In the second half of the internal competition, what are the characteristics of these companies that stand out?

Everyone knows that the cross-border e-commerce industry is currently experiencing an unprecedented difficult period. The number of sellers' orders has dropped sharply, old products are struggling to get orders, and new products are not being promoted. The survival of logistics service providers, who are most dependent on sellers, is also worrying overall.

In this situation, both sellers and service providers are facing an increasingly fierce competitive landscape, which is what people call "involution."

The cross-border e-commerce industry has entered a reshuffle period. As we have seen, after a period of struggle, many sellers and service providers have been cleaned out. Those who remain at the table and can live comfortably all have their own core competitiveness. This is what is often said, when the tide recedes, you will know who is swimming naked.

Of course, these core competitiveness did not appear out of thin air, but are the result of long-term layout planning. Recently, three companies interviewed by Ennet are like this. They are Li Chunhui, chairman of Shenzhen Ouda Home Technology Co., Ltd., a billion-level seller, and Sky, a Shenzhen home furnishing e-commerce seller, as well as a person in the industry who manages a logistics company with a value of tens of billions.

What they have in common is that they work hard on their products, have a long-term vision, and are not blinded by the industry's short-term dividends. As for the current chaos, they are not only not frustrated, but feel more motivated than before, and are attacking against the trend.

During the period of rapid growth in the industry, everyone's performance is growing rapidly, and only at this time can the value of such enterprises be truly reflected. Not only that, after this round of cycle, I believe that more market share will be in the hands of such enterprises.

As the reshuffle is underway, pessimism looms over the industry

Since the beginning of this year, a series of factors such as inflation, the Russia-Ukraine conflict, and the return of physical stores to grab market share have halted the rapid development of cross-border e-commerce. As the dividends gradually fade, the industry has also entered a period of reshuffle.

The cross-border e-commerce industry, which has been moving forward rapidly, has now slowed down, and this state of the industry is reflected on the platform, seller side, and service side.

From the platform perspective, unicorn Amazon suffered a huge loss of $3.8 billion in the first quarter of this year, which was its first quarterly loss since 2015, and also saw its lowest growth rate since 2001. In addition, Shopee closed its sites in India, France, and Spain, and Wish also withdrew from 79 markets. In addition, eBay's active buyers fell by 13% year-on-year in the first quarter.

The same is true for sellers. In the first quarter, many big sellers saw an increase in revenue but not in profits, and some even saw both revenue and profits decline, or even losses. According to a visit by Ennet, sellers' order volumes generally fell by 20% to 30% year-on-year. Li Chunhui, chairman of Ouda Home Furnishing, predicted that 20% to 30% of small and medium-sized sellers will not be able to hold on and will be eliminated this year.

The specific manifestation of the service side is that it is difficult to obtain business. For example, among the enterprise logistics service providers that sellers most often contact, many freight forwarders complained this year: "After returning from the Spring Festival, there was suddenly no stock in the market." The business volume of many logistics companies has directly dropped by 50% to 60%. In this case, it is not uncommon for freight forwarders to be fired for failing to meet the company's performance requirements.

Some service companies are also seeing their team size shrink rapidly due to shrinking business. "A review company that relies on Amazon had 30 people last year, but this year it has shrunk to 5," Li Chunhui told Ennet.

Under this situation, some companies were directly purged out. Some people have observed that in Shenzhen Bantian International Center, where cross-border e-commerce companies are concentrated, many training, logistics and other service providers that had offices there have closed down, and the vacancy rate of office buildings is very high.

In addition to those who ran away, the rest simply lay flat. One seller said helplessly that he had no money to develop new products. According to the current market situation, traffic has dropped rapidly. Even if new products are launched, it is very likely that they will not be promoted. It is better not to waste the effort, just rely on the old capital and place orders.

This is like a butterfly effect. If one link is not good, other links will also have problems. The industry is shrouded in pessimism.

Regardless of whether they are sellers or service companies, those who are still at the table and living relatively comfortably today all have one thing in common: they make their own products down-to-earth, have a long-term vision, and are not dazzled by the short-term dividends of the industry.

Those who were not purged did the same thing

Een.com interviewed Ouda Home Furnishing Chairman Li Chunhui, Shenzhen home furnishing e-commerce seller Sky, and the person in charge of a billion-level logistics company in the industry. Unlike many sellers who are in a state of collapse, they are very calm in the face of the current difficulties in the industry, and even feel that the current industry reshuffle has made them more motivated than before. At the same time, they are ready to attack, for example, some have expanded their team size against the trend .

The confidence that supports their mentality and actions all comes from their early planning and layout. It can be said that they are all long-termists. They do the right thing and persist in doing so. They identify a path and move forward step by step, without being confused by the flowers at the crossroads.

