Amazon has made a series of new changes, and a group of sellers are about to lose their orders!

Platforms fight each other, and the one with the lowest price wins? A group of Amazon employees move forward in anxiety!

" Since the beginning of this year , my mentality is not as good as before. The main reason is that it is more difficult to launch new products. Several products launched have ended in failure. Now I am still relying on my previous capital. I don’t know how long I can continue to do so. "

"I have been working on Amazon for almost a year. The category I am in is in a state of involution. Advertising costs have skyrocketed, and the order volume is dismal. I don't know where to go as a seller."

"I used to work for a company, but I started working on my own last year. The business environment on Amazon has changed over the past two years. It takes more energy and money to make products. Plus, the returns are slow, so all the money I earn is in inventory. It's stressful to sell on a small scale."

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Similar words can be heard in major Amazon communication groups. Sellers complain about internal competition, low prices and other issues day after day, and their words perfectly illustrate what it means to be more difficult every year. The uncertainty of the future makes many Amazon sellers feel confused.

Cross-border e-commerce is changing again in 2023. Whether it is the four Chinese companies that are going global collectively launching a fully managed model, or new platforms constantly snatching traffic from the Amazon platform, a large number of Amazon employees who depend on Amazon are panicking. Competition between sellers within the platform is becoming increasingly fierce, and so is competition between platforms.

Temu's threat theory against Amazon is recognized by more and more people. Since the beginning of this year, Amazon has taken frequent actions, whether it is adjusting logistics charges, providing discount plans, or launching the "Find the Same Item" function. In the eyes of industry insiders, these are actually important measures for the platform to defend its low-price position. Amazon is ambitious to firmly grasp its profits and e-commerce dominance, and it is the sellers who pay for its ideals after all. "In the long run, Amazon sellers will have two strategies to survive better. One is the extreme cost strategy, and the other is the continuous innovation strategy."

Amazon has issued a series of new policies. Is it trying to firmly protect the low-price market?

Recently, Amazon issued its latest logistics policy. On August 29, Amazon’s logistics rates for low-priced goods will replace the Small and Light Commodity Program.

According to the interpretation, after August 29, Amazon FBA will only have two types of logistics, standard logistics charges for more than $10 and logistics charges for low-priced goods below $10 . All goods below $10 will automatically enjoy the low-price Amazon logistics rate, and the delivery speed is the same as the standard Amazon logistics. The delivery fee is $0.77 less than before, and there is no need to pay the holiday peak delivery fee. For goods above $10, the delivery fee will increase to varying degrees.

After the implementation of the new policy, it is good news for sellers who use FBA to sell "cheap" goods below $10. However , it will have a greater impact on sellers whose product prices are stuck in the price range of $10-12, because the small and light plan will no longer exist after August 29. There is no doubt that Amazon's new policy has put forward new requirements for sellers' product selection, pricing and logistics. Product prices, logistics and delivery fees are closely related to profits. Now many sellers have two options to choose from: either increase product prices to balance the cost increase caused by the increase in logistics fees, or reduce product prices to less than $10 to enjoy Amazon's low-rate service.

Although there is more than one choice, many Amazon sellers feel that the platform is encouraging low prices. Many products on the platform are priced at $11.99, and Amazon wants sellers to lower their prices to below $10, so as to better retain the low-price customer group, grab market traffic, and compete with other e-commerce platforms.

It is foreseeable that after August 29, the price range of US$9-9.99 will welcome multiple new competitors . There are already a large number of sellers in this track, and the entry of new players will further squeeze their profits. Sellers are sharing an increasingly smaller piece of cake in a relatively small space. In order to survive, they may continue to compete on price. A new round of price cuts is inevitable, and eventually a group of sellers will inevitably be squeezed out by low prices.

In fact, in addition to adjusting logistics costs, Amazon has made a number of changes recently.

