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Valuelink's Zack Franklin reveals the strengths and weaknesses of Chinese Amazon sellers

Posted: April 26, 2017

ZackFranklin

Since its inception in 2008, Valuelink has made a name for itself in China’s e-commerce industry by both developing and selling its own brands, and by working closely with Chinese sellers to help them do the same. Chinese sellers have become more visible on overseas platforms like Amazon in recent years. This has made their tactics and resources a big conversation topic among overseas sellers. We sat down with Valuelink business director Zack Franklin to learn what he’s been seeing among Chinese Amazon sellers and what differentiates them from American sellers and those in other markets.

Matt Haldane, Global Sources: Can you give me an introduction to Valuelink and what you do for them?

Zack Franklin, Valuelink: I work for a company called Valuelink, which most Americans haven’t really heard of. But it’s a top 50 Chinese e-commerce company and we’ve been power sellers on Amazon for more than eight years.

Originally the company started only on Amazon and eBay. It’s transitioned into a lot of education for Amazon sellers. So you might be able to think of us as the Proven Amazon Course for China. We also provide quite a few services and software to Amazon sellers, as well. This includes DTAZ, which is a cross-border payment company and quite a few different solutions in software.

So some of the things I do for the company are help them market e-commerce products. I help consult for Amazon sellers. I go around the country and teach people how to sell on Amazon. I do a lot of project management roles, as well. So I’ve had a really good overview of the Chinese Amazon ecosystem and how that works here in China. I’ve gotten to meet hundreds of Chinese Amazon sellers and get to know what’s going on here in China.

MH: Are you working with Chinese sellers?

ZF: I’m one of the professional teachers for Valuelink. I will give maybe 6 to 7 hour courses on how sellers can use Western marketing to enhance their listings, to promote using external traffic and stuff like this. I go around and tell people more about the American market and the differences between selling on something like Taobao and something like Amazon. There are some huge differences and a lot of Chinese sellers come into the game using the same stuff that they used on Taobao, which will just get you banned in a couple weeks.

MH: Do you work with American or overseas sellers very much?

ZF: I’m actually not as familiar with the American side of business. When I started to sell on Amazon a couple years ago, I was in America and following guys like Scott Voelker and AMZTracker and all the different Facebook groups and Reddit groups. That’s how I ended up here, through one of the Facebook groups. I knew a couple sellers, but there wasn’t the ecosystem there as there is here.

Only recently, after I started selling in America, did they start having all these different summits and live events. But America is huge and they’re all over the country, so most sellers I know didn’t go to these live events. There isn’t really this kind of community besides these Facebook groups.

MH: What kind of impact do you think that has on the dynamic between American and Chinese sellers? Is there an advantage on the Chinese side?

ZF: I think Americans are really unaware of the resources that Chinese sellers have and the ecosystem for cross-border e-commerce here. For example, there are all of these different industrial parks that are only for Amazon. All of these individual sellers want to launch their dream go to these coworking spaces just for Amazon sellers. When they’re there, they have lectures and talks every week. You have tons of different professional sellers coming in with services and consultations and help. You even have coworking programs where sellers will come in and oversee training for 90 days, six months or one year. You’ll have professional people looking over your listings all the time. They get bulk discounts on services. There are probably about once a week massive conventions for these Amazon sellers. My company alone is doing more than 60 events this year for Amazon sellers.

In Shenzhen, I know more than 10 different e-commerce parks only for Chinese Amazon sellers. The government backs them and provides quite a bit of funding. They’re very close to the entire supply chain.

If you’re an American, you have to spend a couple weeks trying to get in touch with these suppliers and vet them and wait for samples. [Chinese sellers] can just take a taxi to the factory and check it out immediately. What for you is a three week process is for them an afternoon. That’s going to affect your speed to market which is everything in this business.

So Chinese Amazon sellers have more support on every level: from the government, from the local community of Amazon sellers, from all these different spaces and business cooperatives. It’s really hard for Americans to compete when they don’t even know that this is going on.

Most American sellers I know are kind of working out of their house. They have a couple pallets of inventory in their garage. They don’t know many other sellers that they talk to face-to-face everyday, so they aren’t getting all of that new information from just having that communication. There aren’t a lot of live events and if there are they’re all the way across the country for most of these people. So most of them don’t know a lot of Amazon sellers personally, there’s not as strong of a community, they’re far away from the supply chain and it’s very fragmented compared to the centers of e-commerce in China, which are Shenzhen, Guangzhou, Xiamen, Hangzhou, Yiwu and maybe Wenzhou. If you are in those kind of communities, you have the most support on every level that American sellers can’t even dream of.

MH: Is there a solution to this? Would more community organizing in this space help in the US or is it just too disperse?

ZF: For America, it’s very fragmented. You have meetups going on in big cities like Chicago, New York, LA; you’re going to have small smaller meetups. But I think America just can’t really compete with China when it comes to the level of rapid organization. When they want to build a co-working space, three months later it’s done, it’s seven stories, it’s beautiful. So I think Chinese sellers really have a lot of advantages when it comes to the community, but this just adds to the other competitive advantages that Chinese sellers have over American sellers.

MH: How do American sellers compete? Do they have to be here here in Shenzhen?

ZF: I think if you’re really taking this business seriously, you should at least come to China and experience this for yourself and and see what’s going on here. American sellers are being outworked. Chinese sellers have the resources, they have the capital.

