JIAXING, China / NEW YORK (Reuters) – When Kevin Chiu left his job in 2012 to try his luck by starting an online apparel business in a rural Chinese city, his main goal was to get more time to spend with his wife and newborn baby.
Founder and CEO of Orolay Kevin Chiu represents an image in an interview with Reuters, at the company in Jiaxing, Zhejiang Province, China January 28, 2019. REUTERS / Pei Li
It never came to his mind that his Orolay puffer jacket would be a big hit, celebrated as "Amazon Coat" in American social and traditional media – and held up as a budding competitor to the premium brand Canada Goose.
By using duck down from China's Hebei and Anhui provinces, polyester coatings are priced between $ 80 and $ 139. On the other hand, Canada Goose jackets start from about $ 575 in the United States.
"We made more money in January than we did for the whole of 2017," Chiu, 32, told Reuters at the factory in the eastern Chinese city of Jiaxing.
He estimates the company has made $ 5 million in sales last month and expects to bring in $ 30- $ 40 million this year. US sales – almost all of them sold through Amazon.com Inc – account for 70 percent of total revenue.
However, Orolay's success is not just a tale of competitive pricing and a design that benefited US consumers.
Chiu is among a wave of Chinese sellers who have benefited from initiatives introduced by Amazon in recent years, which have made it easy for foreign vendors to sell on their side.
Concerns among US sellers on Amazon are being challenged. And in industries such as clothing, experts say, brick-and-mortar dealers can't ignore the threat caused by the influx of small brands, many of which are based in China.
"It's the impact, overall, is happening in the industry from all these brands. When you add them, they only take market share," said Robert D & 39; Loren, CEO of Xcel Brands Inc, whose trademarks are sold at Macy's Inc. and on Amazon.com
Amazon refused to comment on the view that US firms are being subjugated by Chinese sellers using the site. It does not break down the number of sellers on their sites by country.
Number of Chinese sellers on Amazon is set to grow even further as fierce competition and rising costs have made it less attractive to sell in local e-commerce areas such as Alibaba Group Holding Ltd's Tmall, analysts say.
In fact, Chiu no longer sells in China. are Europe, Japan, Taiwan and Australia.
"We sold at Alibaba in the early days … but the competition in China is stiff," he said, adding that increased costs for using local places were also n factor.
In addition to fees for the use of Chinese e-commerce websites, sellers also face other costs such as investing in customer service teams. Alibaba refused to respond to Reuters' question as to whether the cost of suppliers had increased.
Analysts say that the number of Chinese sellers selling on Amazon's US site began picking up over the past five years after implementing measures that allowed sellers worldwide to store products in the Amazon stores and help deliver these goods to the customers.
Later last year, the retail giant also launched a program that refers to China-based sellers to local lenders. In comparison, Amazon offers loans to selected US, UK and Japanese based small businesses that sell on the site.
Chiu credits Amazon for much of the company's success, but thinking about branching out and saying dealership offers include invitations to sell online from Walmart Inc and the US shopping area Rue La La.
A Walmart spokeswoman said the firm had no agreement in place with Orolay. Rue La La did not respond to requests for comment.
Expansion plans include expanding Orolay's product line to cotton clothing and men's outerwear. But for now, Chiu is still curious about how his business has become so successful in a market he barely knows.
"I went to New York twice last year and was so excited to see people on the streets wearing our jackets," he said.
"I was very eager to ask them how they like our jackets, but didn't do it because I don't speak much English."
Reporting by Pei Li in Jiaxing, China and Melissa Fares in New York; Writing and additional reporting by Brenda Goh in Shanghai; Editing Vanessa O & # 39; Connell & Edwina Gibbs