Cross-border sellers went public last year, but this year they will lay off staff!

There are still opportunities to enter cross-border e-commerce now, but the threshold is higher.

In 2022, cross-border e-commerce has been called the worst year by many industry insiders, with declining traffic and low prices, cross-border sellers are trembling for survival. It involves various fields in the cross-border circle, and it affects the whole body. As the life of cross-border sellers becomes more difficult, the domino effect appears. Amazon and other cross-border e-commerce platforms, freight forwarders, collections, trademarks, trading accounts The business of various service providers such as education and training has also declined.

Why did the cross-border e-commerce industry, which was in good shape in the past two years, take a sharp turn for the worse in 2022? The most common explanation is that the epidemic dividend has disappeared. At the same time, the United States, Europe and other developed regions have ushered in ultra-high inflation levels this year, consumer demand has cooled down, and the inventory crisis has broken out. It is too late for overseas markets to digest excess goods. Around 2020 Consumption pomp naturally “no longer exists.”

The “deterioration” of the general environment has indeed caused the traffic and profits of a large number of cross-border sellers to drop sharply year-on-year, and many sellers even bluntly said that they are “losing money every month” and will soon be unable to continue.

Amidst these negative emotions, if we take a closer look, we will find that cross-border sellers who are “difficult in life”, many of whom are really struggling, are currently in the stage of “clearing inventory and leaving”; however, there are still The business of some groups is not as bad as they say. The loss they think is actually like this:

I made 50 million in the same period last year, but I only made 5 million this year, so I lost a lot…

The editor thinks that this situation is not so much a loss, it is better to say that the sellers are not making as much money as before. We cannot deny the development prospects of cross-border e-commerce because of this. From the perspective of export data, cross-border e-commerce is still booming. According to customs data, China’s exports in July increased by 23.9% year-on-year in RMB, and the year-on-year growth rate in a single month hit a new high since March 2021; China’s exports increased by 18% year-on-year.

But I have to admit that the law of the jungle and the survival of the fittest apply to the cross-border circle as well. With the transformation and upgrading of the cross-border e-commerce market, the competition in this “fertile soil” for making money will only become more intense, whether it is a seller or a All kinds of service providers have to find their own way of survival in the unpredictable market conditions.

Going public last year and laying off staff this year, cross-border sellers are riding a “roller coaster”

Every year, sellers withdraw from cross-border e-commerce, and every year there will be voices like “this year is the most difficult year”, and this year is no exception, and the seemingly miserable voice is even louder.

“Many sellers are withdrawing their funds. To be honest, none of the circles I have contacted currently say that they are doing well.” Especially on the Amazon platform where Chinese sellers are more focused, Amazon people feel the whole industry more clearly. It’s really not as optimistic as it used to be.

“Amazon is more difficult to do this year. I have learned about the situation of the peers. The main task in the first half of the year is to clear the inventory. The profit is basically supported by the old links, and it is difficult to push new products.” A seller on the European website said that the problem of price involution has become more serious this year. Too bad, last year the average unit price of my category was still above 200 euros, but now it is basically below 80 euros.

There is also feedback from sellers on the European website that under the impact of the exchange rate, even if the product customer order price is not much different, the difference between this year’s 1,000 orders and the previous 1,000 orders in RMB is 10%, and the profit and commission are cut in half. The overseas demand is still there, but the purchasing power is declining. Even if the old link sales are still placing orders, the conversion rate has obviously dropped. Even gifts cannot effectively increase the order volume, and direct price cuts are needed to effectively stimulate transactions.

Similar examples abound.

“The entire category is very volumetric. When peers cut prices for promotion, they don’t cut prices by a small amount, but by a large amount. Small and medium-sized sellers are fighting price wars, and top sellers are also fighting price wars. In the past, they could sell for 25-30 US dollars. The products are all sold for 15-20 US dollars now. Products that used to cost around 15 US dollars are now rampant at 9.99 or even 7.99 US dollars. Although the price has dropped, Amazon shipping fees and inflation fuel surcharges have increased by 15%. Costs such as advertising fees and storage fees, when shipping to Amazon warehouses, they dare not consider air freight, red bills, and other logistics methods, even if they ship by sea, they must consider whether the profit is enough.”

