60,000 accounts were blocked in just one month, and the cross-border way to make quick money was under siege!

After the Amazon ban, sellers have taken independent websites as a safe haven and started to make plans. But what many people don’t know is that independent websites are also divided into multiple models, among which the once popular website cluster model has gradually faded out of people’s sight in recent years. Not long ago, the third-party payment platform PayPal froze and deducted the funds in the accounts of independent website sellers, which made industry insiders deeply feel that the website cluster model is heading towards extinction.

In fact, it is not just PayPal. In recent years, whether it is the website building tool Shopify, or social media Facebook and Google, they have been "encircling and suppressing" the site clusters, making it difficult for sellers to survive.

Why have the sellers in the station group come to this? Where should they go in the future?

Obviously, if they want to stay at the table, the only way before them is transformation and upgrading, but this road is not easy. First of all, traffic is still the biggest obstacle. Now the traffic dividends of Facebook and Google have faded, and new traffic has not been tested yet. The cost of traffic is high. On the other hand, this is a long road, and it is difficult to see obvious results in the short term. It is obviously not the same as the previous time when they could make money quickly.

Financial regulatory measures were taken, and 60,000 seller accounts were blocked

What is a "site cluster"? This model may seem sophisticated, but its gameplay is actually very simple. It mainly uses website building tools to build multiple websites. Each website only sells one vertical product. Through Google Ads, Facebook ads and EDM, the product is tested. Each product uses a rated budget to test the advertising effectiveness data. If the data is good and it is believed that the product has the potential to become a hit, the budget will be increased to launch it.

This kind of game originated in Putian City, Fujian Province. In the early years, many sellers of counterfeit brands there made a lot of money by relying on the traffic dividend of Google, and some even achieved financial freedom. Due to the high efficiency of product testing, fast volume growth, low cost and high profit, many latecomers also made a lot of money, and even ran a big seller like Aopeng.

"The essence of a website cluster is actually to play with traffic." Feng Yuan, an executive at AsiaBill, a well-known cross-border payment company, said bluntly : "During the traffic dividend period, those who know how to play with traffic will definitely make money, because they can do it simply and crudely."

However, since the second half of last year, traffic depletion has become increasingly evident. There are three reasons for this phenomenon:

1. After the account ban, many Amazon sellers switched to independent websites. With more sellers, each person gets less traffic.

Second, the domestic economic situation is grim and internal competition is serious. Some domestic companies, including DTC brands, have begun to rely on their supply chain advantages to go overseas;

3. The conversion efficiency of existing channels is decreasing, and new traffic channels have not yet been tested.

It is not easy to make money, so sellers start thinking about how to save money. A large number of people start to produce products that are not what they claim to be, lowering the quality of the products, and then making counterfeit goods, and finally simply not shipping the products.

"This situation was just a competition of what was worse. Many foreign consumers complained during that period," said Feng Yuan.

You know, there is an obvious problem with the site group model: customer service is not up to par, or even non-existent. When consumers encounter problems and cannot find the seller, they can only complain to the site building service provider, advertising service provider, and payment service provider. This has caused these service providers to block sites, advertising accounts, and freeze funds.

Among them, the freezing of operating funds by payment service providers is regarded as strong supervision. This method directly strangles the lifeline of site group sellers and is also known as the last gatekeeper. The PayPal account fund freezing incident that was exposed not long ago adopted this financial supervision method.

Feng Yuan revealed that from March to June, PayPal carried out three rounds of account blocking operations. The operations in March and April were mainly aimed at large accounts with more serious characteristics. The second round in May was aimed at small and medium-sized accounts. This time, the scope of impact was wide, with 60,000 small sellers' accounts blocked. Another batch of accounts were blocked in June, also with a considerable number.

"I think the latter ones were blocked through algorithms. For example, those with abnormal data such as rejection rate and dispute rate were directly scanned by the machine. However, because they are operated by machines, the false positive rate in the latter two waves will be higher than the former." Feng Yuan told Yien.com.

In this storm, the big seller Tongtuo Technology stood at the forefront. Recently, its parent company Huading Co., Ltd. disclosed that Tongtuo Technology had 49 Paypal accounts deducted, with a total amount of 69.0252 million yuan. This loss also directly affected Huading Co., Ltd.'s performance. The semi-annual performance forecast it released recently showed that the company's cross-border e-commerce sector was still in a loss-making state. This was mainly due to the significant year-on-year decrease in cross-border e-commerce revenue, and the large asset impairment provision was made due to the PayPal incident.

Feng Yuan recalled that period and mentioned that their risk control was very strict, and most of the time was spent verifying what customers were doing. " Even if it was a customer we had worked with for many years, once we found that his customer complaint rate was increasing, we would restrict or investigate him, and even go to the warehouse to check whether there was any stock. "

Yien.com has observed that even though it is already late July, PayPal has not stopped blocking accounts, so much so that many independent website sellers lamented that they have become numb to the blocking. Some industry insiders believe that because the sellers who rushed to the front have gone too far, PayPal no longer trusts Chinese IPs, and its risk control will only continue to tighten in the future.

