Shinghi Detlefsen has experienced both sides of Amazon’s warm embrace of China-based sellers.
As an Amazon corporate employee in the 2010s, Detlefsen witnessed the company’s internal drive to offer the largest product selection possible, resulting in what one Amazon executive dubbed an “avalanche” of Chinese merchants recruited to stock the Everything Store’s seemingly endless digital shelves.
But after leaving Amazon as an employee and joining his wife to sell their own brand of supplements on Amazon, Detlefsen has also witnessed firsthand what he believes to be the downsides of what some would consider Amazon’s China-first approach.
Detlefsen argues that many China-based Amazon sellers—some hawking private-label products with unpronounceable, vowel-challenged “brand” names—are beating U.S.-based merchants not always because they have lower wholesale costs that result in better prices. Instead, Detlefsen says, many Chinese rivals benefit from a cocktail of tax and regulatory advantages that stacks competition on Amazon and other shopping websites heavily against U.S. sellers.
That includes Chinese-based sellers not having to pay U.S. income tax. Additionally, some Chinese sellers have been able to take advantage of a trade rule known as “de minimis” that lets them ship sub-$800 orders to U.S. customers without paying tariffs or duties. (President Trump briefly banned this exception in an executive order last week before at least temporarily reversing course and pausing the ban.)
The former Amazon corporate employee turned merchant said it’s also common knowledge in seller circles that many China-based merchants figure out ways to skirt Amazon’s requirement for proper liability insurance, another significant cost for high-volume merchants on the platform.
Some Chinese sellers have also developed reputations as ruthless competitors willing to post fake negative reviews on rival products, or carry out other forms of sabotage, to win a sale. (Of course, such behavior is not limited to China-based sellers even if U.S.-based merchants claim it is more prevalent with sellers from the world’s second-most populous country.)
Detlefsen and an ad hoc group of other top longtime Amazon sellers have started making the case for government intervention, in blogs, frequent posts on the social media site X, and behind-the-scenes discussions with think tanks, lobbyists, and Amazon staff up to the level of vice president. Detlefsen’s standing as a former Amazon corporate employee likely doesn’t hurt his cause.
“I’m not advocating for an unfair advantage,” he told Fortune. “I’m just advocating for a level playing field.”
Mira Dix, an Amazon spokesperson, said in a statement that U.S. sellers are “incredibly important” to the company and their average sales continue to experience “healthy growth.”
“We appreciate seller feedback as we continually work to make improvements in our store that support the growth and success of U.S. sellers’ businesses,” she said. “Amazon not only complies with all applicable laws and regulations, but we have a number of initiatives to help create a positive experience for our selling partners, including working closely with them on issues of shared interest. We have proactive measures in place to prevent bad actors from listing prohibited products, including counterfeit, and have zero tolerance for customer reviews abuse.”
She added that “bad actors that attempt to abuse our systems make up a tiny fraction of activity in our store.”
Some of Detlefsen’s complaints have received at least indirect support from the billionaire Mark Cuban. The entrepreneur and investor recently tweeted a list of his ideas to help limit the counterfeiting of America-designed products by Chinese sellers on Amazon and other shopping sites. One of his suggestions is that China-based merchants should have to “register and display any product they want to sell online, on a .gov website (similar to patents) for 90 days…allowing [intellectual property] holders to review for infringement” before the item can go on sale.
In an email to Fortune, Cuban said the counterfeiting problem has been significant for companies he’s invested in, including through his longtime involvement with the hit business pitch show Shark Tank.
“If they have a popular product it’s inevitable that it will get knocked off,” Cuban told Fortune. “And then the process to verify you own the IP is time-consuming, and by the time it’s resolved, the company may have lost a ton of sales they need.”
He called the state of competition on Amazon and other U.S. online marketplaces “a huge problem for small companies that [shouldn’t] be understated.”
Detlefsen and his group of Amazon sellers are also proposing a similar 90-day presale period for IP holders to review new products coming onto the market from Chinese and other foreign sellers, though they want the system built into online shopping marketplaces themselves. One could imagine fierce pushback from shopping sites that fear such a plan would make it impossible for merchants to react quickly to new consumer trends or fads.