The editor learned that a seller’s order volume has decreased by 70% this year, and the selling price on Amazon has also been reduced from 59 US dollars to 39 US dollars. In this case, even if there is no advertising promotion, each product will lose at least 3 US dollars. , but he did not give up this product because the store has expanded its product line and is now using this product to attract traffic to the store. This method is not only cheaper than swiping orders, but also “holds back peers” by the way.

In addition to sellers, the prices of many products on Amazon’s self-operated products are so low that it is suspicious of life, and some products even have no profit or require the platform to repost.

In this context, Amazon sellers are no longer making money, more people have changed their careers, and the jokes have also been updated:

Amazon’s latest strategy in 2022: market research—determining the product—finding a factory to place an order—preparing copywriting, pictures, A+—delivery—planning for a week—products on shelves, ready to advertise—automatically add Manually—conversion to poor quality—clearance—abandonment—buying a battery car—registered rider—finally, paying off the payment…

There are also some sellers who have not been mixed up to the point of changing their careers, but their living conditions have also undergone tremendous changes. “We have a big-selling customer who vowed to go public last year. This year, we will lay off employees.” said the factory manager.

Some factories only work 3 days a week, and freight forwarders, VAT and other service providers are under pressure

It is understood that many factories mainly supply cross-border e-commerce sellers. When the situation was good in the past two years, cross-border sellers naturally wanted to take advantage of the victory and sell more goods to make more money, so they asked the cooperative factories to increase production capacity. Many Factories followed the “trend” to expand workshops and manpower.

The fate of cross-border sellers and factories is closely related. When sellers have a hard time, they can’t pay to pick up the goods, and the goods in the factory become “hot potatoes”, and even become “time bombs” that drag down the factory .

“My big client is engaged in cross-border e-commerce. Even with the impact of sky-high shipping costs in the past few years, the sales volume of this big client has been very stable, so the money earned from supplying goods in the first half of each year is enough to pay for rent, labor expenses and other costs. The second half of the year is basically a pure profit. This year, the sales of this big customer have fallen off a cliff, and because of the domestic epidemic, our factory is basically on holiday in the first half of the year.” A factory manager said that there is no cabinet so far this year. Going out, let alone making money, capital preservation is out of reach.

It is understood that the current situation of factories having super-long holidays is not an exception. Although there are still many factories that will not be closed to the point of closure, layoffs are inevitable. The few remaining employees only need to work two days a week. The three-day shift is really the realization of “vacation freedom”.

In addition to factories, various service providers such as freight forwarders, VAT, and registered trademarks are also complaining.

“I thought I received goods at a very low cost price. Who knew that my peers received goods at a loss price.” A freight forwarder said that the market involution will become more serious in 2022. He has seen many small freight forwarding companies around him go bankrupt. The peak season has arrived early, and there is still no splash this year. In 2022, there is no customer base for freight forwarders who will enter this industry. Because there is no support from old customers, it is difficult to develop new customers. Living expenses such as rent will be deducted from the salary you get. , basically empty-handed every month.

ERP software service providers, account selling service providers, trademark service providers, VAT service providers and other service provider groups that rely on cross-border sellers, the most mentioned word this year is also “volume”.

“Since the beginning of this year, the company’s new customer growth rate has only been 1%, which is far lower than the previous two years.” An employee of a well-known service provider company in the industry said that the interests of sellers and service providers are tied together, and sellers sell well. Only then will they open new stores, so their VAT, trademark and other service businesses will be easy to do, but the sellers are not selling well now, and their opportunities to develop new businesses are greatly reduced, but the competition among peers is very fierce. In fact, there is no other way to go by cutting prices to grab business.

Even cross-border e-commerce platforms such as Amazon have fallen into the predicament of declining performance.

