Yahoo Finance recently ran an article entitled Think you’re buying on Amazon? It’s actually from Alibaba.
A few people in the US noticed that many products they can buy on Amazon.com can also be found on Alibaba.com. Let’s unpack their differences:
- Amazon.com is a B2C marketplace that sells to consumers. Very often, products are bought 1 at a time.
- Alibaba.com is a B2B directory that serves as advertising to manufacturers and trading companies. I would guess the average order is in the thousands of USD and includes hundreds of units.
- AliExpress is a marketplace where smaller quantities can actually be purchased. Some individuals in the US have bought out of Aliexpress — for example, drone enthusiasts can buy standard electronic components at a low price (and with a relatively high risk, too) — but it doesn’t compete with Amazon in any meaningful way.
So, what happens? How are some of the products identical?
- Some companies buy a batch of products that are already made by a Chinese factory, and that are displayed in their Alibaba ‘virtual showroom’. They don’t ask for any change on that product, or for small changes (color if possible, a silkscreen logo, etc.). This is fast and easy for both parties.
- Those companies have a “Fulfillment By Amazon” (FBA) account. The goods are shipped directly to an Amazon warehouse, and then are sent to Amazon customers.
- All the marketing elements that are “around” the product are usually different when the goods are sold through Amazon — the description copy, the packaging (sometimes), a logo on the product (sometimes), and so on.
Is it a problem? No, as long as those products fulfill their intended function (e.g. the knives must be sharp and durable, the T-shirt must have a nice workmanship, and the torchlight must function) and comply with the importing country’s regulatory standards.
The reporter quoted me on this topic:
Who is actually responsible for making sure products are in compliance with American standards in the Amazon’s FBA model is a gray area that has not been clarified yet,” Renaud Anjoran, president at China Manufacturing Consultants, told Yahoo Finance. “Consumers can easily tell if the product works by trying it, but it’s not like they would pay to test if it’s in compliance with standards.
That’s a key issue that seems to have caught nobody’s attention so far. How long can it last? The amount of business done on the FBA model has grown enormously over the past few years.
If I were selling on Amazon, I would be cautious and I would try to get my ducks in a row…
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