Dix, the Amazon spokesperson, did not directly comment on this proposal but said Amazon investigates all counterfeit and IP infringement claims, and that the company has made progress as evidenced by a 30%-plus reduction in credible infringement violation notices submitted by brands since 2020.
Beyond advocating for an end to the de minimis trade loophole for Chinese merchants, Detlefsen’s group is pushing for other changes. One would require foreign companies selling through Amazon or any online marketplace in the U.S. to register as a U.S entity, pay some level of U.S. taxes, however unlikely that outcome may seem, and designate a U.S.-based “responsible person,” similar to what is required in the European Union. That individual or entity would be responsible for handling any compliance and safety issues and concerns, and would be required to take out liability bonds of $1 million or more with the appropriate collateral held in a U.S. bank.
Dix, the Amazon spokesperson, told Fortune that U.S. sellers with more than $10,000 in monthly sales are required to carry general liability insurance of at least $1 million, and that Amazon runs a program that can connect both U.S. and Chinese sellers with appropriate insurers and brokers. That said, Amazon’s policies do not require the insurance provider to be based in the U.S.
Another suggestion would require online marketplaces in the U.S., like Amazon.com, to display the national origin of each seller along with detailed tariff information for their products.
The concerns being aired by Detlefsen and his group of fellow Amazon business owners are not new, but have mounted in recent years as the market share of China-based sellers on Amazon’s U.S. shopping site has crossed 50%, according to estimates by the e-commerce data firm Marketplace Pulse. The real market share of China-based Amazon merchants is likely even higher since some use U.S. business addresses that misrepresent their real headquarters, according to Marketplace Pulse founder Juozas Kaziukėnas.
From the time Amazon staff began courting China-based merchants a decade ago, the company has been walking a tightrope between adding more selection and low prices that Amazon customers crave without trumpeting the huge role that Chinese merchants are playing behind the scenes, decades after U.S. corporations began offshoring manufacturing to China.
“[T]he risky downside to this is that US and EU based sellers do not find this avalanche of China based sellers very amusing,” former Amazon executive Sebastian Gunningham once told colleagues in a 2015 email as the company was ramping up its recruiting in China, adding, “I have coached the team to be aggressive marketing in China to sell globally,” but to be “low key” about the influx of Chinese sellers in Western markets.
The business case for the trade-off seems clear. More selection and lower prices may make Amazon customers happier, and adding millions of new merchants over the years has also helped to line Amazon’s coffers in the form of revenue from seller fees. In fact, if Amazon’s third-party seller business were its own company, it would be a Fortune 25 corporation. In 2024, seller fees filled Amazon’s war chest with more than $150 billion in revenue—and that doesn’t even include the billions more in advertising that independent merchants buy on the world’s largest marketplace.
“You could argue that the benefit to consumers is lower prices and perhaps wider selection,” Marketplace Pulse’s Kaziukėnas told Fortune, “but over the long term, it [could mean] there are no U.S. sellers.”
“That essentially means no local sellers, no local brands, no local jobs,” he added. “I think there is a level of protectionism countries should have and this is one of them. You do want U.S. sellers, manufacturers, retailers to exist because they create jobs and they pay taxes.”
Kaziukėnas also noted that while he believes these are some valid reasons for U.S.-based Amazon sellers to decry the current environment, some clearly possess ulterior motives, including both anti-China sentiments and beliefs, as well as competitive dynamics.
“They themselves are sourcing from China and are sometimes selling the same exact goods,” he said of some U.S.-based sellers. “So ideally, they want to have less competitors.”
Detlefsen, though, insists that’s not his motive, and points to his top supplement’s standing as an Amazon bestseller as some proof.
“All of this is common sense,” he said.
Are you a current or former Amazon employee or seller with thoughts on this topic or a tip to share? Contact Jason Del Rey at jason.delrey@fortune.com, jasondelrey@protonmail.com, or through messaging apps Signal and WhatsApp at 917-655-4267. You can also contact him on LinkedIn or at @delrey on X, @jdelrey on Threads, and on Bluesky.
