Is it worth opening a store and selling on Amazon or Alibaba?

posted in: Nundinae | 0

As explained by Helen H. Wang, on Forbes, about setting up an online store on Alibaba and/or Amazon

Selling on Alibaba

Another interesting discovery I made in my research is that Alibaba takes extra steps to scrutinize sellers and make sure they are reputable businesses. Because there are many frauds in China, Alibaba has raised the threshold for those who are allowed to sell on Tmall. A business needs to pay a deposit of as much as $25,000 in order to set up a shop. The deposit serves as an advance for Alibaba’s commissions. Most businesses are not bothered by the high upfront cost because their sales through Tmall are well worth it. Importantly, the hefty upfront cost screens out illegitimate businesses and ensures that vendors on Tmall are serious and committed for the long term. As a result, Chinese consumers have more confidence in purchasing products on Tmall.

Selling on Amazon

In contrast, Amazon lets any individual set up a seller’s account free of charge. It also allows many different vendors to sell the same brand name product. This opens the door for fraud. Some brand name products sold on Amazon are by unauthorized vendors. For example, Estee Lauder doesn’t distribute its products on Amazon. Yet, in a search on Amazon you will find hundreds of sellers selling Estee Lauder products, from expensive night repair creams to makeup kits. Worse, many counterfeit products have been comingled into Amazon’s warehouses. I personally have bought some cosmetic products on Amazon that are not authentic and outdated. Countless customers have complained about the knockoff products sold on Amazon.

Would Amazon become your competitor?

A Wall Street Journal article indicates that Amazon regularly launches new products that had been selling well by third parties. For example, the California-based small retailer Collective Supplies listed a product called “Pillow Pets” on Amazon’s site. For months, sales had been great. Then, Amazon started to offer the same product at a lower price. Collective Supplies’s sales suffered. When Amazon does this, small businesses cannot compete. Tottini, a Seattle-based toy store, stopped selling the giraffe-shaped teeth toy on Amazon’s site once Amazon began to offer a version of its own.

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