The fourth quarter is a critical period for achieving year-end performance targets, but this year many foreign trade factories have already closed early.
In the first three quarters of this year, sellers' performance was not ideal. Many saw an increase in revenue but no increase in profit, or even losses. Therefore, many people placed their hopes on the fourth quarter. The first shot of the peak season, Halloween shopping, has already started, but sellers did not feel much joy from the peak season's booming orders. Instead, the products have become next year's inventory.
The next wave of peak sales, Black Friday and Cyber Monday, is just around the corner. If Halloween is just a limited carnival season for sellers of decorations and seasonal products, then Black Friday and Cyber Monday will be a carnival for all sellers. Data shows that in 2022, e-commerce sales on Black Friday and Cyber Monday will be close to US$10 billion and US$12 billion, respectively, up 3.9% and 3.8% year-on-year, respectively.
Sellers are also ready for this important promotional festival, but this year's Black Friday and Cyber Monday may not be as popular as sellers expected, because data shows that the number of overseas consumers participating in shopping this year will decline significantly.
In fact, many sellers do not have high hopes for the fourth quarter. Judging from the current feedback, their concerns are not unreasonable, because the market response is too flat. Compared with the news of explosive orders in previous years, this year is too calm. Many people have not even waited for their own "peak season".
Fortunately, the sky-high freight rates that had reached the ceiling last year have fallen sharply this year. The price of a container from Asia to the West Coast of the United States has fallen to US$2,720, a decrease of about 87%, while the freight forwarder's quotation has also fallen by more than 60%.
The number of people planning to shop has dropped sharply, and sellers on Black Friday and Online Shopping Day only hope not to list "0"
Halloween sales have come to an end, but according to sellers’ feedback, as the beginning of a series of “shopping promotion festivals” in Q4, this peak season did not start well. Most sellers’ sales were mediocre, and some sellers even slashed prices but still could not sell. Sellers who had too much stock ended up selling at a discount to clear out their stock.
Seeing this situation, many people are worried about the upcoming Black Friday and Cyber Monday. According to some current survey data, the number of people participating in shopping in the United States has declined.
In September, shopping rewards app Shopkick surveyed more than 14,400 U.S. consumers, and the results showed that 43% of respondents said they planned to shop on Black Friday this year, a decrease of 18% year-on-year, and 27% planned to shop on Cyber Monday, a decrease of 40% year-on-year.
More than half of Americans do not shop on Black Friday, and nearly 80% of them even ignore Cyber Monday. If Black Friday is mainly a carnival for offline merchants, then Cyber Monday is the absolute protagonist for online sellers. However, judging from the above survey data, this year's Black Friday and Cyber Monday will be much less exciting than last year.
However, like Halloween, some current forecasts remain optimistic about the GMV of these two promotional festivals.
According to eMarketer data, in 2022, e-commerce sales on Black Friday and Cyber Monday will be close to US$10 billion and US$12 billion, respectively, up 3.9% and 3.8% year-on-year, making them the largest online consumption days of the 2022 holiday season.
Predictions like “this year’s sales will be higher than last year’s” have already appeared once on Halloween, and sellers have experienced the reality of the situation.
At the same time, Amazon's big autumn promotion this year also overdrew its Black Friday and Cyber Monday sales in advance.
According to a Blue Yonder survey, 53% of American consumers purchased holiday products on early access days . On the other hand, 40% of consumers will reduce their shopping on Black Friday due to early purchases. Among them, 7% said they would reduce their shopping significantly and 23% said they would reduce their shopping slightly.
Based on this, many sellers are not optimistic about this year's Black Friday and Cyber Monday. Compared with previous years when people rushed to set various "big" and "small" goals, many sellers are much more conservative this year.
Some sellers said that in this year's market, plans can't keep up with the changes, as long as there is no fork, it will be fine. Some operators even said: There are many unfavorable factors now, just don't have "0" orders. Some sellers even said frankly that the profit of Black Friday and Net Monday is too low, and their focus is not on this.
