Puffer jacket maker Orolay rides overseas success, ponders product line expansion

When Kevin Chiu, 32, left his job in 2012 to try his luck at starting an online apparel business in rural China, his main goal was to carve out more time to spend with his wife and newborn child.

Little did he realize his business would spawn a huge hit: Orolay puffer jacket. In US social and mainstream media, the jacket is celebrated as the "Amazon Coat", a potential rival to premium brand Canada Goose.

Using duck down sourced from China's Hebei and Anhui provinces, the polyester coats are priced between $80 and $139, much cheaper than Canada Goose jackets that retail from about $575 in the United States.

"We made more money in January than we did for the whole of 2017," Chiu said at his factory in the eastern Chinese city of Jiaxing in Zhejiang province.

He estimates his firm made $5 million in sales in January and expects this year's revenue to reach anywhere between $30 million and $40 million.

US sales, almost all of which are through Amazon's online marketplace, account for 70 percent of total revenue.

Orolay's success is, however, not just a tale of competitive pricing and a design that found favor with US consumers.

Chiu is among a wave of Chinese merchants who have benefited from measures introduced by Amazon in recent years that have made it easy for overseas vendors to sell on its site.

China's cross-border e-commerce has grown remarkably. In 2018, the total volume of retail import and export commodities through the customs cross-border e-commerce management platform surged by 50 percent year-on-year to 134.7 billion yuan ($20.2 billion), with exports up 67 percent to 56.12 billion yuan.

US-based e-commerce intelligence firm Marketplace Pulse said in a recent report that the number of successful China-based sellers on Amazon has doubled in recent two years.

And 36 percent of the top sellers were from China by June last year, compared to 15 percent two years ago.

The report noted there are more sellers from China joining Amazon every year, and as a group they are also getting better.

For instance, more than 90,000 sellers joined Amazon in the United Kingdom (amazon.co.uk) from June 2017 to June 2018, among which a third are from China, the report said.

The number of Chinese merchants on Amazon is set to grow further as fierce competition and rising costs are prompting sellers to look for alternatives to local e-commerce sites like Alibaba Group Holding Ltd's Tmall, analysts said.

Indeed, Chiu no longer sells in China. Orolay's overseas markets include Europe, Japan and Australia.

"We did sell on Alibaba's online marketplaces initially ... but competition in China is stiffer," he said, adding higher costs of using local sites were also a factor that prompted him to look for cost-effective alternatives.

In addition to fees to use Chinese e-commerce sites, sellers also face other costs such as investing in customer service teams.

Analysts say the number of Chinese merchants selling on Amazon's US site began to pick up over the last five years after it introduced measures that allowed sellers worldwide to store products at Amazon's warehouses and provided help in shipping those goods to customers.

Late last year, the retail giant also started a program that refers China-based sellers to local lenders. Amazon offers loans to select small businesses that sell on its sites in the US, the UK and Japan.

Cindy Tai, head of global selling for Asia region at Amazon, said China's cross-border e-commerce exports have seen robust gains in recent five years, taking a key role in driving the export trade growth.

"We are glad to see more and more Chinese companies start business on Amazon's global marketplace. They regard Amazon as a key partner to go global," Tai said. "We will continue to help Chinese sellers to upgrade and optimize their products, build international brands, expand globally and seek key momentum with stronger competitiveness."

Till now, Amazon's 12 overseas sites, including those in the US, Canada, Germany, Spain, Japan, Australia and the Middle East, are open to China-based sellers.

Since entering China more than a decade ago, Amazon has helped tens of thousands of Chinese merchants to sell products globally, the company said in a statement.

Chiu credits Amazon for much of the firm's success but now is thinking of branching out, saying offers from retailers include invitations to sell online from Walmart Inc and US shopping site Rue La La.

Expansion plans include extending Orolay's product line to cotton clothing and men's outerwear. But for now, Chiu is still marveling at how his business has become so successful in a market he barely knows.

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

Reuters contributed to this story.