Multiple parties are "encircling" each other, and the soil for the development of station clusters is gradually lost

PayPal's sudden crackdown on site group sellers is a concentrated outbreak of years of accumulation. As we all know, the site group model has a bad reputation in recent years. When people mention site groups, they think of "goods not matching the description", "fraud", "non-delivery", "fakes" and other bad words.

Of course, the site group model is not a sin. From a business perspective, it is just a way for Chinese cross-border e-commerce sellers to provide high-quality and low-priced domestic products to overseas consumers through independent websites. The reason why it is criticized is that some unruly sellers use this asset-light, low-threshold model to conduct fraudulent operations, without considering quality issues, not providing after-sales service, and even not shipping.

Independent sites are different from third-party platforms. They do not have a specific regulatory platform, so these improper operations are becoming more and more rampant, and overseas consumers are complaining.

Therefore, in addition to PayPal, the website building platform Shopify has also cleaned up site group sellers in recent years. The wave of bans in 2020 was particularly wide-ranging. At that time, more than 200 accounts of an independent site seller in Guangdong were blocked.

Not only that, the traffic of site group sellers has also been blocked. The two major traffic channels for independent site sellers are Facebook and Google. However, last year Apple updated its privacy policy, which stipulates that applications must seek user authorization before tracking online data, which directly affects the effectiveness of Facebook advertising, that is, the accuracy has decreased. In February of this year, Google announced that it will update its privacy sandbox, gradually cancel support for third-party cookies in 2023, and limit the default ability of applications to obtain user privacy, which will result in the same result as Apple's privacy policy.

Facebook itself has also banned a large number of personal accounts, and its advertising and account opening policies are now being tightened.

Obviously, under the siege of multiple parties, the soil for the development of the station group model is rapidly eroding. In this case, finding new traffic channels is a top priority. Many industry insiders believe that the social star TikTok will take over from Facebook and become the next choice for station group sellers. However, TikTok's traffic is not easy to tap.

Feng Yuan said that TikTok is still in the growth process, and the top sellers have not yet tested a healthy input-output ratio.

He continued, saying that some success has been achieved in Southeast Asia, which has a similar culture to ours, but there is still no obvious effect in Europe and the United States. Because our culture is different, the calculation logic is also different, and the portrait cannot be accurate.

For another independent website seller, Jikeyin, the above-mentioned "encirclement" action has obviously had a lot of impact on it. Its parent company Jihong shares' 2021 financial report shows that net profit plummeted by 53.56% year-on-year, which must be related to it, because in the case of a sharp drop in advertising conversion rate, in order to increase the number of orders, it can only increase investment, so the cost will inevitably rise sharply. However, compared with other sellers, Jikeyin, whose business is mainly deployed in Southeast Asia, is lucky because it can still use TikTok to publish advertisements and do precision marketing.

Feng Yuan revealed: "Jikeyin has made a name for itself in TikTok's traffic."

Yien.com observed that Jikeyin is currently recruiting for "TikTok placement" on a certain recruitment website. The job responsibilities show that this position is responsible for the placement and optimization of advertisements on the advertising platform. It is necessary to understand the characteristics and target market of the customer's promoted products, analyze and explore potential consumers, and conduct data analysis, and identify and solve problems from them, thereby optimizing advertising effects.

At the same time, Jikeyin is also trying other methods besides advertising, such as live streaming sales, which is what sellers are paying attention to now. On the above-mentioned recruitment website, Jikeyin also posted recruitment information for "TikTok Thai anchor".

However, in European and American countries that have lost their cultural advantages, the results of sellers’ advertising on TikTok may not be satisfactory. A senior person in overseas marketing said that although TikTok advertising has been growing, it still cannot make up for the loss of Facebook. In addition, some sellers also said that the current advertising conversion rate of TikTok is not very ideal. At this stage, it is more suitable for brand promotion rather than bringing goods.

The number of station groups has been halved, and the horn of transformation has been sounded

Many senior industry insiders interviewed by Ennet believe that the update of Apple's privacy agreement and the ban of PayPal directly cut the number of site groups in half. This data can be indirectly confirmed by the decline in the number of customers of some service providers. For example, Feng Yuan revealed that the number of their site group customers has dropped by 50%, "I think that 30% of the sellers may have disappeared."

Some of the sellers who have not collapsed are also laying off employees to save their lives. One seller said that his three teams have laid off more than 60% of their employees, and if the funds frozen by PayPal cannot be recovered, further layoffs will be required. Another seller also said that before April, his team had 150 people, but after being blocked by PayPal, only 16 people were left.

At present, the top organizations (i.e. website building platforms, traffic platforms, and payment tools) are collectively exerting pressure, and the bonus period of the station group has basically stopped, and the era of wild growth has ended. In addition, from the perspective of gameplay, the station group model has no repurchase and no user sedimentation, which is not a sustainable development model for sellers.

