Amazon's top seller in the US can't hold on any longer! It's laying off employees and liquidating

Under the influence of inflation and weak consumption, even the largest seller on Amazon's US site can no longer hold on. Slightly different from other companies that lay off employees and clear inventory to maintain business development, the parent company of this seller said it will close related businesses after layoffs and liquidation.

Repeatedly ranked first among Amazon's third-party sellers in the United States, it is now laying off employees and liquidating

Recently, it was revealed that Packable, the parent company of Pharmapacks, the largest third-party seller on Amazon's US site, is undergoing layoffs and liquidation, sparking heated discussions.

According to foreign media reports, Packable has issued a relevant notice to its employees on Monday . The notice stated that the company will lay off 20% of its employees, and the remaining more than 370 employees will gradually withdraw from the company.

In addition, the notice also revealed that the layoffs and liquidation were mainly due to the failure to obtain new internal and external financing , which made it difficult for Packable to make profits in the future and had to stop operations. Last year's supply chain impact also made it difficult for its inventory to continue . In short, the product supply was insufficient and the funds were insufficient. The simultaneous occurrence of the two crises became the last straw that broke the camel's back for the company.

(Picture from Pharmapacks official website)

This 12-year-old company first came into the public eye because of its medical supplies, and its sales exceeded US$270 million in 2018. From 2018 to 2020, it received financing of US$32.5 million, US$150 million, and US$40 million respectively.

As the business develops, the company has expanded its sales categories while also moving its sales channels from offline to online, and gradually broadening its market. In addition to pharmaceuticals, its main products now include beauty products, household products, baby products and other categories, and its products are mainly sold in the United States, the United Kingdom and Canada in Europe and the United States.

Public data shows that Pharmapacks has more than 31,000 SKUs on sale, processes an average of 30,000 orders per day, ships approximately 1.8 million orders per month, and cooperates with more than 100 brands.

In terms of sales channels, although its products are sold on Amazon, Walmart, eBay and other platforms, nearly 80% of its revenue comes from Amazon. In February this year, the relevant person in charge of Packageable also revealed that the company's average daily revenue in January this year was nearly 1.6 million US dollars, an increase of about 6% over the same period last year. However, some investors said that its growth has slowed down.

In terms of business strategy, Pharmapacks mainly adopts the model of regular price adjustment, brand leverage, and real-time supply, and has quickly occupied a certain market share.

In the first quarter of this year, the company's seller review growth rate still ranked first on Amazon's US site. Other top sellers include Orva Stores, Zappos, etc. Although the rankings of other sellers will fluctuate, Pharmapacks' leading position has always been stable.

The long-term stable dominant position and strong business development capabilities made the industry very optimistic about its future development. The brands that cooperated with it continued to increase their investment. However, few people would have thought that Packable would announce its "withdrawal" from the industry nearly half a year later.

The impression of the company in the industry is still mostly at the stage of its failed SPAC listing. When the company's pre-listing news came out last year, its market valuation was close to 1.6 billion US dollars. However, due to the company's failed SPAC listing and the supply chain crisis, the company is facing huge operating pressure.

Behind Packable's layoffs and liquidation, we can actually get a glimpse of the market environment pressures currently faced by third-party sellers and platforms in Europe and the United States: high inflation and weak consumption.

Consumption is weak, inflation is high, and many companies are laying off employees and lowering their performance

In addition to Packageable, a number of traditional American retailers are currently or have already laid off employees due to market pressure.

In the first and second quarters of this year, Amazon conducted large-scale layoffs in warehouses and distribution centers, and the company laid off a total of 99,000 people including other positions. Walmart also announced earlier this month that it would lay off about 200 people, and Best Buy also announced layoffs of hundreds of people in the past week.

Compared with last year's account suspension and high freight rates, this year sellers and retailers in the European and American markets are more worried about weak consumption and continued inflation. In the second quarter financial reports released by several major traditional retail companies in the United States this year, the performance of Walmart and Macy's exceeded market expectations, but then they all lowered their full-year performance forecasts.

Walmart lowered its full-year profit forecast from a previous 1% decline to 11% to 13%. Macy's also lowered its full-year profit forecast by about $100 million, and Best Buy also made adjustments, down 11%. Obviously, future uncertainty has become the main threat to the future development of these companies.

As for the reasons for the downward adjustment of full-year performance, the above retailers mentioned one point in the relevant interviews: consumer consumption may continue to "deteriorate" under inflation . Most of them believe that under the influence of high inflation, consumers will shift their consumption focus to daily necessities, and the demand for clothing and consumer electronics may decline.

Data shows that the current inflation rate in the United States and Europe is still high, exceeding the annual target set by the Federal Reserve. The inflation rate in the United Kingdom has hit a 40-year high, breaking 10%, and the inflation rates in other European countries such as Spain and the Netherlands are also over 10%.

Under the high data, the lives of people in Europe and the United States have been greatly affected, and the change in consumer spending is one of the most important manifestations. Although some young European and American consumers do not pay much attention to the continued impact of inflation, in reality, its impact is substantial.

In the first half of this year, the economic development of the US market was not optimistic, and the consumer confidence index continued to decline under high inflation. In July, the US consumer confidence index fell to 95.7, a new low. With the changes in consumer consumption habits and spending, sellers and platforms have become a "mirror" that directly reflects this situation.

According to relevant surveys, more than 70% of American consumers are shopping less, and more than half of them have reduced their purchases. In terms of categories, sales of groceries, shoes and clothing have declined. The above categories are basically consistent with the inventory backlog of the above retailers.

In order to reduce such inventory, these retailers are taking price cuts to sell off the remaining inventory within a few months to ensure normal operation in the second half of the year. Walmart and Target recently announced that they would cancel billions of dollars of orders to clear the remaining inventory.

It can be seen that consumers and sellers are preparing for the low market pressure. Layoffs and price cuts have become common practices of many companies, and it is not ruled out that more retailers will take the same measures in the future.

Although the European and American markets are in a low-pressure state and consumption has declined, the consumption willingness of people in Europe and the United States is still higher than at the beginning of the epidemic. In addition, the existence of peak seasons in the third and fourth quarters may become a key point for sellers and platforms to break the ice.

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