Losing money! Another batch of cross-border sellers are planning to leave

Is there still an opportunity to do cross-border e-commerce in 2023?

From its initial wild growth to its current brand-first mentality, cross-border e-commerce has long since torn off the label of an emerging industry. Years of accumulation have also made cross-border e-commerce more and more well-known. Almost every year, many outsiders come here to join the industry, and a group of people are waiting for the opportunity to join. Is there still a chance to do cross-border e-commerce in 2023?

When it comes to the interpretation of this issue, people in the industry have the most say, and one of the indispensable voices is that "cross-border business is difficult." Whether it's the year-on-year plummeting sales in the category and the plunging advertising conversion rate since the beginning of this year, or the rising platform fees further squeezing the meager profits, or the continuous news of various layoffs and bankruptcies, many people are using their personal experiences to interpret the difficulties of cross-border business, and the concept of "small and beautiful" is being further applied in practice.

It is not difficult to find that cross-border e-commerce is still plagued by "volume" in 2023, but new changes are also giving rise to new opportunities and challenges. One of the phenomena that cannot be ignored is that the collective entry of the "Four Little Dragons of China's Overseas Expansion" into full trusteeship is bound to shake up the cross-border market landscape!

In order to keep up with the cross-border development and not fall behind, what the majority of sellers need now is perhaps to abandon distractions and think about how to enhance their own capabilities!

Another cross-border seller is preparing to exit the market and is selling office supplies

Cross-border e-commerce is becoming more and more difficult every year, which is the perception of almost all people in the industry. The fact that many peers are constantly being eliminated seems to confirm what sellers are thinking. It is understood that before the halfway point of this year, many sellers have already given up.

"As far as I know, one of my friends no longer plans to do cross-border business and is now dealing in office supplies. Some of my colleagues also stopped doing this business at the beginning of this year." According to feedback from an industry insider, in addition to those who have already made it, there are many cross-border sellers around him who are on the verge of losses and have the idea of ​​withdrawing. If their performance continues to be poor during this year's peak season, which is the end of the year, they plan to officially stop being sellers next year.

In fact, every year many operators or small sellers silently withdraw from this track. Their reason is simple: there is no future.

Some of my colleagues have already switched careers to become freight forwarders or training service providers.

Taking the civil service exam is the best and most stable way out for cross-border people.

My friend has already obtained his teaching certificate, and I also want to leave Cross-border.

Cross-border e-commerce is not as easy as I imagined. I want to change my career but I don’t know what to do after that.

…

Xiao Liu (pseudonym) is now struggling with the question of "should I change my career?" every day. He used to work for a cross-border e-commerce company as an Amazon operator. One year ago, he mustered up the courage to quit and start his own business. However, the situation of working alone is completely different from working in a company. The pressure is too great. Working in a company means that each position only needs to do one thing well, while working alone means that the seller needs to take on all the work and do it perfectly.

As we all know, there are too many pitfalls on the Amazon platform itself . Sellers will fall into pitfalls more or less during the operation process. Each pitfall requires a large or small tuition fee. Big sellers can get up after falling, but many small sellers may suffer heavy losses and their cross-border careers will come to a halt. In addition to the sellers' own business mistakes, the troubles caused by external factors are endless, and the loss and damage of goods are the hardest hit areas.

Since he used up all his savings in recent years to start his own business, Xiao Liu faces tremendous pressure every day. Every time there is a problem with the store or the platform has a new policy, Xiao Liu gets very nervous.

What most discouraged him was the rate of return on the Amazon platform. The platform was too expensive, and he clearly felt that the speed of payment could not keep up with the speed of expenditure. He had not seen any cash flow on the books, and it was not clear when he would be able to make a profit. For Xiao Liu, who did not have sufficient funds, he did not have the courage to continue gambling, and planned to go ashore after clearing the inventory. This experience of working alone also wore away Xiao Liu's enthusiasm and hope for cross-border business. After dealing with all matters, he would think about changing careers and did not plan to go back to working in a cross-border e-commerce company.