If sellers want to stay at the table, the top priority is to seek transformation.

"The solution to the fundamental problem is not to simply switch to Shopify when your account is severely blocked, and then switch to Shopline when Shopify is severely blocked . " Feng Yuan said: "This is not a traffic jam. If it is blocked here, go to the other side."

Feng Yuan believes that the transformation opportunity for site group sellers lies in vertical sites.

First of all, many sellers in the station group do not have brand genes and cannot switch from sales-driven to value-driven, because the team members who are used to simple and crude methods cannot transform to do research. "Companies with explosive product genes and companies with R&D genes have two completely different ways of playing."

Secondly, vertical sites are easy to differentiate. This type of independent site meets consumers ' demand for "tool attributes". Products with tool attributes have a very high conversion rate in the field of cross-border e-commerce, "because their customer base is often the kind of person who says: I want to buy this type of product, and I don't have too many ideas about which one to buy, and I'm not too picky. I'll buy it as long as it meets the requirements."

"Sellers in the site group can try by category or vertical category in the original site, and add more investment if the effect is obvious. Once successful, the site will stand firm in that vertical field." Feng Yuan believes that there is a chance for this kind of transformation, and the vertical site may even evolve into a brand after two or three years of operation.

At the same time, he emphasized that independent websites must have the ability to perceive customers and be tailored to each customer. It is best to have a group of self-propagating categories. As young people increasingly emphasize personalization, this type of independent website has a greater chance. In the future, Amazon will still have an absolute advantage in standard products, but personalized products may not be available. If independent websites want to win, they must work hard on differentiation.

Big sellers are often very sensitive to market trends. For example, Aopeng, which emerged from the site cluster model, had more than 1,000 independent sites at its peak, but in recent years it has been trying to transition from the extensive site cluster model to the boutique model. Judging from the current transformation results of several major brand websites such as Berrylook, the results are quite good.

Similarweb data shows that Berrylook, an independent website for fashion women's clothing brands, is now ranked 98,509th in the world, 42,738th in the United States, and 1,322nd in the American fashion apparel category. From April to June, the number of visits showed an upward trend, with a total of 1,293,200 visits, of which the United States brought the largest number of visits, accounting for 55.02%, followed by Canada, accounting for 10.59%, and the United Kingdom, accounting for 9.13%.

Behind the popularity of DTC brand independent websites, GMV growth is not obvious

It can be said that the DTC brand independent site is an advanced version of the vertical site. It has certain requirements for product research and development, design, and product property rights. Sellers need to have certain R&D capabilities and brand marketing awareness.

Due to the huge success of SHEIN, the DTC brand independent station track has attracted much attention from capital. In recent years, a large amount of funds have poured in. Cross-border DTC brands including PatPat, Cider, CUPSHE, Lilysilk, Newme, etc. have obtained large amounts of financing, covering sub-sectors such as clothing, furniture, home appliances, and auto parts.

The purpose of the capital rushing in is also very clear, which is to create the next SHEIN.

However, behind the lively appearance, some problems are also reflected. For example, the current overseas DTC Chinese brands have not generated much GMV.

Een.com believes that there are two reasons for the above problems: first, the brand has not yet formed a scale and there are too few sellers; second, Chinese brands have a poor image overseas and are not highly recognized by consumers.

The 2021 "Ipsos China Brand Global Trust Index" report released by Ipsos, a leading global market research company , shows that compared with 2019, although the favorability of developed European and American markets towards Chinese brands has increased in 2021, it is still relatively low overall.

It has been proven that more DTC brands have set up independent overseas sites, which has significantly improved the image of Chinese brands overseas. However, this influence is still very limited.

Expanding a brand overseas is a complex and lengthy process. For example, a lot of effort needs to be put into the product alone, because this is not only about quality issues. Brands going overseas are facing different countries and regions. Consumption habits and customs vary from region to region, so products naturally need to be "adapted to local conditions."

Therefore, it will take time for DTC brands to be widely recognized by overseas consumers. There is a question worth considering for DTC brand sellers, that is, how to make your products and services based on the needs of local consumers, which is often called "localized marketing" to achieve product sales growth and improve brand awareness.

Although localized marketing is only five short words, it includes four aspects at the same time: product localization, content localization, operation localization, and talent localization. It is not easy to do well.

For example, issues that need to be considered in order to achieve product localization include the language, culture, customs and characteristics of the target market. Any link before the product is promoted can be optimized for localization, such as the product language, design packaging, selling points, etc., all of which belong to the scope of product localization.

In summary, before the new traffic is tested, the survival of the site group model will inevitably become increasingly difficult as the traffic cost becomes more and more expensive. Based on the current situation, transformation is an important choice for this type of seller.

However, in this process, the black and gray industries that rely on the site group model will be greatly eliminated under multi-party supervision, especially strong financial supervision. This is a good thing for more sellers who truly go overseas, especially brand sellers.

PayPal

Shopify

Facebook

Station Group Mode