Amazon’s second-quarter financial report showed that Amazon’s online retail sales have declined for the second consecutive quarter, falling 4.3% to $50.9 billion in the second quarter. To this end, Amazon had to make up for the decline in its online sales by charging fees to Prime members and third-party sellers. In the second quarter, Amazon seller service revenue increased by 9.1% to $27.4 billion, and advertising sales increased by 17.5% to $8.8 billion.

Wish, a cross-border e-commerce platform with continuous losses, is still “running” on the road to losses. Data show that Wish’s revenue in the second quarter of this year was 134 million US dollars, with a net loss of 90 million US dollars, a year-on-year decrease of 19%; adjusted EBITDA was a loss of 58 million U.S. dollar, narrowed by 13% year-on-year. What’s more noteworthy is that the MAU of Wish in the second quarter was only 23 million, a year-on-year decrease of about 74%.

Independent stations cannot escape the plight of weak growth. Shopify, the leading website building tool for independent stations, has announced layoffs of 10% of its employees. It is reported that Shopify only added 71,000 merchants in the first half of this year, but it increased by 680,000 during the peak period of the epidemic in 2020. Even last year when the epidemic dividend was dying, the number of new merchants reached 314,000.

U.S. e-commerce prices fall for first time in more than two years

The apparel category has slowed as U.S. consumers spend more on essentials and have to cut spending on other products as U.S. inflation remains high.

To this end, Wal-Mart’s website is reducing inventory through price reduction promotions and other means. It is reported that the highest discount of some clothing products can reach 60%.

In addition to Wal-Mart, before this, Target also promoted the sales of clothing, electronic products and other categories by reducing product prices.

The survival soil of cross-border e-commerce has changed, and one of the important reasons is the disappearance of epidemic dividends.

Shaking consumer confidence and a pullback in spending as demand for consumer goods cools amid the pandemic, coupled with an oversupply at some retailers, is driving prices down in major online categories like electronics and apparel, while “hard demand” like food, according to the Adobe Digital Price Index. “Products” prices accelerated, rising a record 13.4% year-over-year, the largest increase of any category.

The forecast said that in the second half of the year, retail shipments to U.S. ports would be reduced due to slower economic growth due to successive interest rate hikes and persistent inflation.

Total retail shipments arriving at the largest U.S. port between July and December likely totaled 12.8 million 20-foot-equivalent units, down 1.5% from a year earlier, the National Retail Federation said.

The economy is slowing, and NRF expects U.S. imports of goods to decline in 2022 and possibly even more in 2023.

From the current market situation in the United States, the global e-commerce environment can be seen.

Rational thinking: Has the cross-border e-commerce bonus period passed?

In the field of cross-border e-commerce, no matter what the period is, there will always be a situation where “outsiders want to enter, and old people want to leave”. This year, sellers who want to leave the market do not understand that newcomers have to enter the market at this time. , which is actually justifiable.

Perhaps it was because the cross-border e-commerce “myth of making wealth” in the past two years was too attractive, which drove more people to enter the market, consumers were no longer enthusiastic about shopping, but there were more sellers fighting in the limited gold digging stage, there must be More cross-border sellers than before will not be able to enjoy the dividends of the epidemic, and this is the time for them to leave the market.

We have to admit that in addition to the disappearance of the dividend period of the epidemic, there are also reasons why people misjudge the situation in this mighty elimination battle of cross-border e-commerce.

In the past two years, the orders of cross-border sellers have soared, mainly due to the suspension of foreign countries and the interruption of supply in consumer countries. Chinese sellers with strong supply chain advantages have sufficient production capacity and temporarily won the orders of offline and other sellers. Can this luck be It will continue to depend on the follow-up development trend of the epidemic. The law of development of things is always that when the water is full, the water will overflow, and the monthly profit will lead to a loss. Cross-border sellers who have enjoyed the sweetness want to take advantage of the victory to expand the sales scale, and they have to bear greater risks behind them.