When searching for keywords for certain products, multiple sellers found that a new search box "More Like This" was added in the lower left corner of the picture, similar to the "Find the Same Item" button on Taobao. In this search box, the system will simultaneously recommend some products with the same or similar styles, and more recommended results will be found after pulling down.

Currently, only some sellers in some categories have seen this feature. It is speculated that this feature is in a small-scale test and will be officially launched in the future. If this feature is fully implemented by then, the situation faced by some sellers will only become more uncertain.

In the sellers' view, Amazon is moving towards "Taobao-like". Now the Taobao platform is very competitive. When consumers use Taobao, they click on a page and find multiple identical products. In the end, they are often attracted by the links on the page with lower prices and relatively better product reviews, and then place an order. In the near future, Amazon sellers will most likely face the same situation. At present, there are still many people who choose products on 1688 in a stereotyped way as before, and then move the products to earn the difference. The Amazon platform is full of various homogeneous products. For the same product, the one with the lowest price often wins in the end. Consumers' ability to compare prices for similar products is further enhanced, which either forces sellers to make changes or squeezes them out.

In addition, Amazon recently added three new product labels : Overall Pick, New Arrival Pick, and Popular Brand Pick. Among them, Overall Pick (which can be regarded as the original Amazon Choice label), as the most selected item under the term, can consolidate the best-selling products under the term and keep the hot-selling products in hot demand. In the eyes of some sellers, Overall Pick is also a driving force for sellers to intensify their internal competition. Some sellers may reduce prices to grab this label , thereby obtaining higher sales.

Amazon has issued a series of new policies, all of which were interpreted by industry insiders as being related to low prices. The purpose of the platform's actions is to firmly protect the low-price market.

This reminds us of the industry's well-known "flywheel theory": by continuously introducing high-quality suppliers and sellers, providing consumers with more choices - lower products, better convenience - continuously improving customer experience - thereby generating word-of-mouth effect, bringing in tap water traffic and more customers - attracting more high-quality suppliers and sellers, forming a constantly rotating flywheel, rolling forward.

The flywheel theory is the core operating philosophy of Amazon. Focus on providing a good user experience, and everything else will follow. Throughout Amazon's development history, it has indeed been strictly implementing the "flywheel theory". Now several policies of the platform are pointing to the low-price track, and its intention to protect the low-price market and target consumers is obvious.

Amazon, which is surrounded by wolves and in its mature stage, has brought challenges to sellers.

The reality does pose considerable challenges to Amazon.

Although Amazon's e-commerce dominance is temporarily unshakable, and the slogan of advocating branding has been shouted again and again, there are many brand sellers with strong product strength on the platform, but standard products without premium ability also account for a large part. It can be said that these "white-label" products are an indispensable part of the Amazon platform and bring a lot of traffic to Amazon. They are not the only shopping option for Amazon. Especially in the face of absolute subsidies on new platforms , user stickiness and user habits will quietly change. If a group of consumers who focus on low prices quietly slip away and turn to platforms with lower product prices, Amazon will naturally be frustrated.

Now, with the rise of the full-hosting model, platforms such as Temu will also pose a threat to Amazon's Prime Day. For Amazon sellers, products with serious homogeneity are easily snatched by Temu. "Amazon's Prime Day is only two days, but every day on the Temu platform is a member day." An Amazon seller joked that in general, most consumers want to buy the best products at the lowest price. As the consumption capacity of Europe and the United States begins to decline, the attraction of low prices to buyers is also doubling.

The voices of a large number of consumers also verify the above statement.

"As a consumer, affordable, high-quality and low-priced products are the best choice for ordinary people. After all, most people in real life are ordinary people. I have recently bought dozens of products on the Temu platform, and 90% of the products are of good quality. Those that are not suitable can be thrown away directly, anyway, the price is not expensive."