“When even the uncles and aunts at the village entrance know the news that a certain industry is making money, it means that the industry is now in the red ocean stage within the red ocean. There are always signs before an industry starts to go downhill, and that is going too far! Now when you open your mobile phone, whether it is short videos or other channels, it is full of news about cross-border e-commerce Amazon and short video sales being very good…” More than one seller began to say as early as two years ago that cross-border e-commerce is no longer a stage for "losers to counterattack". It is now soaring difficult to make tens of millions a year on Amazon, but it is very easy to lose a million or more a year on Amazon.

It can be found that 2023 is almost halfway through, but the voices of sellers complaining about their misery have almost continued from the beginning of the year to now, and are reflected in all aspects.

1. Product sales, both sales and profits have declined and are widely complained. Since May, many sellers have said that sales are dismal, and the main categories have declined severely, with sales almost cut in half. It is worth noting that this situation does not only occur in individual categories. The decline in sales means that the profit margin of the product has been greatly reduced, especially when the platform fees continue to rise, the profits received by sellers are getting less and less.

2. In terms of new product promotion, the established situation of "low-price internal circulation" in cross-border e-commerce has made the life cycle of many popular products shorter and shorter. Even Amazon, the leading cross-border e-commerce platform, has been complained by sellers and has become Pinduoduo, and the situation on other platforms is not much better.

On the Amazon platform, there are many products such as "charity products that cost only $3 and cost $4 for delivery". Many sellers cannot compete with the sellers on price and often choose to develop new products to find new competitive points. However, the success rate of new product development is not high. According to feedback, the conversion rate of new products of many sellers is ridiculously low. After various optimizations and adjustments, the products still cannot be promoted. This is a big difference compared with last year. It is understood that some sellers have launched more than a dozen products this year, but all ended in failure.

3. In terms of advertising spending, the advertising spending of Amazon sellers has become a mystery recently. For example, some sellers cannot spend all their advertising money, while some sellers have ridiculously high ACOS.

According to feedback from one of the Amazon sellers, since May, without any changes, the daily advertising costs have shown an extremely obvious downward trend. It is useless to increase the bid a lot, and the recommended bid fluctuates throughout the day, and the conversion rate has also dropped. Coincidentally, another seller also said that the bid has risen to an outrageous price, but the conversion rate is still very low.

There are also some sellers whose ads have been clicked too much, but the conversion rate is still as dismal as before. Many sellers speculate that Temu has snatched traffic from the Amazon platform. Now many Temu sellers have begun to copy the popular products on the Amazon platform, but the price is much lower than Amazon. For example, the same product is sold for $49.99 on Amazon and only $19.99 on Temu. Amazon has become a price comparison platform for consumers. The sellers' ads have been clicked crazily but no orders have been placed. The most likely reason is that consumers are comparing prices from three different stores.

In fact, whether it is suppliers reporting shrinking business, complaints at the Canton Fair, Amazon's investment managers no longer being so arrogant, or freight forwarders frequently going door to door to save performance and lower operating salaries, all aspects indirectly confirm that cross-border e-commerce is not having an easy time this year.

Since the sales of many cross-border sellers’ products are not ideal now, and compared with the same period last year, it can be said to be very bleak. The business of most suppliers and freight forwarders is also shrinking, and the purchase amount and the amount of goods received have died. Taking freight forwarders as an example, the editor observed that many freight forwarders are active in major comment areas, and without exception, they are advertising; these freight forwarders even actively and frequently visit the building or make phone calls, and some sellers receive dozens of freight forwarder sales calls in one day; in addition, many cases of running away have been exposed in the current logistics market, and the recent US terminal overseas warehouse explosion incident is still in effect. In the final analysis, the entire cross-border e-commerce industry is in a downward stage, and freight forwarders who rely on sellers have a hard time surviving. Some people have to use crooked ideas. The freight forwarding market has entered a deformed period where bad money drives out good money.

