Another huge sum of money has arrived from Americans, so are sellers’ orders going to take off?

Since the beginning of the year, sellers have been experiencing a bleak order volume. Although it is normal to have fewer orders during the off-season, many sellers lament that the number of orders is not only too small to bear, but is also decreasing, and they are often in a bad mood. Even the US market, which has been a major driver of sellers' revenue, has shown signs of weakness. Is it possible that even Americans have no money left?

The American people are indeed under tremendous economic pressure. An analysis report recently released by WalletHub, a well-known American personal finance website, shows that American household debt increased by $320 billion in the fourth quarter of 2022, reaching $17 trillion at the end of last year, the highest point since the 2008 financial crisis. And this data has not yet reached a critical point.

In the case of debt, consumption will inevitably be hindered. However, this situation may be broken in the future, because the American people will receive two cash payments, and these two moneys come from the federal government and state government tax refunds. These two moneys will arrive in large quantities in February and March. American consumers have always advocated "consumerism" and "hedonism". Of course, they will buy, buy, buy, so to a certain extent, it will stimulate the growth of online consumption.

However, giving money can only bring short-term prosperity. Rising costs and deepening internal circulation are still problems that plague sellers. The only thing that can give sellers a new way out is the product itself. Therefore, cross-border e-commerce sellers should discover consumer demand and then develop products that meet market demand. For example, after the epidemic is relaxed, people have more freedom to move around, and the hot-selling products will be very different from those during the previous epidemic restrictions. For this reason, sellers can do some product selection research.

Consumption is weak? The US government is giving out money again

Not long ago, a report from a US port clearly showed that the consumption power of the American people is declining. According to the port data released by the Port of Long Beach, the port's import volume in January fell by 32.3% year-on-year to 263,000 TEUs. Not only the Port of Long Beach, but also the import volume of the Port of Los Angeles, another major port in the United States, fell by 13% year-on-year.

Although the port 's import volume data for February is not yet known, from the feedback of sellers, online sales in February are not very ideal. The continued sluggish sales make sellers sigh every time they talk about the order volume.

Some sellers lamented that the number of orders per day was in the single digits, and more than 10 orders was already an incredible achievement. The weak consumer power made sellers who wanted to advertise say that they could not spend money even if they wanted to. "The paint on the F5 was peeled off, there were only a few orders, and I don't know how to adjust the ads, so there were not many clicks."

The declining order volume has hit the sellers’ confidence that was rekindled after the beginning of the year. Some even found excuses for the sparse order volume: “Today is Valentine’s Day”, “Today is President’s Day”, etc., and they are vying to be “excuse-makers” in an attempt to cover up their own mistakes.

Sellers are all asking, “Why can’t we bring in orders?” Ultimately, there is only one reason why consumers don’t “buy, buy, buy”: they are short of money.

An analysis report recently released by WalletHub, a well-known American personal finance website, shows that American household debt increased by $320 billion in the fourth quarter of 2022, reaching $17 trillion at the end of last year, the highest point since the financial crisis in 2008. And this data has not yet reached the critical point.

In addition, as the U.S. economic stimulus plan has ended, many Americans and businesses are facing increasing financial pressure, and bankruptcies have surged. According to data from legal research firm Epiq, the total number of bankruptcy filings in January this year soared to 31,087, an increase of 19% from a year ago, and the number of Americans filing for bankruptcy under Chapter 7, Chapter 11 and Chapter 13 of the Bankruptcy Code surged 20% year-on-year.

The surge in bankruptcy filings comes as rising interest rates and high inflation continue to weigh on household budgets. A recent Primerica study found that three-quarters of U.S. households are cutting back on purchases of discretionary items to offset rising prices, while half are dipping into emergency savings to make ends meet.

However, factors that are favorable to sellers have now emerged, namely, tax refunds from the IRS have begun to arrive.

Foreign media reported that the IRS began accepting federal income tax returns for the 2022 tax year on January 23. Nearly 19 million returns had been received as of February 3. According to the latest data, the IRS has issued about 8 million tax refunds during this period. Since it was still early in the tax filing season, the vast majority of Americans had not yet filed their taxes.

However, as the economic environment becomes increasingly severe and it may take up to 21 days to receive a tax refund after submitting a tax return , more Americans will submit their returns earlier this year to get a refund faster rather than waiting until the April 18 tax filing deadline.

The IRS typically receives more than 160 million tax returns each year. In addition, for those who receive tax refunds due to the Earned Income Tax Credit or the Additional Child Tax Credit , US law prohibits the IRS from issuing tax refunds before mid-February . It is conceivable that a large number of Americans will receive tax refunds after mid-February.

Last year, nearly 110 million American households received an average tax refund of nearly $3,200, according to the tax agency . This year, the average refund was smaller because of the expiration of the COVID-19 tax credit and other benefits , but it was still about $2,700.