In addition, the rising US dollar exchange rate will also reduce orders to a certain extent. Intuitively, the rising exchange rate will indeed increase the seller's profits, but it is not so simple when you look closely. The rising exchange rate proves that inflation still exists. Under inflation, consumer purchasing power is weakened, and the seller's order volume will naturally decline.
Without orders as a basis, the appreciation of exchange rates is of little significance, not to mention that the profits gained from the appreciation of exchange rates can easily be "eaten up" by various costs.
On the evening of October 24, the offshore RMB fell below the 7.3 mark against the U.S. dollar. Earlier, there were reports that the United States would raise interest rates by 75 basis points before the end of the year. Under the expectation of interest rate hikes, the U.S. dollar exchange rate is likely to continue to rise. In this case, sales on several holidays including Black Friday and Cyber Monday are likely to be affected.
Black Friday is considered a barometer of Christmas sales performance in the retail industry every year. If its sales performance is not ideal, it is easy to imagine what the peak season sales will be like this year. Now some sellers have already "lying flat".
The peak season is calm, and some bosses have completely given up.
Recently, an operator expressed helplessly that his boss has completely entered a state of giving up. As a product developer, he does not develop new products, is indifferent to the pie in the sky drawn by employees, and has been enjoying the benefits of old products. Employees are forced to follow suit and have become "Amazon civil servants."
Now that the peak season has arrived, all sellers are working very hard to prepare for the season, whether it is preparing stocks or formulating traffic strategies ... all kinds of work are going on non-stop. It is rare to see a seller who "plays rotten" like this one.
However, it must be said that what he did was a good coping strategy, because this year's peak season was indeed too dull. It is very likely that after all the trouble, he did not make any money, but instead stepped into a pit, which was not worth the loss.
Although Halloween sales are coming to an end, many sellers say they are not feeling the spirit of the peak season.
Now the seller has registered for the activity, paid the storage fee, and prepared the goods, just waiting for the "peak season". However, the only feedback to the seller is "quiet".
"Where is the peak season?" "When is the peak season?" ... "Waiting for the peak season" has become a standard action for many sellers.
One seller joked : "I ask myself every day, when will the peak season come?" Sellers whose orders not only did not increase, but declined were even more helpless: "The peak season almost forgot about me."
What is even more frustrating is that the orders are not exploding, but the advertising fees and storage fees during the peak season are exploding. Under the pressure of "involution", sellers dare not raise prices. The goal I set for myself every day is not to lose money.
Some sellers said that big sales promotions are often a carnival for big sellers, and small sellers can only get a share of the profits, so it is important to maintain profits. The purpose of doing business is to make money, and profits cannot be sacrificed for the sake of running events.
It’s not that there are no sellers who are flooded with orders, but compared to the exponential growth in the past, this year’s growth seems much more “restrained.” A seller said: “Now the increase of 20 to 30 percent is already very exciting.”
Moreover, as we all know, offline retailers such as Walmart and Target have serious inventory backlogs, and clearing inventory in the second half of the year is still their main theme, and the opportunity to release inventory at the end of the year will certainly not be given up.
Faced with overseas consumers who are accustomed to offline shopping and sellers’ online prices do not have much advantage, it is difficult to compete with these retailers.
What’s more, the online business is full of pitfalls. A seller was mad a few days ago, saying that his account had been steadily receiving orders, and there was an upward trend. However, when he finally made it to the peak season, his account was blocked in the second review because he opened a European account.
Therefore, this year's peak season is not only "late", but also very likely to disappoint many sellers who bet on Q4. However, through communication with sellers, it is found that many people do not seem to have much hope for this year's peak season. One seller said that he was not optimistic about Q4 and now he is just taking it easy. In addition, due to the tightening of overseas consumer spending power, the shipment volume of Christmas products this year is also half of that of previous years.
In fact, for many sellers, the word "recession" has been running through the beginning of the year to the end of the year. The decline in traffic in many product categories can be clearly felt in the industry. For example, the monthly sales of some sellers' main categories of products were in the five digits at the beginning of the year, but in October, they were only in the three digits, which was a direct drop in sales.