This year's Canton Fair was also criticized for its poor results. One foreign trade person said that the overall effect this year was much worse than that of 2019. In 2019, each salesperson in the company could receive more than 30 foreigners with strong intentions, but this time each person received less than 10. The number of European and American participants was almost 70% less. Although the proportion of people from Asia, Africa and Latin America was high, the volume in these markets was small and the price was low.

The salary of cross-border e-commerce operators has also begun to fall. Many operators have not found suitable jobs yet. During the interview process, it is obvious that some companies are just trying to gain experience. Of course, as some cross-border e-commerce companies are struggling to survive, layoffs and salary cuts are still happening. "The company's sales are sluggish and they are planning to cut back on development," "I'm about to lose my job and have to start looking for a job again."...

Sellers and service providers are both in a revenue dilemma, and the attitude of platform investment managers has also changed. During the first two years of the epidemic, sellers almost begged Amazon investment managers for links, and even intermediary service providers started the business of buying and selling registration links. In 2023, the number of new sellers decreased significantly, and the performance of investment managers did not meet the standards. Instead, sellers were needed to help recommend new sellers. It is difficult for platforms to attract investment, and many platform investment managers have begun to change their careers.

Chinese cross-border e-commerce platforms collectively launched the "full trusteeship" model! Will cross-border business change in 2023?

As we all know, in recent years, the global economy has been facing changes in trade policies and tightening monetary policies in major economies, deteriorating local economic environments, and tense geopolitical situations. Against the backdrop of a sluggish global economic recovery and huge inflationary pressures in Europe and the United States, demand in overseas consumer markets remains weak. The European and American markets are precisely one of the important markets for my country's traditional manufacturing exports, which has exacerbated the large number of empty containers this year. In addition, as a major global economy, a major consumer market, and a core link in the world's industrial chain, the export restrictions, tariff barriers, and other protective trade policies adopted by the United States may have a significant adverse impact on many industries around the world.

Data shows that in the first four months, the United States was my third largest trading partner, and the total trade value between China and the United States was 1.5 trillion yuan, down 4.2%, accounting for 11.2%. Among them, exports to the United States were 1.09 trillion yuan, down 7.5%; imports from the United States were 410.06 billion yuan, up 5.8%; and the trade surplus with the United States was 676.89 billion yuan, narrowing by 14.1%.

In summary, fierce market competition, difficulty in promoting new products, rising costs of various stores, and halving of sales continue to besiege sellers, and the situation is even getting worse year by year. These are all old challenges! What new market changes will there be in cross-border e-commerce in 2023? One phenomenon that cannot be ignored is that Chinese cross-border e-commerce platforms have collectively launched a "full trusteeship" model!

The fully managed supply model means that merchants "supply the platform" while the platform handles operations, logistics, after-sales and other aspects, so that merchants can focus only on the product itself. The Temu platform relies on the "fully managed" model to dominate overseas, attracting a large number of sellers to set up shop, and overseas consumers' shopping enthusiasm continues to rise. Now, the Temu platform has been regarded by industry insiders as a strong rival to Amazon.

After Temu, other platforms followed suit! Full hosting is collectively favored by Chinese cross-border e-commerce platforms, proving that this model has significant advantages.

In the view of industry insiders, the full-hosting model simplifies things and allows sellers to get rid of cross-border problems such as logistics, compliance, and exchange rates. They only need to focus on products and leave it to the platform to sell after opening their own stores. The major platforms have lowered the threshold for cross-border transactions, which is a good thing. In the future, even if you don’t understand English or operations, as long as you have product advantages, you can do cross-border transactions. It is understood that many merchants are leveraging full-hosting to double their sales.

It is not difficult to find that Temu and other companies have created the possibility of "simple overseas expansion" for cross-border sellers, especially factory-type sellers. However, full trusteeship brings not only benefits but also disadvantages. Obviously, Temu's extreme method of rolling has made a large number of sellers very resistant. "Exploiting Chinese sellers, making them work themselves to death and starving their peers to death" is the current mainstream view.

