From China to the Top: How Spotter Leverages Amazon's VC Influence
Spotter's Growth Amid Amazon's VC Surge
This year, Chinese sellers are buzzing about Amazon's VC(Vendor Central) accounts and Temu. With Amazon's SC(Seller Central) facing more competition, many are shifting focus to VC. Some big names, like VeSync and Aukey, have thrived in this space.
Take VeSync, for example—when it started as a VC seller in 2017, sales from VC accounts were just 8.4% of its revenue. By 2019, that jumped to over 50.8%. And Aukey, a top Amazon seller, has since made a comeback thanks to VC accounts though it faced significant setbacks and almost went bankrupt in 2021 when multiple stores were shut down by Amazon.
Meanwhile, Spotter, a newly established company, is riding the wave created by VC accounts.
Who is Spotter?
Spotter is dedicated to assisting businesses in B2B cross-border trade, providing precise solutions to empower Chinese brands in overseas market, with services available in logistics, channel sales, Amazon operations, and finance. As a pioneer in global self-operated channels, Spotter has formed alliances with many top Chinese sellers on Amazon.
Founded in 2021, Spotter has set up supply chain and channel centers in North America, with its headquarters in Chongqing and branches in Hangzhou and Shenzhen. Targeting Europe and the U.S. as core markets, Spotter aims to streamline the processes for domestic sellers on global cross-border platforms.
By 2022, Spotter had grown its global team to over 100, with members from big names like ByteDance and BAT(Baidu, Alibaba, and Tencent), generating more than 250 million RMB (35.65 million USD) in revenue.
In 2023, Spotter became the first domestic platform in the cross-border market to integrate supply chain, channel operations, and financial services into a cohesive platform. With innovative digital solutions for sellers aiming at the European and American markets, Spotter achieved over one billion RMB (142.62 million USD) in revenue, a 400% increase from 2022.
In China, Spotter operates through Chongqing Yilian Tech, led by legal representative Zhao Lu. There is also another key figure in Spotter, who previously worked at VeSync, renowned for its high revenue from Amazon VC accounts in the industry.
After leaving VeSync, this person started his own venture and founded Cellections in February 2014, which focuses on Amazon VC business. He holds all the company shares through a foreign partner and registered the entity in Brooklyn, New York, a hotspot for Amazon sellers, mostly Jewish.
In 2019, Shenzhen-based cross-border seller Sunvalley acquired Cellections for 13 million RMB (1.85 million USD) to boost its VC business, drawn to its VC resources and connections. After the deal, the founding members left the company and Spotter was born.
Why is Spotter?
In 2022, Amazon's total GMV hit $672.1 billion, with sales by Amazon (also known as first-party sales) reaching $247.2 billion, making up a third of its total sales. Sales by Amazon (first-party sales) mainly come from VC accounts, where sellers provide goods to Amazon at wholesale prices, and Amazon then sells them to customers.
The roughly 1700 billion RMB market is highly enticing for many third-party sellers (Seller Central, or SC). With big players like VeSync and Aukey in the mix, the wealth potential from VC accounts is hard to resist.
DJI, now a global leader, also leveraged Amazon's VC to expand its reach. Initially, DJI tried selling directly on Amazon, but the results fell short as the brand had yet to mature. It wasn't until they were invited by Amazon to become a VC seller that their sales took off.
The high privileges of VC accounts often puts SC sellers at a disadvantage, as VC products can be offered at lower prices while maintaining profit margins, aided by Amazon's traffic. Embracing the philosophy of "if you can't beat them, join them," sellers are trying every way to become Amazon's VC seller, and as demand rises, so do the prices of VC accounts in China.
Back in 2020, you could get an Amazon VC account for just 200,000 to 300,000 RMB (28523.76 to 42785.64 USD) in China. By 2021, that price soared to about 800,000 RMB (114095.04 USD), and now some reports say that during peak demand, an established U.S. VC account is being sold for as much as 1.5 million to 2.6 million RMB (213928.20 to 370808.88 USD).
Even though VC accounts have more privileges, Amazon isn't shy about suspending them. Amazon typically does a yearly check-up on VC accounts, and failure to meet the criteria can result in suspension.