The annual tax refund is usually the largest check that the entire American family will receive throughout the year. About one-third of Americans rely on this check to maintain a balance between income and expenditure. According to past practice, after receiving the tax refund, Americans usually use it to repay debts, pay bills or make large purchases. Therefore, online consumption will be driven to a certain extent.

In fact, the boosting effect of this unexpected money on orders was verified last year. In mid-August last year, many sellers reported that the number of orders suddenly surged, and at the same time, the traffic also increased significantly. Finally, after investigation, it was found that the reason behind this was that 16 states in the United States, including California, Colorado, Delaware, Massachusetts, and New Jersey, formulated their own stimulus plans.

For some states, the stimulus plans will not be implemented until this year at the latest.

There are 11 more states that also want tax refunds, and the fastest one will be credited tomorrow

Currently, the imbalance between supply and demand, the impact of the global economy and the aftermath of the COVID-19 pandemic continue to push up the prices of basic necessities of life such as food and energy in the United States, but the federal government’s economic stimulus plan that allowed Americans to earn money while lying at home has ended.

To help residents cope with the high cost of living, some U.S. states introduced their own stimulus plans last year, using their budget surpluses to pay cash directly to residents through tax rebates, with many of them only arriving earlier this year.

California

California began giving tax refunds to the middle class in October last year . So far, more than $9 billion has been distributed to more than 7 million people. The maximum refund amount is $1,050. Those who have not yet received a refund will receive the last payment on February 22 (local time) this year .

And this year , when filing taxes for fiscal year 2022, those who qualify for the CalEITC (Earned Income Tax Credit) and have a child under 6 can receive an additional credit of up to $1,083.

Starting in 2022, California’s Child Tax Credit (YCTC) will be available to people with a minimum income of zero dollars, compared to a minimum income of $1 in previous years.

South Carolina

Taxpayers are eligible for a refund of up to $800. The refund began to be paid late last year, but those who filed between Oct. 17 and Feb. 15, 2023, will receive it by March 31 of this year.

Michigan

With billions of dollars in unspent budget surpluses, Michigan has unveiled a proposal to send $180 directly to every taxpayer. Because the legislation has not yet been formally introduced, there is no exact date for when the money will arrive. However, experts in the field expect the first checks to be sent in the spring.

Michigan residents who filed taxes last year are eligible for the money.

Hawaii

Residents of the state can get a one-time refund of $300 if they made less than $100,000 in 2021 as an individual ($200,000 if married filing jointly). Individuals with income over $100,000 and couples with income over $200,000 can get a refund of $100.

Although the refund began to be issued at the end of August last year, taxpayers who filed their 2021 state tax returns between July 31 and December 31, 2022 will not receive the money until 10 weeks after filing the return. If you request a check, the waiting time will be longer (12 weeks).

That is to say, if someone submitted their application on December 31 last year, they would have to wait until mid-to-late March this year to get the money.

New Jersey

Homeowners making up to $150,000 will receive a $1,500 property tax rebate, while those making between $150,000 and $250,000 will receive $1,000. Renters making less than $150,000 will receive a $450 check.

The refunds will be issued no later than May 2023. About 2 million New Jersey households are eligible for property tax rebates.

New Mexico

State residents can receive a $500 refund if they file a single return, or $1,000 if they file a joint return. State residents have until May 31, 2023, to file their 2021 income taxes and receive a refund.

Idaho

The state has been issuing tax refunds of up to $600 to residents since September last year. The money should have been distributed before Thanksgiving, but due to delays, some residents had to wait until the beginning of this year to receive their refunds.

Illinois

Illinois residents who make less than $200,000 a year or couples who make less than $400,000 will receive a $50 rebate and a $100 rebate. A dependent will get an additional $100, up to three times.

The earliest tax refund was also issued in September last year, but because it took several months to process, those who submitted later had to wait until the beginning of this year to receive the refund.

Massachusetts

Taxpayers in the state are eligible for a refund of about 14% of their state taxes. People who filed their 2021 returns by Oct. 17 of last year should receive their refunds in December. Taxpayers who filed their taxes on or before Sept. 15, 2023, should receive their payments a month after filing.

Colorado

Taxpayers who applied for an extension to file their 2021 tax returns (which were due on October 17) should receive a refund of up to $750 by January 31 of this year . Not only that, the state also has some subsidies for property taxes/rent/heating costs.

These will be huge driving forces for American consumption. However, for sellers, the joy of booming orders is short-lived and cannot offset the difficult situation of rising costs.

The platform takes away half of the income, and the high costs make sellers feel the pain

A few days ago, the news that "Amazon's commission rate is as high as 50% of sellers' income" immediately caused widespread discussion.

Marketplace Pulse statistics show that 50% of sellers’ revenue will be pocketed by Amazon, and this figure has increased by 10% in 5 years (it was 40% five years ago). The reason for this is that the advertising fees and fulfillment fees that sellers need to pay have become higher.

Generally speaking, Amazon sellers pay a 15% transaction fee (Amazon calls it a referral fee), a 20-35% Amazon service fee (which includes storage and other fees), and an Amazon advertising and promotion fee of up to 15%.

