Sourcing for Amazon Sellers

China, the World’s Factory

If you were to randomly ask companies in the US or Europe where they source their supplies from, a majority will likely to say China. Pose the same question to Amazon sellers, and they will cite China as their manufacturing hub. Some may have a ‘China plus 1’ plan, but their supply chain is pretty much unimaginable without the world’s largest manufacturer.

Low manufacturing costs, a strong business ecosystem, flexible suppliers, manufacturing expertise and efficient workers are strong points that other countries haven’t been able to replicate. China also dominates the supply chain on raw materials. It is a one-stop shop that global businesses have come to rely on and trust over the past decade when the country overtook the US as the world’s numero uno industrial powerhouse.

You may already have China in your sights as you lay the groundwork to become an Amazon seller. This article helps you understand what is involved in becoming an Amazon seller from the all-important aspect of sourcing products to sell. The focus of this article is on providing an overview of doing business with Chinese suppliers and the role that a sourcing agent in China plays in contributing to your success.

Selling on Amazon

Amazon is a tech behemoth dominating retail, cloud data and the voice commerce segments. As a mega-industry that weaves into several other industries, Amazon offers sellers incredible opportunities to find a profitable niche to sell.

The company’s ecommerce model, technological innovation and marketing strategy are responsible for propelling it to such great heights. Amazon makes massive sales, but small profits, which may be beneficial for its long-term profits, as this Vox article explains. A few points from the article:

     - Amazon invests a vast majority of profits back into its business

     - Amazon’s massive investments in its business have allowed the company to keep its tax bill low

     - Amazon has very high free cash flow, exceeding the combined revenue of Twitter, Snapchat and Pinterest

     - Amazon has created or established new industries

     1.  Amazon has more than 2.5 million sellers currently selling on the marketplace.

     2.  In 2019, there were 225,000 Amazon sellers with more than $100,000 in sales, representing a growth from 2018, when 200,000 sellers worldwide made over $100,000 each.

     3.  Amazon sells $4,722 each second, $283,000 each minute, and over $17 million each hour.

     4.  If Amazon were a country, its net sales would make it the 146th richest country in the world!

     5.  Online shoppers spend more time on Amazon than on the top nine online retailers combined.

     6.  45% of US ecommerce spending in 2019 was on Amazon, a number which is expected to rise to 47% in 2020.

     7.  Most Amazon sellers use other platforms to sell their products. This is because of the growing competition on the ecommerce marketplace and the launch of its own private label brands.

     8.  In 2021, over 2.14 billion people globally are expected to purchase goods and services online, up from 1.66 billion digital buyers in 2016.

     9.  Amazon dominates Google as the preferred first channel for product searches online:

          o   55% of shoppers between the ages of 13 and 24 begin their search on Amazon, compared to 17% on Google.

          o   59% aged 25 to 34 embark on their initial search for products on Amazon compared to 27% on Google.

          o   61% of those in the 35-54 age category prefer to start with Amazon while 31% choose Google.

          o   56% of those aged 55 and older begin on Amazon while 25% prefer Google.

     10.   Amazon dominates UK ecommerce (30.1%), accounting for $30bn in sales in 2019.