Obviously, many sellers took a gamble and took advantage of the victory to pursue it. Standing taller and falling hurts even more. The elimination survival matches that would have happened every year have become more and more tragic. Their lessons learned have also brought certain “” Psychological shadow”, causing panic, such as “the dividend period of cross-border e-commerce has passed”, “entering cross-border e-commerce now is a dead end” speeches spread vigorously.

In fact, the current cross-border e-commerce is far from being inaccessible.

“This year is actually not that difficult. Our sales have increased a lot compared to last year. I predict that the overall performance in the second half of the year will be better than the same period last year. Survivor bias will occur at any time. When it is good, we only see big money. If we look at the general environment rationally and comprehensively, our mentality will be much more stable.” The editor communicated with a cross-border seller and found that their company’s store sales caught up with last year’s peak season, with a five-fold increase in Japan and a seven-fold increase in Europe.

The cross-border e-commerce dividend is still there, but it does have higher requirements for cross-border sellers.

Many sellers empathize with this point, “In the past, you could make money as soon as the product was put on the shelves, but now it is not as easy as before to open new products. The company needs to spend more energy to develop new products, and also take care of design and quality. The requirements are indeed higher. .” Cross-border e-commerce has higher and higher requirements for product selection, operation, and supply chain capabilities. So generally speaking, it is definitely not as easy as it was in the past few years. The categories are gradually becoming saturated. This is a normal development law of the industry. Sellers in the game cannot change the general environment, but they can change themselves and work hard to adapt to the general environment.

Therefore, cross-border e-commerce still has unlimited opportunities for qualified and prepared people!

You can earn 50 million last year, but only 5 million this year, so you are losing money?

“Cross-border bosses could have earned 50 million yuan last year. They could easily buy a house in Shenzhen Bay and buy a Porsche Panamera with ease. This year, they can only earn 5 million yuan. In comparison, they have lost a lot of money.” An industry insider According to sources, although the living environment of cross-border e-commerce has changed and the threshold for cross-border e-commerce has become higher, relevant practitioners still have money to make, but the money they earn is less. Many bosses say they are losing money Yes, because their definition of loss is not what you think.

Of course, there are also many sellers who say that although they are not losing money, they can’t see where the money is! The money earned from selling the goods will never be hot, and you may use the money to continue to buy and sell goods in the next second… But, don’t say that cross-border e-commerce can’t make money because of this, and someday you decide not to If you do it, you will find that you have quietly accumulated a lot of money. It is said that a seller worked hard to move bricks every day during cross-border e-commerce, wearing two T-shirts back and forth, exhausted physically and mentally, and decided not to do it after the store had a problem, and immediately bought a car and a house after getting the money back…

Some cross-border sellers shouted “no money, hard work”, and the next second, they continued to devote themselves to the great cause of building cross-border e-commerce. increase.

According to data released by the General Administration of Customs on August 7, in the first seven months of this year, China’s total import and export value reached 23.6 trillion yuan, a year-on-year increase of 10.4%, achieving a rapid double-digit growth. Among them, the import and export in July increased by 16.6% year-on-year, maintaining the trend of foreign trade growth since May and making positive contributions to stabilizing the macroeconomic market.

According to customs data, in RMB terms, China’s exports in July increased by 23.9% year-on-year, and the year-on-year growth rate in a single month hit a new high since March 2021; in US dollar terms, China’s exports in July increased by 18% year-on-year.

From the perspective of export structure, in the first seven months, China’s exports to major trading partners such as ASEAN, the European Union, the United States and South Korea achieved double-digit high growth year-on-year, of which exports to ASEAN and the EU increased by 19.1% and 19.7% respectively; The total exports of countries along the “Belt and Road” increased by 19.8% year-on-year. During the same period, the export of private enterprises increased by 20.9% year-on-year, higher than the overall year-on-year growth rate of 14.7% in the same period; the export of mechanical and electrical products and labor-intensive products both achieved year-on-year growth, of which the export of automobiles increased by 54.4% year-on-year.

Looking forward to the third quarter, China’s exports are expected to maintain a relatively high growth rate! Cross-border e-commerce is still possible!