"Temu has been very popular in Canada. I have bought cleaning supplies, gardening supplies, and various household items on it. The prices are affordable and most products are of good quality. Some products are not of good quality, but fortunately the returns are smooth. In my opinion, everything should be of good quality and low price. If I can buy the same thing at a lower price, I will definitely not pay more."

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Unlike sellers who have overwhelmingly negative reviews of Temu, consumers have a split view of Temu. One group of overseas consumers complained about the poor quality of the products and the mismatch between the products and the ones they purchased, and uninstalled the platform in anger. Another group of consumers believed that platforms like Temu were undoubtedly beneficial, as not only the services were relatively standardized, but the prices of the products were also lower. After installing the platform, they couldn't stop shopping. Of the two groups, the group that installed the platform undoubtedly had the upper hand!

On the one hand, a large number of consumers are downgrading their consumption and are eager for low prices. On the other hand, new and old platforms such as Temu , Shein and TikTok are all stepping up their overseas market layout this year , leaving fewer and fewer opportunities for Amazon and sellers.

TikTok is following Temu's example to launch its e-commerce business in the United States, and has promised merchants that the platform will provide all services to sellers free of charge, without charging any fees, including delivery, warehousing and even commissions!

TikTok will attract more sellers by handling everything from marketing to logistics and invoicing , a sales manager at Bytedance said in a live broadcast. It is envisioned that merchants only need to submit product information and ship the goods to a warehouse in Guangzhou, and TikTok will take care of the rest.

Similar news has been exposed frequently recently. Earlier, there was news that TikTok may launch an online retail store in the United States as early as next month. The biggest difference between this feature and the previously launched TikTok Shop is that the new shopping store mainly sells ByteDance's own products, and most of the suppliers are from China. According to Bloomberg, TikTok hopes to more than triple the size of its e-commerce business to $20 billion in GMV by the end of 2023, compared with $4.4 billion last year. TikTok has been making frequent moves in its e-commerce business, and it seems to want to share the big pie of cross-border e-commerce.

Industry insiders speculate that Temu's temporary success and TikTok's strong support will surely give this new "full-hosting" business the confidence to continue. The new platform's disruption may continue to snatch a large number of low-price consumers from Amazon.

Shein and Temu also occupy the first and second positions in ten countries. Among the 50 countries with the largest GDP in the world, Shein and Temu have successfully topped the shopping app download rankings in 25 countries. As a cross-border e-commerce giant, Shein has made remarkable achievements in recent years. Recently, SHEIN officially announced the promotion of the platform model SHEIN Marketplace and announced the "Xiyou Gravity" million sellers plan, which aims to help 10,000 sellers around the world to exceed one million US dollars in annual sales and help 100,000 sellers to sell more than 100,000 US dollars in annual sales in the next three years. Temu is even more ambitious. With viral fission spread in 16 countries and regions around the world , Temu has been downloaded more than 70 million times, ranking first in the shopping app download rankings in a total of 14 countries around the world .

According to data disclosed by research organization YipitData, Temu's GMV in May was as high as US$635 million (approximately RMB 4.56 billion) . If true, this number is not small.

What we cannot ignore is that, unlike those platforms that have been operating for a long time, Temu has surpassed many platforms in less than a year. According to this trend, it will "capture" more markets and consumers in the future. "Temu is now in the stage of attracting consumers with low-price subsidies. It is likely to launch direct stores, specialty stores, and brand stores in the future to ensure the authenticity and quality of products, just like Pinduoduo in China. Pinduoduo, which was not optimistic at the beginning, once became a threat to Taobao. Temu, which is still in its development stage, has achieved such results, which is enough to attract attention."

Various new and old platforms are eyeing the market covetously. Several policies of the Amazon platform are oriented towards low prices. The inevitable price war in Amazon's mature stage has made a group of Amazon people realize that it is no longer a question of whether they should actively lower prices, but that they have to lower prices.

How long can the Amazon platform remain prosperous?

