#1 Cheaper labor cost
We can see from the chart that US labor cost is 4 times of China. Although, China experienced a 20+% labor cost increase over last 20 years.
For a full 40″ container of caster wheels and yoga mats mixed like this:
It can take 849 hrs total to repack and bundle. (*click to see details of how caster wheels and yoga mats are repacked, bundled, consolidated, shipped)
Amazon seller can save 849 * 15 = 12,735 USD labor cost if this collect, repack / bundle, label, consolidate, ship are done in China.
#2 Easier return / replace / rework
In case some defective products are found, they can be sent back to the factory for re-work. Or simply for a rebate on the order. Payment can be done for the good pieces only. This a much better setup than finding out about quality issues overseas. Return is no possible.
As the factory gets the rejects, they learn about what is acceptable and what is not. It’s good for training supplier too.
#3 Lower shipping cost
Instead of shipping several LCL (less than container load) shipments, Amazon sellers can have a China prep center receive all their small shipments, then consolidate and ship out by FCL (full container loads).
It’s cheap and easy to ship inside China. Take Yiwu for example:
This can save lots of logistics cost (freight, docs, handling, customs inspections…) and often offers safer protection for fragile items.
#4 Lower tax & duty
Amazon sellers don’t have to ship defects all the way from China to overseas, pay all duty and tax for defects. What a waste!