Due to the sharp decline in performance, some sellers have already used the snack bar downstairs of the company as the venue for the year-end dinner. Looking back at last year's luxurious dinner, generous year-end bonus, and extra-long paid annual leave, the contrast is quite strong.
Now, both sellers and operators have clearly felt the pressure and chill from the market. Sellers are struggling on the edge of "survival", and workers who are worried about losing their jobs are also worried about how to keep their bosses.
The cross-border e-commerce industry is a whole. Like a domino effect, when sellers’ performance is sluggish, the logistics companies that are interdependent with them will also have a hard time.
Container freight rates plummeted by nearly 90%, and shipping companies are also joining the ranks of loss-making
According to the Fightros Baltic Index, the world's authoritative index for measuring international shipping conditions, the average rate for freight containers from Asia to the West Coast of the United States was US$20,586 in mid-September last year. In contrast, it was only US$2,720 last Friday ( October 21).
In other words, in just one year, it plummeted by about 87%.
The direct reason for the rapid decline in container rates is that consumers are not buying things. On the one hand, foreigners stockpiled too many products last year, resulting in a decline in demand for new products this year, and on the other hand, inflation has caused prices to soar.
A supply chain management platform observed that many consumers said that even if the COVID-19 pandemic is over, they do not plan to buy anything again because they have already bought it before and would rather use the money to go on vacation.
Even for consumers who are not affected by rising prices, they are more willing to spend their money on experiences and entertainment.
The sharp drop in consumption has caused the logistics market to quickly change from “hard to get a box” to “hard to get goods”.
Some freight forwarders said that the cargo volume has become even smaller since October. In order to obtain orders, the quotations have been falling all the way. Yesterday, the quotations for sea freight in the West Coast of the United States were: Matson’s time-limited Dhaka delivery CLX 11/kg, Matson’s time-limited sea delivery CLX 13/kg, Yantian’s sea delivery 4/kg, and Zim’s time-limited sea delivery 9.4/kg.
In the same period last year, Matson's quoted price was around 30, a drop of about 63%.
In this regard, Lu Yang, the person in charge of the operation of the Yunquna platform, also said that judging from the transaction situation on the Yunquna platform, although there are certain differences in different routes, overall, the logistics costs of foreign trade merchants this year (especially some ocean trunk logistics) have decreased by about 50%-75% compared with last year. At the same time, the growth of goods in the entire market has slowed down significantly.
With freight rates falling rapidly, some people have made pessimistic predictions about the performance of shipping companies. Recently, an analyst predicted that Evergreen, Yang Ming and Wan Hai Lines will start to lose money on the US West Coast in the fourth quarter , and will also suffer losses on the US East Coast in the first quarter of next year. It is estimated that Evergreen and Yang Ming will still be profitable throughout the year, but Wan Hai Lines will turn from profit to loss, and its losses will appear as early as the second quarter.
Media reports pointed out that Evergreen, Yang Ming and Wan Hai will see their profits drop by more than 90% next year.
I believe many people still remember the 40 times monthly salary year-end bonus that Evergreen Shipping gave to its employees last year . As freight rates soared, shipping companies became the big winners last year with outstanding performance. Compared with the joyful atmosphere of "sharing money" last year, the above predictions are a big change.
Why will shipping companies' profits plummet or even suffer losses next year? Because the current freight rates have not bottomed out.
HSBC predicts that if spot freight rates fall by 7.5% per week, freight rates may reach 2019 levels by the end of this year. It also predicts that the Shanghai Containerized Freight Index (SCFI) will bottom out in the middle of next year, while industry profitability will bottom out in the second half of next year.
Trade consulting firm Hackett Associates made a similar forecast that by January next year, spot prices from Asia to the West Coast of the United States will fall to $1,500 per 40-foot container, returning to prices familiar to the industry. Now facing the weak market environment, some shipping companies have begun to reduce capacity in order to reduce losses. Not long ago, Maersk issued an announcement stating that it expects global demand to continue to decline, so it will reduce capacity on the Asia-Europe route.