"Be able to endure loneliness and resist temptation." Sky's words well explain their mental journey.

Li Chunhui: 5 years ago, we transformed from selling goods to making indoor lighting

Li Chunhui has been in the industry for 13 years and is considered a senior cross-border e-commerce seller. Last year, his company's team of 50 people generated more than 200 million yuan in revenue. This year, when many sellers are laying off employees and shrinking their scale, he has bucked the trend and expanded his team to 70 people.

Li Chunhui believes that if an enterprise wants to survive for a long time, it must have its own core competitiveness or comprehensive competitiveness, "because core capabilities alone are not enough, your comprehensive system must be strong."

Before 2017, Li Chunhui thought that his core competitiveness was the speed of distribution and market expansion. However, when he found that the funds and resources he invested were not equal to the returns he obtained, and that the investment could not be effectively accumulated, he began to think about whether there was a more stable way of operating.

"At that time, I was also thinking, should we make quick money or slow money, and slow money is the so-called difficult but right thing." In the end, Li Chunhui chose the latter and began to transform into indoor lighting.

Of course, he made this decision after some market research. After visiting many suppliers and other companies, he found that he should work in such an industry with high barriers to entry. "High barriers to entry will help screen out many competitors, because sellers without strength or determination will not come in."

At the same time, in this industry, he has also established his core competitiveness as product strength, that is, his products are better than others and more popular with buyers.

In recent years, platforms such as Amazon have gradually moved towards compliance. Especially after the outbreak of Amazon's account blocking wave, it has further verified that Li Chunhui's original decision was not wrong and he has not gone astray over the years.

Li Chunhui believes that the one-stop mechanized production method of relying on early collectors to collect products and then publish them is destined to sell cheap products. Because in the "low-price competition", there will be a situation of "cheap but not good products", which will eventually be fed back to the seller's operation, that is, his own history, and he will not live long or well.

Li Chunhui said that after they chose the path of vertical development, the next step is to consider the issue of branding, which will not only allow the company to develop in a longer-term and more stable manner and provide products with more sales channels, but also enable their products to compete with local brands.

Regarding the power of brands, there is one thing that impressed Li Chunhui: "We sell the same lamp for 29 euros, but a European brand sells it for 128 euros." The shocking price difference of nearly 100 euros is the influence of the brand.

Sky: Three things I did three years ago helped me a lot

While most sellers are shrinking their business or even going flat this year, the team led by Sky is “on the offensive.” At a time when sellers generally give up on launching new products , they are working non-stop to develop new products.

"Looking back, today's results are due to some decisions we made in recent years." Sky said that the three things he did three years ago have now begun to play a positive role.

The first thing is to dig deeper and sink into the home furnishing category. Previously, there were many SKUs, up to tens of thousands, which made it impossible to provide better services to consumers, and the supply chain was not well polished. At that time, we chose to focus on the home furnishing direction and iterate the products in it. On the one hand, we avoided the fiercely competitive 3C, and on the other hand, this category has no off-season and peak season, and the fluctuation is very small throughout the year. Therefore, Sky, who believes that e-commerce companies should try not to fluctuate too much, said that this is a very healthy category.

"We were able to survive this storm because, firstly, our product is a common item, and secondly, although we did not produce explosive high-quality products, our copywriting and other aspects were all operated in accordance with high-quality products, and we did not choose any radical methods during the operation process."

The second thing: we did not produce epidemic prevention materials in the early stage of the outbreak. Sky made this decision for three reasons: first, he could not judge how long the epidemic would last; second, his values ​​could not accept making money from such opportunities; third, he felt that his team was relatively conservative, and if they suddenly did such a short-term high-explosion business, they might not be able to accept the gap in future business management.

"I would be fine if I didn't make epidemic prevention supplies, but if I did, I might be pulled down. After all, many sellers in the circle have failed because of masks," said Sky.

The third thing: accepting localized investment promotion. Two years ago, sky returned to the mainland to set up a cross-border e-commerce company and withdrew the team to Hubei. There are also three reasons why sky made this decision: First, he believes that in the future, labor costs will become a very large expense for cross-border e-commerce companies; second, cross-border e-commerce will gradually become formalized, but with the scale of its own company, if it wants to be formalized, it may be difficult to find policies to cooperate in Shenzhen, but after returning to the local area, these are easy to solve, such as 9710 customs declaration, unequal restoration of foreign exchange data, etc., and you can also enjoy rental subsidies, foreign trade subsidies, overseas warehouse logistics subsidies and other support policies; third, in the case of fierce internal competition, many businesses that cannot be done in Shenzhen can be transferred to the mainland.