"Platforms are collectively engaged in full-service trusteeship, targeting factories or integrated industrial and trade enterprises. More factory goods can directly access the overseas retail market, which is a good thing, but it also infinitely magnifies the price advantage of the products. As more cross-border newbies enter this track, sellers who have already suffered from low prices will only be more sad.

In addition, full trusteeship also means that the platform controls important aspects of cross-border operations, and the seller is just an emotionless "supply machine" that earns a little price difference. If the seller wants to control autonomy and build a brand, then it is not suitable to enter the full trusteeship. If you just want to find an additional sales channel or a clearance channel, you can give it a try. "

Small and beautiful is popular ! Individual sellers may be more profitable than large companies

Opportunities and challenges will continue to coexist in 2023. What impact will cross-border sellers face? Should we expand against the trend or focus on small and beautiful now? Weibo blogger "Yun Feiyang AMZ" briefly talked about the survival situation of Amazon sellers. In his opinion, it is very difficult to expand the scale of Amazon startups if you only rely on the profits of existing products. Amazon has entered an era of low gross profit and low investment. If you don't have old links as cash flow, no continuous injection of external funds, and only rely on hundreds of thousands of start-up funds, you will soon have no working capital to develop new products. At this time, there are generally two situations:

First, stop developing new products or slow down the pace of development, and wait until the cash flow is sufficient to pay for goods, labor, and rent before developing new products.

Second, when launching new products, be conservative in stocking them, adopt a distribution model, launch more products, and ship fewer products.

Both situations will greatly slow down the pace of business development. In the former, there are too few new products, and in the latter, there is no traffic barrier. Links are likely to be blocked by advertisements, and cross-category product selection is particularly tested. This is the inevitable result of the FBA model and the fierce market competition. At this time, the two extreme sellers live more comfortably.

The first type is pure individual sellers who do not have a team and are not under pressure to achieve performance, and their monthly cash flow is relatively healthy. The second type is players with capital support, who enter the market just to increase sales, achieve performance, and prepare reports. These people do not think about making money by selling goods, and they do not burn their own money.

In the view of many Amazon sellers, the larger the company, the lower the profit margin, while the smaller the company, the higher the profit margin. Maintaining a team is a very expensive thing, and the larger the team, the more money and energy you need to invest.

"Where's your money? You bought in the stock! Where's your stock? You sold it! Where's the money from the sales? You bought in the stock! Where's the extra profit? You launched a new product." There are almost no products that can be used once and for all now. As the profit of old products is getting lower and lower, even small independent sellers with relatively stable cash flow have to constantly develop new products, otherwise they will either advance or retreat. Sellers with larger scales often need to repeat the operations of "new product - make money - launch new product - make money - launch new product" more frequently, so the funds are all on the goods, especially the more orders there are, the more anxious they are. The inventory backlog, production pressure, and the turnover of funds basically make many people breathless.

Well aware of this truth, in 2023, the key words for Amazon's development will mostly be related to "careful budgeting" and "cost reduction and efficiency improvement". The risks and costs of going against the trend are too great, so they can only go with the flow, reduce the size of the company, cut expenses, and streamline staff.

There will always be countless challenges on the road of cross-border business, which will test the seller's ability to adapt to changes. Thinking from another perspective, what are the things that are eternal and worth the seller's long-term persistence? The following is a summary of the views of many industry insiders:

1. Maintain old customers and explore their needs. New customers are indeed worth developing, but the cost of the entire period is very high. If old customers are maintained well, the repurchase rate of products can be greatly increased.

2. Improving pre-sales and after-sales services and carefully solving the problems encountered by consumers will bring unexpected rewards.

3. Deepen the categories, refine the products, and based on the existing products, polish and upgrade the products according to consumer opinions.

4. Focus on original design and intellectual property rights to enhance competitive advantage and extend product life cycle.

5. Don’t invest blindly to expand production. First lay a solid foundation in a certain field, obtain more cash flow, and then cautiously explore new areas.

Cross-border e-commerce is still a profitable industry, but the elimination rate is also higher.