The bleak economic outlook has suppressed shoppers' spending desire
Countries around the world are now plagued by inflation. Not long ago, Amazon's former head Bezos even warned that the US economy might fall into recession.
Earlier, Goldman Sachs CEO David Solomon said in an interview with foreign media that as the economy copes with continued high inflation and the Federal Reserve attempts to lower prices through a series of aggressive interest rate hikes, the US economy is likely to fall into recession, reminding investors to understand the risks and be prepared accordingly.
Bezos responded on Twitter: "Yes, the possibility of this economic situation tells us that we must seal the hatches before the storm hits."
The bleak economic outlook is suppressing consumers' shopping desire, and there is no doubt that this year's peak season will continue to be affected by this economic situation.
A survey report released by the Italian Federation of Small and Medium Enterprises recently showed that with the increase in inflation and the surge in energy prices, nearly 70% of Italians plan to reduce their shopping expenses before the end of the year. The data showed that 68% of Italians plan to reduce consumption from now until the end of the year, 39% plan to reduce "excessive consumption", and 29% plan to cut all expenses. 19% of people think that they can keep their personal budget unchanged, and only 5% said they will increase consumption.
This is just a microcosm. Similar survey reports from various countries have become common in recent times.
At present, the existence of inflation is an objective fact and is not subject to the will of sellers. Although inflation has caused buyers' spending power to drop sharply and their consumption habits have changed, it does not mean that they will not buy at all. It is just that their new consumption needs and habits need to be explored by sellers.
The widening gap between high- and low-income earners will continue to impact the holiday shopping season, according to a new analysis from JLL.
Specifically, lower-income shoppers, those making less than $50,000, are more likely to cut their holiday budgets from last year and start shopping between Halloween and Thanksgiving. They are also likely to look for discounts, buy less expensive gifts, and shop in stores, especially at big-box stores.
Conversely, affluent shoppers, those making more than $150,000 a year, will spend more than average, start shopping before Halloween and are more likely to buy online and pick up their items in-store.
Inflation will have a more profound impact on holiday shopping patterns among lower-income consumers, according to JLL research: 49.7% of consumers with incomes below $50,000 plan to make significant budget cuts, while only about 24% of those with incomes below $150,000 will do so.
But in the long run, now is a good opportunity for sellers to build their own brand loyalty.
Deloitte’s annual Canadian Holiday Retail Outlook shows three quarters ( 76%) expect prices to be higher this year, while supply chain challenges are prompting consumers to look for alternatives, with 61% saying they would try a new brand if a product they want is out of stock.
This presents an opportunity for sellers to engage with consumers with the utmost transparency and consideration. By catering to consumers’ short-term concerns and desire to purchase goods that reflect their values, brands and sellers can build a foundation of trust that will benefit them in the long term as the economy normalizes.
The economic situation may get worse before it gets better, which is bleak news for sellers who rely on a fourth-quarter sales surge to meet their sales targets. To grab a bigger piece of the shrinking cookie, sellers still need to have a detailed plan for this peak season. Black Friday Cyber Monday Christmas |
<<: TikTok UK Store launches pet products category
Recently, Walmart stated in an email to sellers t...
The secondary review is a new review mechanism la...
Since the outbreak of the epidemic, in order to a...
Attracted by low costs and high profits, many sel...
Outdoor Voices is an American sportswear brand fou...
TikTok , the popular global short video platform ...
Logisticsbaba.com (5688.cn) is a comprehensive int...
Wish's confirmed delivery policy is a logisti...
The new plugin is called Multimarket.pro , and wi...
Recently, XTransfer, a one-stop cross-border fina...
Infringement is a taboo for Amazon sellers. If th...
Americanas.com is a well-known e-commerce website ...
Elevate Brands, a New York and Austin-based start...
As soon as it was past midnight last night, I bel...
Amazon Europe launches new listing tool To help s...