A really interesting thing is that I thought the main disadvantage for Chinese was marketing. I always saw in all of these Amazon seller forums that would complain about Chinese competition, saying, “Oh, I’m not worried about the Chinese at all because they don’t understand marketing. They’ll never win.” I get this a lot, but that’s why the really smart e-commerce companies just hire foreigners to handle the marketing. When have this combination of Western talent and Eastern resources, it works out really well for these companies. They don’t have to worry about marketing because of places like Upwork.

More and more, Chinese realize the value of marketing. They are rapidly reaching a new level of sophistication both in technical skills and marketing. They understand that price is not the only area they need to compete in, even though that’s the area that they’re very good in.

You used to hear about people ordering their product, and by the time it got all the way to the states someone else is already selling it on eBay for their unit cost. That’s one of the reasons speed is important, but Chinese just have the advantages when it comes to cost.

MH: Do you see any areas of weakness or disadvantages here that that American sellers are able to capitalize on?

ZF: It’s a really good question. Americans are going to be better initially when it comes to branding and understanding of the consumer, but that’s really it. One of the bigger advantages is is proximity to the customer and the fact that they can have more live events and more live branding. If they’re using Amazon as their only outlet, they can’t beat the Chinese.

MH: A lot of Amazon’s sellers are being taught to diversify their avenues for selling products. Does Valuelink focus primarily on Chinese sellers using Amazon as an avenue to break into the overseas market?

ZF: Yeah, which is both good and bad. Amazon has seen, I believe, over two hundred percent increased competition on the same items in the same price point in just a couple years. Amazon isn’t hitting market saturation because it keeps growing, but it is becoming harder. Amazon is rapidly hitting the next level of sophistication, and consumers are as well. Simple landing pages don’t cut it anymore. It’s a lot more about the user experience. A lot of the more spammy internet marketing stuff of the past doesn’t work.

I think Chinese sellers are not as diversified as American sellers could be. There’s a lot of different pockets of opportunity to continue growing. A lot of the Amazon sellers I know in America that are smaller solo sellers just need to make $5,000 or $6,000 a month and they’re happy. There’s still hundreds of ways to do that, including on Amazon. But if they’re trying to build million-dollar brands it’s going to be harder and harder to compete.

MH: There was this pivot in selling on Amazon away from things like retail arbitrage and sourcing generic products. Now Amazon is trying to teach people that you need to build your own brand because you can’t make money anymore just grabbing cheap products from China.

ZF: You need to add value. Our job as Amazon sellers is adding value to this product that we find. I think it’s very easy if you’re actually on the ground in China to find unique, awesome products that are probably difficult to find any other way.

MH: As Chinese sellers get more savvy in marketing, might overseas sellers pivot again into a different sphere of e-commerce?

ZF: The thing about e-commerce is that it’s changing rapidly every week. I think there’s a lot of pivots left. The rest of the world is coming online and they want their taste. Look at Thailand today or China 20 years ago to now. Average incomes have gone up and and they’re going to be doing their part in consumerism. Whether it’s in Madagascar, Saudi Arabia or Thailand, people are gonna start buying online.

MH: In China, there also seems to be a bit of a weakness in saying things in a way that that makes sense to consumers in another country. Do you notice challenges in explaining why things need to be worded a certain way, or why pictures have to be a certain way?

ZF: Yeah, I really do notice Chinese sellers sometimes doing some strange stuff, and it kind of depends where they’re from in China. Shenzhen and Guangzhou are kind of the highest level of sophisticated Chinese selling.

I’ve given a lot of speeches in in these cities. I’ll ask them a lot of questions. Raise your hand if you use Google Translate or Baidu Fanyi for your listings. In Shenzhen, maybe one person raises their hand, but in Xiamen, maybe 25 percent of the audience will. There’s a lot of regional differences when it comes to the savvy of Chinese sellers.

Sometimes I’m really impressed. Chinese sellers are doing really sophisticated email marketing. They have their own email list off of Amazon or have a really phenomenal Facebook and Instagram presence and are doing influencer marketing, content marketing. It’s really impressive. Some of these guys are doing much more than American sellers when it comes to marketing. Some of the top sunglasses sellers on Amazon are from China, and their marketing is perfect.

MH: Do you have any predictions you can share about how this kind of e-commerce will evolve over time?

ZF: I think the of the future of this business is really in collaboration internationally. American sellers need to realize that they are running more of an international business, and Chinese need to realize more about the American seller and the American consumer.

There’s so much room for collaboration. The smartest Chinese e-commerce companies are going to hire foreigners to do their marketing, and the smartest Americans are going to go to China do their product sourcing. The future of e-commerce is going to be more and more about these international relations and international markets. So people have to run this business with a global consciousness instead of thinking locally.

MH: Do you have any other thoughts on the roles of Chinese and American sellers?

ZF: I think Americans are not doing bad. It’s a big enough ecosystem and a big enough marketplace, and more and more people are using Amazon. So there’s enough room for all these people on the platform even if it does get pretty saturated.

There’s still so much opportunity. There’s still so many niches that are pretty easy to dominate. Even though the the competition is fierce, new opportunities and new software and all of these things that help you are coming online every day. It’s easier than ever now to sell on Amazon.

I think Americans and people everywhere are demanding more and more personalization and customization of their products. This is an advantage Americans have. They can get what people need. They see a lot of cool ways to customize products or use pop culture products. That’s the advantage that Chinese aren’t going to have.

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