and invites merchants to enter into a "wholesale" contract with Amazon, which regularly supplies products that are run and sold by Amazon, while the brand can remain in the hands of the merchants themselves.
But in fact, in this relationship, the final pricing power has been controlled by Amazon, and the payback cycle has become longer, often around 90 days. "all the benefits of branding are gone." One VC merchant said.
VC's regular account is SC, and VC needs to pay a lot to get traffic support (photo source: forbes)
Amazon sees its VC account as self-employed, allowing it not only to have traffic slant, but also to have far more privileges than regular accounts. This privilege even includes "modifying others' Listing," that is, when VC and other ordinary sellers sell the same product, VC merchants can modify others' Listing.. As mentioned above, the importance of Listing to sales has largely put ordinary businesses that have not taken protective measures against their listing in front of VC.
"Basically, Amazon gave VC a huge amount of power, enough for him to play with other ordinary businesses in the palm of his hand." Xue Chang said, "If he wants to play with you, it is very easy." Among the many small and medium-sized sellers, almost everyone who has used non-VC accounts to sell goods has encountered malicious things being sold by VC accounts.
“When everyone received an invitation to the Amazon VC account, they also judged whether they need to go or need profit, because becoming a VC will make you a lot less profit margin.” A senior seller with five years of Amazon operating experience on PingWest Product play. "But with Amazon tightening management, VC is equivalent to becoming an officially authorized privilege. Everyone who is not a VC hates VC, but at the same time, he wants to become a VC. In order to protect himself. The end result That is, basically no one will refuse to become a VC."
VC itself is Amazon's account for self-development, so that it has less resistance to "swallow" high-quality business profits.
"Amazon's positioning of seller resources in the Chinese market has always been a big foundry," said a person close to Amazon China. According to PingWest's play, Amazon's goal this year has been to further sink the business from the wooing merchants. It will launch a new program called "LBP", based on the data of the Amazon platform to judge the good products sold, and then directly find the factory. Asked to OEM for a self-operated brand of Amazon. Amazon will ensure that these products are heavily drained to attract manufacturers. "In this way, what you sell is completely my Amazon thing." The person familiar with the matter said.
Amazon has also begun to recruit for this program. According to people who know about the recruitment situation in Amazon China. Amazon China has been recruiting investment promotion team personnel last year. "The headcount seems to have no upper limit. The whole country is expanding its enrollment." The job of these investment personnel is to "run the factory."
A factory owner who had signed a similar partnership with Amazon last year explained his decision to PingWest: "American guests are generous."
"normal e-commerce, at the beginning of the cooperation to order two or three products, the volume of a container can be good, but this Amazon's list, one product can order two cabinets." Such a big order is more difficult to resist when cross-border e-commerce as a whole enters a downturn.
Factories, of course, pay a price: first, the account period was extended to 90 to 120 days, from "not a day" when working with other ecommerce companies. What's more, he has had to give up on brands he has been running for many years because "Amazon's own brand must be posted."
To do so is to go back to the age of contract work. But the factory owner was clearly not in the mood to think about it.
The actual actions of Amazon are completely opposite to the publicity of Amazon China. In the mouth of Amazon China President Zhang Wenyu, who took office in 2016, Amazon is helping Chinese companies “to achieve traditional industry upgrades through Amazon, breakthroughs in traditional foundries, innovation, global branding and maximum commercial value”. In a high-profile local government forum in 2018, Zhang Wenzhao linked Amazon's business to the “Belt and Road” strategy, saying that Amazon is building an effective and convenient “online Silk Road”.
But in fact, even Amazon China itself is hard to cite successful cases that are consistent with their propaganda. In a public relations report in 2017, Amazon pulled the Chinese cross-border e-commerce group to have a tree as a positive case. But the fact is that there are trees that have never got rid of the "traders" and "low buy high" models.
"No one knows what brand a tree is selling." A number of cross-border e-commerce said. According to PingWest, a tree and similar cross-border ecommerce groups were laid off on a massive scale last year. One tree was sold at the end of last year and sold to Tianze for 3.4 billion yuan, while a similar cross-border ecommerce group, which started with a trader model, cut 30 percent of its workforce and Aoki cut 20 percent.
“When it’s best to make money, they chose the mode of distribution. They didn’t realize that they would consider investing in R&D and brand building for the future.” Chen Chang said. "Now, with the tightening of Amazon's management of Chinese sellers and increased support for self-employment, many categories have no space for third-party sellers. Now, it is almost impossible to make brands slowly. ""
(Text Xue Xue, He average is a pseudonym)
More exciting content, focus on Titanium Media WeChat (ID: taimeiti), or download Titanium Media App