This unique advantage will also play an important role in his counter-trend attack.

The helmsman of a billion-dollar logistics company: We have been doing infrastructure construction since 2015

Although there are many logistics companies in the industry, there are only a few with a market value of tens of billions, and the company is currently preparing for listing.

The logistics chain is very long. It is difficult to see the positive effects of setting up one or two nodes alone in the short term, and the investment is huge. Therefore, many logistics companies in the industry are actually freight forwarders rather than real logistics companies that do layout.

However, for those logistics companies that have done a good job in the infrastructure construction of each node, when those nodes ferment, the impact will be immeasurable. The above-mentioned logistics company is a representative of solid and step-by-step infrastructure construction. I believe that the foundation of its 10 billion scale is also these important nodes.

"If you asked me what I was doing four years ago, my answer would be exactly the same as today, which is to do infrastructure construction from beginning to end." The helmsman admitted that in fact, he would go down one path to the end and there would be no difference between what he will do this year and what he will do next year.

In fact, logistics ultimately comes down to efficiency. If the infrastructure of each link is not well built, efficiency cannot be guaranteed. As the helmsman of a billion-dollar logistics company, he sees this very clearly.

Since 2015, the company has started to invest in infrastructure, with the investment amount reaching billions over the years. However, the gap between logistics companies is reflected in whether they have made such investments. The gap between companies that have not made such investments and those that have will become larger and larger.

In the short term, these types of companies will be relatively less affected by the logistics chaos caused by the epidemic. In the long term, logistics will eventually become an oligopolistic business, and the ones that will remain in the market will be those that have truly accumulated capital over the long term.

It is not difficult to find out from observing these three companies and their leaders that they are all long-termists who insist on converting money into investment in core competitiveness and have a long-term vision. Unlike the pessimism held by most people in the industry now, they have greater confidence in future development.

This cycle will be a watershed, and the future will be more promising

The bad economy will undoubtedly accelerate the reshuffle of the industry. The three interviewees mentioned above all said that the more the economy goes down, the faster they will be eliminated in the internal circulation, and the more opportunities will be left for them.

This is not without reason. For example, in the logistics field, leading logistics companies with strong financing capabilities will find it easier to use their abundant funds to acquire high-quality assets in this process.

As for sellers, after this cycle, some bad phenomena in the market will be curbed or eliminated. "I think the development next year or the year after may be better." Li Chunhui said that the whole market is too mixed now.

For the development of the industry itself, it will be a watershed, that is, for the entire industry, this year will be a relatively good year, and it will become increasingly difficult in the future. However, as some bad coins in the market are eliminated, it will be a good thing for some companies with better systems and stronger competitiveness.

Compared with the previous chaotic market, Li Chunhui and Sky said that this clear market environment, which is already vaguely visible, is more promising.

There are three reasons for today's internal circulation situation: first, a large number of products are purchased randomly from the market without in-depth polishing; second, there is no deep understanding of intellectual property rights, and the way of handling them is simple and crude, or not very reasonable and formal; third, intellectual property protection is not done well, and no barriers are built.

After this round of reshuffle, sellers will have a deeper understanding of products, their data analysis capabilities will also be improved, and their operations will become more and more compliant. Now many sellers have evolved from a simple sales business to a mature management model in terms of management, products, supply chain and business strategy.

Compared with local sellers in the United States and other countries, Chinese sellers have very strong financial supply chain capabilities. In addition, relying on Made in China, they have very strong R&D and iteration capabilities.

"In the future, we just need to do more protection on intellectual property rights, do a good job of iteration in the early stage, build a good supply chain, and do the basic things like copywriting. After the product is launched, we can increase advertising efforts slightly and do some marketing, and we will get good results." Sky said.

From recent observations, East China's integrated industry and trade sellers, such as Li Chunhui and Sky, who rely on product strength as their core competitiveness and win with products, are rising rapidly. As domestic brands or manufacturers, they are already very mature in a certain field, and they have strong supply chain capabilities and product strength. They have an absolute advantage in changing the battlefield and fighting in the terminal.

"I think operations are relatively unimportant in all aspects of e-commerce. As long as the product is well made, meets market demand and caters to consumers, the operational capacity can actually be reduced a bit, that is, the sales end can be reduced a bit." Sky told Ennet.

Sellers like Li Chunhui and sky who focus on their products and slowly settle down in a certain category are very likely to achieve impressive success in the future.

During the business dividend period, performance has grown exponentially and everyone is rushing forward. Now that the industry is in a reshuffle period, the pace has slowed down. This is a good time to take some time to think about what kind of business you want to build, a purely trading type or a value-driven one?

Industry reshuffle

Involution