Who would have thought that Amazon would turn out to be an incubator for Chinese companies? This past winter, an Amazon down winter jacket took US fashionistas by storm. Made by the Chinese fashion label Orolay, this sleek puffy jacket has managed — in one cold short season — to wipe away any stereotypes associated with the stigma of “Made in China.” For one thing, it’s stylish, with a Balenciaga asymmetrical shape. Another it’s also functional, water-resistant, windproof, and sports six convenient pockets. Most noteworthy, it’s high quality for a low price, $160 USD (shipping included for Prime members).
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Kate Schneider, a writer for New York Magazine, first spotted the jacket among the stylish women on the Upper East Side of Manhattan, a neighborhood famous for chic women normally decked out in expensive designer ensembles. From there, the jacket spread down the fashion food chain to trendsetters, stylists, and creative directors. One was also spotted even on a socialite. While it remained an insider fashion secret for a moment, it’s no longer so. The hashtag #amazoncoat garnered hundreds and hundreds of posts. The coat itself got 4.2 stars, more than 6,800 reviews on Amazon, and was crowned the “UES Mom Coat.” This is how a stylist described the phenomenon to NY mag, “It’s like the Moncler when it first came out.” A veteran fashion industry executive in Milan told the Financial Times had a more cautionary concern — what if traditional luxury consumers start to find it more chic to spend less and consume less.
Could the “Made in China” jacket challenge the status quo? And if so, what gives it an edge in competing for the spotlight with luxury brands?
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The Poster Child of D2C Chinese brand
While in the US, Glossier, Allbird, Casper are the first wave of direct-to-consumer (D2C) brands to disrupt the traditional retail model in beauty, footwear, and mattress industries. Ironically, riding on Amazon, Orolay is one of the first few Chinese companies operating with this model to enter the mainstream fashion landscape. “As labor and the cost of transportation increases, we think D2C is the shortcut,” Kevin Chiu, the founder of Orolay, told Reuters.
But success didn’t happen overnight. To fulfill the D2C model, it started with a clear vision and meticulous planning. According to Chiu, 90% of the staff focuses on production, quality control, and supply chain management. The company also does its own design, manufacturing, and distribution. Product innovation is based on user reviews on Amazon. The team will look into complaints and make revisions as needed and deliver within 5 days. After winter, the team will then spend the next half year to improve and deliver the best product. The jacket was first launched in 2013, but it wasn’t until the winter of 2017 that fashion bloggers took note. And by 2018 winter, the company saw explosive growth, all organic.
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In the winter of 2018, the sudden word of month effect was good for the business. “Sales in January alone is more than what we had in the entire year of 2017,” said Chiu in Reuters. By January 2019, the company was reaching 5 million in sales, 70 percent from Amazon alone, and is looking to bump up this number to $30 million or possibly $40 million by 2020.
Besides Amazon US, the company has also launched in Europe, which was their next target market, and consumers there responded well to the Amazon coat — it sold out within 3 days.
Could there be more “Amazon Coats”?
Orolay may be the poster child for Chinese companies living off on Amazon. But more Orolays are coming. According to research in 2017 from Marketplace Pulse, 34 percent of top sellers on Amazon are based in China. This goes of course without consumers’ noticing, as all they care is a good product with low price. In 2017 alone, more than 250,000 sellers from China joined Amazon. Besides this vast amount, it’s the ability to produce and innovate is impressive. 60% of products from Chinese sellers are created within a year, half of which will climb to the top 10,000 list. However, as the Chinese tech media Pingwest investigated, Amazon often shuts down best sellers and replicates the product under its own brand — Amazon Basics. Then offers it at a lower price with more exposures on the platform. This raised the eyebrows of many sellers and question whether such a practice could be sustainable.
Nevertheless, Amazon continues to serve as a popular sales channel for Chinese factories to expand overseas. Orolay founder Chiu said they have tried to sell on Alibaba-network of platforms but the local competition is fierce. Now 70% of the company’s revenue comes from selling on Amazon. On Orolay’s Amazon page, there is no mention of their Chinese identity. Instead, on the ‘brand story’ section, it wrote: “Our designers are always in pursuit of creating the latest design that leads the trend and giving our customers pride and satisfaction.” Looks like this apparel, furniture, and plastics exporter is achieving the American dream.