Starting May 2024, Amazon began a crackdown on VC accounts, with many sellers receiving emails saying that their accounts would be terminated in 60 days. Some VC sellers reported seeing over 30 accounts flagged for closure, and there are confirmed reports from vendor managers (VMs) indicating that this enforcement will continue throughout 2024.
VC accounts are pretty rare in China, with insiders saying there are fewer than 1,000 active ones held by Chinese sellers. Sellers don't want to spend big bucks on uncertain outcomes, but the appeal of Amazon's VC account is hard to resist. This creates a demand that some companies offer their VC accounts for collaboration with sellers who don't have them. This approach, known as VC consignment, allows VC account holders to partner with SC sellers, enhancing their inventory while earning a commission—a mutually beneficial arrangement.
Some companies have quietly grown by capitalizing on VC consignment, and Spotter is one of them. "This model has been proven effective, and we can expect more SC sellers to join the VC scene in the future," an insider said.
"As long as the VC account operates healthily—ensuring stable supply, meeting Amazon's profit criteria, and maintaining product quality without hurting the brand image—Amazon usually won't bother too much," a VC service provider explained.
How Spotter Stands out?
Spotter generates most of the revenue from its solutions in three main areas: platform operations, logistics supply chain, and financial services.
For operations, Spotter has developed the SEVC system, which allows brand owners to track their product sales on Amazon while Spotter takes care of the VC accounts, sells the products to Amazon, and earns a commission from the sales.
Using its self-developed SEVC system, Spotter has developed two integrated systems: a fully intelligent order management system and a shipment management system. These systems streamline the handling of VC orders and logistics, turning manual tasks into automated processes, which saves time.
Plus, as an official certified partner of Amazon, Spotter offers an in-house intelligent advertising platform that facilitates fully automated management of various Amazon advertising channels, including Sponsored Products (SP), Sponsored Brands (SB), and other ad types.
This platform enhances efficiency and transparency while allowing for seamless management of advertising accounts, thus optimizing labor productivity and streamlining operations. Furthermore, Spotter's proprietary AI technology automatically adjusts campaigns based on established performance objectives.
In addition, for clients engaging in partnerships exceeding $20 million, Spotter provides additional value-added services, such as official Amazon interviews, training through offline meetings, and other opportunities. These services are designed to deepen understanding of Amazon's operational strategies and market dynamics, ultimately enhancing brand visibility and driving sales growth.
In logistics and supply chains, Spotter has set up a one-stop overseas warehouse service to help brands get their products delivered on time. The warehouse management system works seamlessly with major platforms including Amazon, Shopify, Walmart, Wayfair, eBay, Wish, Temu, and AliExpress, making it easy for cross-border sellers to jump in without needing to change much in their backend.
In addition, Spotter offers a full package of warehousing and delivery services, ensuring door-to-door options so sellers don't have to look for other logistics partners or overseas warehouses. Spotter has also rolled out tailored multi-channel transportation management and FBA transfer services specifically for cross-border sellers and Amazon sellers operating on various platforms.
In late February this year, Spotter entered into a deep collaboration with Cainiao for overseas warehouse operations, utilizing Cainiao's self-developed WMS (Warehouse Management System) as the core to streamline the entire process of Spotter's proprietary warehouses.
"Previously, Spotter relied on both outsourced and in-house WMS systems, which struggled with efficiency in complex and large B2B shipments. The operations were not user-friendly with disorganized data, and it didn't integrate well with other systems, making it difficult to support the increasingly lean logistics goals," explained Sam He, CTO of Spotter.
The WMS project between Cainiao and Spotter has kicked off. Centered on Cainiao's self-developed WMS system, this project integrates seamlessly with OMS, MDM, ERP, and BI systems to make sure warehouse operations are fully managed from start to finish.
Once the WMS is up and running, it will provide Spotter's overseas warehouses with an efficient and standardized management system, ensuring the accuracy and timeliness of system information. This will streamline business processes, boost operational efficiency, improve inventory accuracy, lower product damage rates, and make sure everything is traceable along the entire supply chain.
Spotter currently operates 16 overseas warehouses in the U.S., spanning four major states: New York, California, Texas, and Georgia.
In terms of financial services, Spotter collaborates with various institutions to offer supply chain financing to sellers. While Amazon's VC accounts do not have monthly or annual fees, storage fees, delivery fees, or sales commissions, there are still other hidden fees, such as account period fees.