Amazon, and the off-shoring of American businesses

According to marketplacePulse, in September 2021, 38% of the top sellers in the Amazon marketplace were Chinese sellers. Purchases made from these sellers and brands see their profits leaving North America, and building vast wealth overseas. 

Learn how you, as a consumer, can help support businesses that keep the profits within your country, state or province, and your local community.

Marketplace Trends

Marketplace websites such as Amazon have a mission of bringing value to their shoppers. This value is often realised as the best product, at the lowest price. Since the 1980’s, lower costs have been largely realised through offshoring production lines, and the increased efficiency of shipping through the advent of containerised goods. 

Great products, at the lowest cost to the consumer

It is no secret that manufacturing has been progressively moved offshore from North America to jurisdictions where differences in environmental and labour regulations have created an opportunity for lower production cost. Now that distributed manufacturing overseas has brought excellent quality products to market at ever decreasing prices, the trend towards reducing product cost to the consumer has shifted to a new mechanism; direct-to-consumer marketing. 

Made possible by fulfilment-as-a-service offerings through programs like Amazon’s Fulfilled By Amazon (FBA), a business can now have their entire inventory sent into 3rd party fulfilment warehouses and sent to customers through integrated order processing, packaging and shipping channels offered to the business as a service, for a fee of course. This means that new businesses can be built where the business does not need to have the overhead cost of factories, storefronts, wholesale distribution agreements, warehouses, or staff of their own. A business can be run very easily by a handful of employees, with all of the other mechanisms of the business being sourced out to 3rd party providers offering their services at a reasonable price. 

Offshore direct-to-consumer price competition

This new model has been incredible for bringing amazing products to consumers at remarkably inexpensive prices. It has also created many, many new entrepreneurial millionaires of those who recognised the opportunity and built brands and shops based on a completely distributed business model. There are millions of entrepreneurs operating their businesses in this way, and we, as the consumers, win as a result. A large number of these entrepreneurs have been sellers and brand builders from within your local communities, and have been spending their profits back into your communities for the past several years.

Recently though, there has been an increasing trend that is seeing foreign entrepreneurs and factories utilising the distributed business model within large marketplaces such as Amazon, and their profits are not being spent back into our communities. This is, effectively, an off-shoring of local businesses. 

Through dedicated content and instructional media targeted at sellers based in China (youTube channel results. Amazon Seller University), Amazon has been accelerating the pace of new sellers based overseas. While I can only speculate at the reasons for facilitating the entrance of these new sellers into the marketplace, I believe that it is a method of ensuring that customers to the marketplace are rewarded with the absolute lowest cost of their item and Amazon is rewarded with an ever increasing market share by having exclusive access as the vendor for these goods in America. Since Amazon profits directly from these sellers in numerous ways (pay-per-click advertising, storage, fulfilment fees etc), there is seemingly very little (read: no) preference given to sellers based in local communities that will spend their profits locally. 

Through this model, the already lower cost of direct-to-consumer sales is made even lower. This happens because foreign entrepreneurs may achieve preferential pricing from the manufacturer, or may be an agent of the manufacturer directly, which reduces the required price markup. They may also be able to operate at a narrower profit margin than local entrepreneurs through lower cost of living, reduced taxes or other benefits afforded by operating their businesses overseas.

What can you do to support local businesses?

As shoppers become increasingly comfortable shopping online, local businesses of all size are rushing to develop an online presence to reach more customers, or provide a new kind of service to the customers they already have. New direct-to-consumer brands are also being created to leverage the power of a distributed business model and bring you, the consumer, new and interesting products delivered to your door.

How local businesses sell online

Millions of businesses are racing to get online. 

In order to offer their products for sale online, businesses are turning to platforms such as Shopify, Wix, Squarespace, Magento, and WooCommerce to build a presence for their business online. These platforms enable businesses of all size to easily create a beautiful, branded, online property where they can easily add new products, offer a secure sales and checkout process, create customer service channels, create shipping documents for their warehouses to ship your goods, and perform all the tasks of running their businesses online. 

Once these shops and brands have their online real-estate developed and selling online, the next task is to drive traffic to their site where they can engage you, the customer, and, hopefully, make a sale. Methods of getting your attention are numerous.

Businesses utilise online advertising channels such as Google AdWords, Facebook, Instagram, influencers, Youtube, Reddit etc. Through these advertising channels, businesses hope to be able to get your attention for their products, and get you to their site. Using direct advertising can be very costly for the business as they compete in an auction for the keywords they use to reach your attention.

Since businesses largely rely on word-of-mouth or paid advertising to get new customers, millions of consumers each month turn to marketplaces such as Amazon in order to be able to conveniently search for items available to them online.

But what if you wanted to discover items that you can buy directly from independent shops, without going through Amazon?

How to shop from local businesses online

At Vendazzo, we have been working very hard to do our part to support independent shops and brands.

We have built a search engine that helps you find items that you want to buy online, and we connect you directly to the shops and brands selling those items. This helps you to keep your purchasing dollars closer to home, and discover new shops and brands that you would like to support directly.

With an index of over 100 million products from more than 100,000 shops and brands you are sure to find just about anything that you are shopping for online. We can find you everything from groceries to fine art, from housewares to autoparts, and everything in between.

While we can not guarantee the actual location of all the shops that we index, we continue to develop processes that will verify the seller’s location so that we can help you find products closer to you. 

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