In general, the 15% transaction fee is relatively stable and has remained the same for more than a decade (depending on the category, it can be as low as 8% ), but Amazon fulfillment ( FBA) fees are rising every year, and storage fees have been raised.

Although Amazon does not set advertising prices, as competition becomes more intense, more sellers choose to advertise, and thus advertising becomes more and more expensive. And because most of the screen space with the best conversion effect is allocated to advertising , sellers who want their products to be discovered by consumers have to advertise.

Costs have been rising, profits have been squeezed, and sellers are feeling the pain, complaining: "Amazon will kill us sooner or later." In fact, as early as after the account ban wave, sellers realized that they could not rely solely on Amazon for cross-border sales, and it was important to spread risks across multiple platforms. The rising operating costs of Amazon have accelerated their pace of expanding to other platforms.

The CEO of Amazon agency Supply Kick said that in the past six months, 40% of Amazon sellers it has contacted have expressed interest in selling on other platforms such as eBay, Wayfair, Home Depot and Walmart.

The 2022 "Amazon Seller Status Annual Report" released by Jungle Scout also showed similar results. The report pointed out that 52% of Amazon sellers plan to develop new e-commerce sales platforms in 2023, among which the top three they intend to deploy are eBay (24%), Shopify (16%), and Walmart (15%).

Multiple platforms, multiple retreats, seeking multi-platform development is a development strategy for sellers. But Amazon is still their main "base" for sellers. Data shows that as many as 85% of sellers plan to continue selling products on Amazon in 2023. They generally believe that Amazon is still a viable way to make money online in the future.

Last year, this proportion was 63%, proving that although sellers have some complaints and are seeking multi-platform development, they still recognize Amazon's "status" in the cross-border e-commerce market.

As a cross-border e-commerce seller, the essence is to "sell goods". Therefore, while sellers are looking for opportunities on other platforms, more energy should be placed on products. After all, it is only the product itself that can provide sellers with new opportunities.

Look for opportunities in "unpopular" categories, these products are also very profitable

As a cross-border e-commerce seller, what you should do is to discover consumer demand and then develop products that meet market demand. This demand can be seen from the sales situation of the platform.

On Amazon, the top 10 categories most popular among sellers are: Home & Kitchen (35%), Beauty & Personal Auto (26%), Shoes & Jewelry (20%), Toys & Games ( 18% ) , Health, Home & Baby Care ( 17%), Baby Products (16%), Electronics (16%), Sports & Outdoor Products (16%), Pet Products (13%), and Office Supplies (13%).

The more popular a product is, the bigger the market is, but at the same time, the more intense the competition is. If a seller without strength blindly enters these saturated markets, it will be difficult to rush to the front page among the many experts. Sellers selling in these popular categories often face higher advertising costs and higher CPCs, and price competition is also extremely fierce.

If sellers do not have the strength to fight head-on, they can look for opportunities in some less popular categories. It is understood that the categories with relatively few sellers are electrical appliances ( 12% ), garden and outdoor ( 11% ), mobile phones and accessories ( 10% ), applications and games ( 8% ), automobiles ( 8 %), handmade products ( 6% ), computers ( 5% ), industrial and scientific ( 5% ), collectibles and fine arts ( 5 %), CDs and vinyl records ( 4% ), luggage and travel goods ( 4% ), video games ( 4 %), and musical instruments ( 2 %).

Even though there are relatively few sellers in these categories, they can still be profitable, as the profitability of a product does not depend on the popularity of the category . For example, Home & Kitchen is the top category among sellers, but there are many subcategories that are unprofitable due to increased competition, price wars, direct competition from Amazon, and increased PPC costs .

Of course, every category has profitable subcategories, and you can go into a subcategory like “kitchen gadgets,” but you probably won’t make as much profit from it as you would in the automotive category .

JungleScout’s survey shows that less popular categories can be more profitable than popular ones . For example, in the Home & Kitchen category, 2% of sellers have a net profit of 51%-100% , while in the Arts, Crafts, & Sewing category, 10% of sellers have a net profit of 51%-100% .

According to JungleScout, the most profitable categories ( 21% net profit and above) are: Beauty and Personal Care ( 30% of sellers ), Home and Kitchen ( 30% of sellers ), Crafts and Sewing ( 23% of sellers ), Electronics ( 22% of sellers ), Sports and Outdoor Products ( 21% of sellers ), Health, Home and Baby Care ( 21% of sellers ), Toys and Games ( 20% of sellers ), Grocery and Gourmet Food ( 19% of sellers ), Mobile Phones and Accessories ( 17% of sellers )

Home appliances ( 17% of sellers ), office products ( 17% of sellers ), baby ( 16% of sellers ), pet supplies ( 16% of sellers ), books ( 15% of sellers ), tools and home improvement ( 15% of sellers ), auto accessories ( 13% of sellers ), garden and outdoors ( 13% of sellers ), handmade items ( 11% of sellers ), collectibles and art ( 10% of sellers ).