I did this recently at a local coffee shop, when I was surfing the net and noticed merchants selling quite cheap items with free shipping. I was intrigued. I bought a couple of things and waited about four weeks until they arrived. Everything I received was great quality and incredibly cheap.
The products were sent from China.
I started wondering,”How can the vendor do so and what could be the effect on my business?”
In this column I will address how Chinese vendors accomplish this. I won’t pass judgment of right or wrong. But I will explain what to watch for and what we, as U.S.-based online merchants, can do to deal with this possible threat.
How do Chinese merchants ship free to U.S.?
To begin with, how do Chinese merchants can deliver a product to the U.S. at which the item’s total cost is less than what postage would be for the identical item shipped inside the U.S.? This is brought on by an international law calling for charges between international postage carriers to be reduced. The agreement between the USPS and China Post was taken to a high degree in 2010 when the USPS, hoping to ride the ecommerce boom, agreed to not only charge exceptionally low prices, but to also provide tracking and delivery confirmation services. This made it possible for Chinese merchants to market in the U.S. market with a significant advantage.
This service is known as”ePacket.” It allows Chinese ecommerce vendors to ship lightweight items for a far lower price than First Class mail, and it includes tracking information and delivery confirmation. This opened the doors to direct competition between Chinese and U.S. merchants, especially Chinese merchants which sell low-cost, Chinese-made products.
The best impact I have seen was on the Ebay and Amazon marketplaces. Additionally, AliExpress, an ecommerce site owned by Alibaba Group, is turning into a major marketplace in its own right, where Chinese merchants can sell directly to U.S. consumers. U.S.-based merchants must consider this a threat. If Chinese producers and retailers can market directly and compete with U.S.-based ecommerce merchants, a number people might see a loss of market share.
How do U.S. merchants mitigate threat?
So, how can U.S.-based merchants mitigate this problem, to secure our market share? I’ll begin with a generic answer which may be applied to a lot of product lines. Then, I’ll go over what we’ve implemented in my business, overstockArt.com.
Each U.S.-based ecommerce merchant can deal with this danger in another manner.
- Conduct a SWOT analysis. Work with your staff to conduct a full Strengths, Weaknesses, Opportunities, and Threats analysis. This will uncover additional dangers as well as the way to handle these threats. A SWOT analysis should be carried out frequently, as it’s a chance to open your mind to both inside and outside facets.
- Look at Your Organization from a shopper’s point of view. Why are clients choosing your company? What are clients after? What are the advantages of your products? Think about the difference between order winners and order qualifiers. (“Order winners” are the main reasons for customers to buy a service or product. Order winners differentiate the product or service of an organization from its competitors. “Order qualifiers” are the elements which produce the product or service qualified by the clients to buy.)
- Examine the flaws of the Chinese vendors. What are a few things that Chinese vendors can not do or can not do along with your own company? A vendor from China might be able to cheaply send a product to the U.S., to your customer’s house. But it can not get it there very quickly. It typically takes approximately four weeks. Additionally, the whole time the client is waiting, she must wonder,”Is this thing actually coming? If not will I get my cash back? Will I must fight for it?” The delay causes fear and anxiety into the user, in other words.
When we did our 2015 SWOT analysis for overstockArt, we discussed the possible danger from China-based merchants. In our case, there are variables that could mitigate this issue. First is the customer experience. Consumers at the U.S. have a great deal of stuff. They often do not require additional stuff. Instead, they frequently seek experiences. They like being catered to by quality client support agents.
When purchasing from most Chinese retailers, there’s absolutely no individual that U.S. consumers can talk with. Even if they could talk to somebody, the outcome won’t likely be the sort of experience that shoppers get from our team. Additionally, in our instance, the Chinese vendors are not able to send the framed art to clients in the U.S.. They can only send unframed art at no cost, making their offer not as appealing to shoppers, who have to discover a way to frame their art.
Furthermore, there’s a question of quality. Our artwork is hand painted. Can Chinese merchants provide comparable quality? The consumers must also ask,”How will they be able to return a product?” Last, but not least, our clients (like most U.S. customers ) want their orders delivered quickly. In the modern shipping surroundings — dominated by Amazon Prime — clients aren’t prepared to wait very long.
All those factors above will keep the danger from getting significant, at least in the long run. The approach for overstockArt may be used to deal with any threat. I highlighted this example as it’s likely impacting many U.S. ecommerce merchants and might impact many more later on.
I would like to hear how other merchants intend to deal with this threat.