Xiao Zhang (pseudonym), as an old player of Amazon, intuitively feels that the changes in the platform in recent years are very obvious: the operating style before 2020 was relatively rough and simple. In 2020, the epidemic dividend began to make huge profits. Everyone began to work hard to ship goods to earn more. A large number of newcomers saw the opportunity and entered the market, resulting in serious internal competition on the platform. In 2021, sellers began a war to clear inventory, and price cuts further reduced product profits. In 2022, more sellers pursued small and beautiful, and the primary consideration was how to survive. In 2023, the epidemic was relaxed, and the expected sales recovery did not come, but was replaced by anxiety.

“In the past few years, when people talked about Amazon, they basically thought that the prospects were bright and believed that if they worked hard and persisted, they would most likely achieve results. But now, the Amazon market is basically saturated, prices are getting lower and lower, profits have dropped significantly, sellers earn less money but face greater risks and pressure, and it is inevitable that they are tired.” Xiao Zhang said.

The life cycle of each platform can be divided into four stages: initial stage, acceleration stage, maturity stage and decline stage. In the initial stage and acceleration stage, it happens to be the bonus period of the platform, and the platform and sellers develop rapidly. However, as the market becomes saturated, the development speed of the platform and sellers will tend to stabilize, and even the growth rate will gradually slow down or even stagnate.

Amazon is now in its mature stage, leaving fewer and fewer opportunities for new sellers. As a breakthrough weapon, price is being used by more and more sellers to perfection, and a group of sellers have won the title of philanthropist. According to the "philanthropist" plan: price reduction - strategic loss - explosive increase in orders - crazy replenishment - compressed purchase price - profit increase - later price increase, the product will be successful! The actual result is that the price is reduced - other sellers follow the price reduction - big sales price reduction - you still can't sell - advertising bidding soars - advertising losses - factories ignore people - freight replenishment losses - product scrapped, and the profit of the entire category decreases.

It can be found that the speed at which products change from blue ocean to red ocean is accelerating year by year, which is a great test of Amazon sellers’ adaptability and financial capabilities.

Industry insider "Running Pharaoh" believes that in the long run, two strategies can survive better on the Amazon platform: one is the extreme cost strategy; the other is the continuous innovation strategy.

The former is to continuously optimize costs, which is an opportunity for many factory-type sellers. Factories directly participate in competition, continuously decompose the underlying structure of products, and sell products with low average order value in packages. In this way, the cost of a single product can be spread across various links such as the user side, allowing each product to be optimized to the extreme.

The latter relies on a thorough investigation of the terminal vertical market to gradually form a set of self-developed and self-selling strategies. This is a capability that most sellers do not have. It is worth noting that making private models does not mean having strong R&D capabilities, and there is still a certain gap from real innovation.

Continuous innovation is a top-down culture, determined by the highest decision-makers, and sometimes even conflicts with short-term interests. It may fail in one or two market explorations, but in the long run, it can inject real soul into the company.

The quality of the Amazon platform is closely related to Amazon sellers. It can be said that a large part of Amazon people’s negative emotions such as uneasiness, anxiety, and fear comes from the platform. How long can Amazon, which has already entered a mature stage, lead its sellers?

Many sellers are confident in this platform. "I haven't found any platform that can replace Amazon yet. I personally think Amazon can last for a long time. The platform is not so easy to fail. The ones who are likely to be eliminated are the sellers who cannot adapt to this platform."

"This platform is committed to providing the best buyer experience. Search services tailored to each customer, extremely fast delivery, and extremely fast returns and exchanges are all capital for retaining consumers. Low-priced products and branded products also take into account various consumer groups. We can also see from Amazon's relevant reforms that in the mature stage with full competition, Amazon has increased the discovery of new sellers, new products, and new links. The possibility of relying on one link for several years or even 10 years is getting lower and lower.

I’d still like to work for Amazon for a long time, even though it’s becoming increasingly difficult to do business on the platform, ” Xiao Zhang said.

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