A Chinese firm behind the "Amazon Coat" wins a jackpot in the United States, avoids China

JIAXING, CHINA / NEW YORK (Reuters) – When Kevin Chiu quit his job in 2012 to try his luck by creating an online clothing business in a rural Chinese town, his main goal was to gain more time to spend with his wife. wife and her newborn. child.

He never thought that his Orolay blazer would become a huge success, celebrated as the "amazon coat" in social media and traditional US – and presented as a budding rival of the premium brand Canada Goose .

Using duck down from the Chinese provinces of Hebei and Anhui, polyester coatings cost between $ 80 and $ 139. In contrast, Canada Goose jackets start at around $ 575 in the United States.

"We made more money in January than during the whole of 2017," Chiu, 32, told Reuters in his Jiaxing factory in eastern China.

He estimates that his company made sales of $ 5 million last month and hopes to bring in $ 30 million to $ 40 million this year. Sales in the United States – which are almost all sold through Amazon.com Inc. – account for 70% of total revenue.

However, the success of Orolay is not simply a story of competitive prices and a design that has been favored by American consumers.

Chiu is part of a wave of Chinese merchants who have benefited from measures introduced by Amazon in recent years, which allow overseas sellers to easily sell on its site.

This has raised concerns among US sellers on Amazon, who fear not to be underestimated. And in sectors such as clothing, experts say that physical retailers can not ignore the threat posed by the influx of small brands, many of which are based in China.

"It's the collective impact of all these brands on the industry. When you add them together, they all win market share, "said Robert D'Loren, General Manager of Xcel Brands Inc., whose products are sold at Macy's Inc. and Amazon.com.

Amazon declined to comment on the view that Chinese merchants using its site would undermine US companies. It does not break down the number of sellers on its sites by country.

The number of Chinese merchants on Amazon is expected to increase further due to fierce competition and rising costs that have made selling on local e-commerce sites such as Alibaba Group Holding Ltd's Tmall more difficult. analysts.

Indeed, Chiu no longer sells in China. Orolay's other markets are Europe, Japan, Taiwan and Australia.

"We had already sold on Alibaba early … but the competition in China is tougher," he said, adding that the increased costs associated with using local sites was also a factor.

In addition to the costs of using Chinese e-commerce sites, sellers also face other costs, such as investing in customer service teams. Alibaba refused to answer Reuters' questions about rising costs for suppliers.

According to analysts, the number of Chinese merchants selling on Amazon's US site has begun to increase over the last five years after measures were introduced to allow sellers around the world to store products in Amazon warehouses. help ship them to customers.

Last year, the retail giant also launched a program that directs Chinese-based sellers to local lenders. By way of comparison, Amazon offers loans to certain small American, British and Japanese companies that sell products on its site.

Chiu credits Amazon with a significant share of the company's success, but plans to diversify, saying retailers' offerings include online sales invitations from Walmart Inc. and the American shopping site Rue La La.

A spokeswoman for Walmart said the company had not yet made an agreement with Orolay. La La Street has not responded to requests for comments.

Expansion plans include extending the Orolay product line to include cotton clothing and men's outerwear. But for now, Chiu is still marveling at the success of his company in a market he barely knows.

"I went to New York on vacation twice last year and I was so excited to see people on the street wearing our jackets," he said.

"I really wanted to ask them how they liked our jackets, but I did not do it because I do not speak much English."