Author: Niklas Vesely
Email: niklas at listthe dot com
Location: Guangzhou, China
Date: December 11th, 2018
Competition on Amazon is getting fiercer every year, lowering vendors’ profit margins and decreasing their sales of individual products. To survive on Amazon vendors have to lower their prices and increase their product portfolio at an ever increasing speed.
This development has lead small vendors to desperate measures. Traveling to China’s street-markets to dig through factories’ cheap leftovers has become commonplace.
However factories’ cheap left overs do not meet western standards, as they were produced for 3rd world countries.
Small factories depend on every order and accept all clients including those from 3rd world countries. These clients push prices to such a low level that bad quality and dangerous safety levels are unavoidable. For factories working with textiles, this can mean using fewer sewing lines, or working with toxic or inflammable fabrics. In spite of the low production price, it happens that buyers cannot transfer the final payment, which leaves factories with low quality stock. To recover part of the loss, factories sell these products below their original production cost on local markets. From here they are sold to international traders working in price-competitive market places such as Amazon.
To prevent import of dangerous goods, Europe published the CE regulations well before Amazon came marching in. According to Europe’s CE regulations
it is illegal to import dangerous goods. In combination with national product liability laws, Europe saw itself on the safe side. Before Amazon, traders carefully checked and if necessary re-designed products to meet the CE standards. Additionally every production batch was checked after arriving at the trader’s warehouse, before they were forwarded to shops or in some cases consumers. Only large corporations conducting factory audits and regular production checks would ship to an outsourced distribution warehouse.
Today, vendors must use Amazon’s streamlined product channel and follow Amazon’s demands to keep their online shops profitable. To keep costs low and increase profits, vendors reduce personnel while increasing their product portfolio.
This forces vendors into selling unfamiliar products. Importing and trading unfamiliar products without time and resources to learn about and if necessary redesign the products leads to illegal import of unsafe products into the European Union.
Alibaba and Amazon’s “FBA” have redefined the way traders interact with products. Traders pick products on Alibaba based on photos and price and ship them directly to Amazon’s warehouse. Unaware of their products’ quality or safety level unexperienced vendors proudly share stories of how they sell products they never held in their hands. Accordingly traditional vendors have to follow this trend to stay competitive in spite of the apparent risks.
Listthe.com counters this development by publishing companies’ supplier lists online. This enables traders to unearth the manufacturers who produce for companies representing high quality products well known in the Western world such as Spalding
- companies that conduct regular factory audits and product checks. The search for the most suitable manufacturer is extremely simplified: By applying this method one purchases high quality products at low cost.