The transformation almost killed the company, but it sold well: It is not necessary to make high-quality products

In recent years, the cross-border e-commerce independent station has emerged as a behemoth, SHEIN, which has been shrouded in glory for the entire industry; in 2021, Amazon sellers were unable to sleep at night due to the wave of account bans, but the independent station field has continued to receive financing news, and the scenery is unique. Therefore, this has become a popular place for multi-channel sellers.

Some institutions predict that by 2025, independent websites will account for 41% of the cross-border e-commerce B2C market . So which cross-border companies are suitable for independent websites? Which model is better, store clusters or brand stores? The fire of "transformation" is getting stronger and stronger. Should sellers follow suit? What is the core of cross-border companies to reduce costs and increase efficiency? John, the CEO of Shenzhen Independent Website, a leading seller, shared his views on these strategic issues.

Amazon sellers should walk on multiple legs

An industry report from iMedia Consulting shows that the scale of China's cross-border e-commerce independent station market has increased from 200 billion yuan in 2016 to 1.1 trillion yuan in 2021; it is expected that by 2025, the share of the independent station market in the cross-border e-commerce B2C market will increase from 25% in 2020 to 41%.

The outside world is so optimistic about independent websites, but John believes that this is a big challenge. According to his understanding, the number of independent website sellers is far less than that of third-party platform sellers such as Amazon. The reason is simple. The independent website team is responsible for products, traffic, and operations at the same time. Compared with Amazon sellers who can focus on products and operations, it is more difficult.

In people's minds, independent website sellers are roughly equivalent to big sellers, which is a survivor bias. SHEIN has a scale of hundreds of billions, and has raised the industry average standard by itself, but there are not many independent website sellers with actual revenue exceeding 1 billion.

Independent sites are of course necessary. In 2021, independent sites will see another blowout development. One of the reasons is that the turmoil on third-party platforms has given rise to a sense of crisis among sellers.

John believes that, whether from the perspective of political ecology or channel risks, in the long run, if Amazon sellers want to be more stable, they need to walk on multiple legs, and build multiple channels such as independent websites and offline channels, in order to form a relatively healthy ecology and build risk resistance. Anker Innovations is a model student in this regard.

However, independent websites have natural barriers to entry. John does not recommend multi-channel operations for sellers with revenues of tens of millions or over 100 million yuan. "I think that sellers with a revenue of less than 1 billion yuan should not consider multi-channel operations. In the early stages, it is recommended to focus on some platforms that you are good at and make one channel fully developed and big."

The key to success or failure of independent website building is the awareness of the company leaders. For example, sellers can do well on Amazon because they have a better understanding of certain categories on the platform than their competitors. If you want to do well on independent websites or other channels, you must also continuously build up your awareness through obtaining information, trial and error, etc. Only when you have the right awareness can you make money, otherwise you will have to pay tuition fees.

For those who are interested in trying out independent websites, "how long will it take to make money" is a key question.

John introduced that most teams will start to make profits very early (such as when they are grassroots), and the subsequent capital intervention will accelerate performance growth, but if the organization is not in place, they may do worse. Some new sellers have been quite successful in other fields and are favored by investors, so they get capital support in the early stage of entrepreneurship, and can withstand losses for a long time to expand the scale, without considering profitability in the short term.

If sellers want to get positive feedback, they need the right time, right place and right people - are you entering the market during the bonus period, are the categories correct, and are the information you obtain or your knowledge deep enough? "Any industry will develop from the bonus period to a period of full competition. If you want to survive and live well in the long run, you need to have a better understanding of the industry, products and channels than most of your competitors. In the later stages of competition, most people lose money and exit the market, and only a very few can continue to outperform the market."

Transformation is not necessary, sustainable profits are good business

In the past two years, the hottest topic in the independent station field has been "transformation", moving from the store group model to the brand independent station. It seems that if a company does not consider transformation, it is not seeking progress.

John's company has experienced the "transformation" firsthand. "This is our choice, but it doesn't mean we are right. It also depends on everyone's wishes and conditions. We transformed from a site group seller to a boutique seller. The risks and uncertainties involved were huge, and we almost died. So I don't recommend doing boutiques."

In his opinion, transformation is not necessary. "The term 'transformation' implies 'from low-level to high-level', but it does not mean that boutique sellers are higher than general merchandise sellers. That does not exist. There is no distinction between high and low in business. The essence is to continuously create positive profits and return to shareholders. As long as it does not violate the law and can continuously create profits, it is a good business. The Five Tigers of Bantian and the sellers of South China City, both those who sell general merchandise and those who sell boutique products, can do very well.

So I don't think sellers have to transform. The key is what kind of business you want to do, which is related to the ideas of your core team. For example, why do we transform? We want to stand out in some niche categories so that more people can experience our products, rather than just doing it for profit. If we just want to make a certain amount of money a year, we can probably achieve this goal by continuing to distribute goods and make white-label products. "

The premise for sellers to transform is to find differentiated products that can provide unique value to users in the same category and achieve a soft landing on this basis.

"I advise these sellers not to be aggressive and to make a smooth transition. For most sellers, your actions will not be distorted if you have a positive cash flow."

Reducing costs and increasing efficiency: efficiency is not achieved by the number of people

In the past one or two years, the higher inflation levels in Europe and the United States have weakened consumer purchasing power to a certain extent. Industry analysts believe that this is one of the reasons for the sluggish sales or declining profits.

John believes that the market is fair to everyone. Given the size of most sellers, they are far from being affected by the overall environment, and the top sellers still have an annual growth of 70%-80% or even double.

"The macro environment has only affected the growth rate of sellers by 1%-3%. How big of an impact is this? I think they are all making excuses for their own failures. The core issue is your understanding of your business, products, and consumer channels. If you want to exist for a long time, you must improve your understanding and stay ahead of your competitors, rather than just following the crowd and comparing your misery. This is the behavior of the weak."

As operating costs continue to rise year by year, cross-border sellers have begun to study how to "reduce costs and increase efficiency."

John believes that the key point is whether the seller's cognition exceeds that of competitors. "Your cognition comes from you and your team. Can your team have a small number of people but deep cognition? In this way, you can defeat your competitors. I don't think cognition is built up by the number of people. It is determined by the depth of your cognition. It can also be understood that the company's elites or bosses have a deep understanding of things that determines the company's efficiency. The deeper the cognition, the higher the execution efficiency, and the higher the probability of leading competitors. And human efficiency is the external form of the combination of cognitive depth and execution efficiency."

Now, the popular ChatGPT is seen by sellers as a tool to improve human efficiency. John's company has just tried to use it to write copy or conduct email marketing, but there are no actual results yet.

"This is a revolutionary product. We believe it is a way to improve labor efficiency, so we are actively trying it. If we have a good experience, we will also consider applying it to work," he said.

Competition will intensify in 2023. How should independent website sellers carry out marketing and product layout? Scan the QR code below to register for the conference and have a live dialogue with the top seller John (FY).