Continuously losing money! Sellers lay off entire teams, behind the "cooling down" of cross-border e-commerce

Sellers must have confidence in cross-border e-commerce!

Since the beginning of this year, the complaints of cross-border e-commerce sellers have been getting louder and louder. Whether it is the complaints about the decline in both order volume and traffic, or the helplessness about the continued decline in profits, the majority of cross-border e-commerce sellers are facing a survival elimination competition.

"From April 2021 to April this year, orders for small and medium-sized sellers in the entire cross-border e-commerce industry fell by a full 30% year-on-year, and active sellers also lost 30%." This set of figures reflects that the current development of cross-border e-commerce is not optimistic.

In fact, as early as 2021 when Amazon started the unprecedented "account blocking wave", the development pattern of cross-border e-commerce has quietly changed. For a time, sellers who mainly relied on brushing orders and other methods to sell goods were "panicked". When the era of wild growth gradually became a thing of the past, they are thinking about how to adapt to intensive cultivation. In this process, negative emotions continued to spread.

In fact, if we put aside these pessimistic sentiments, we will find that cross-border e-commerce is just a normal correction , the market is still a normal market, and the pain of transformation is inevitable!

"The surge in sellers' orders around 2020 was just a product of a special period. If the COVID-19 pandemic had not stimulated sales, the current market conditions would actually be normal." In the view of Baoshijia founder Li Shaozhong and many industry insiders, cross-border e-commerce still has great potential. All sellers need to do is adjust their mindset and operating strategies to adapt to the development of the times.

The current situation of cross-border e-commerce under the shadow of the word "volume": sellers' overall orders have dropped by 30%!

Objectively speaking, cross-border e-commerce is indeed becoming more and more difficult.

First, e-commerce platforms such as Amazon and Wish are losing traffic and active buyers.

Take Amazon as an example. At present, various retail platforms are competing for the market, and physical stores are also continuing to make efforts. Although these are difficult to shake Amazon's status in the arena, it is inevitable that the market will be divided. According to a Coresight Research report, the proportion of consumers who buy groceries on Amazon is on a downward trend. In 2022, 56.9% of Prime members surveyed said that they had turned to other retail platforms to buy groceries online in the past year.

The number of monthly active users and active buyers on the Wish platform is also falling off a cliff. As of the first quarter of 2022, the monthly active users on the Wish platform were only 27 million, only 27% of the same period last year; the number of active buyers was 28 million, only 46% of the same period last year. In addition to Amazon and Wish, several other well-known platforms are also facing problems such as slow growth.

In addition to the platform traffic problem, sellers also widely complain about the decline in orders. Due to the global economic downturn, consumers in Europe and the United States have no money to spend and their purchasing power has declined. Therefore, this year, many sellers have complained about poor orders almost every day.

An industry data shows that from April 2021 to April this year, orders for small and medium-sized sellers in the entire cross-border e-commerce industry fell by a full 30 % year-on-year, and this number is very accurate.

In addition, from April last year to now, the industry 's active sellers have also lost 30% . It is reported that as of April 2021 , before Amazon's large-scale account suspension, the number of mature sellers in the entire cross-border e-commerce industry was 200,000, and the actual situation may be much higher than this number.

Then up to now , the assessment shows that there are only 150,000 active sellers left, and this number of 150,000 includes the number of new sellers in the entire cross-border e-commerce industry this year , so the actual number of lost sellers may be even greater.

After the outbreak of the COVID-19 pandemic , cross-border e-commerce has ushered in a period of rapid development dividends, with one wealth-making myth after another flowing out. In addition, service providers in the entire cross-border ecological service chain have been desperately building momentum, and people from all parties have collectively mobilized, whether they are domestic Taobao and Tmall players or big names outside the e-commerce circle. They have all focused their attention on this track, and a group of novice sellers have flocked to this industry, eager to make huge profits on this track.

Li Shaozhong, the founder of Baoshijia, believes that, in fact, those cross-border sellers who are doing well have all worked their way up from the grassroots level and have basically handled everything personally to achieve what they have today. However, many of the sellers who entered the market with the mentality that they can make money have suffered terrible losses.

"As far as I know, new entrants use a rough approach as soon as they come in. A college classmate of mine who is an accountant came to me to learn about cross-border e-commerce. I tried my best to dissuade him. I think this industry has eliminated too many people now, and now is not a good time to enter the market. However, this college classmate did not listen to my advice. In real life, there are many people like me who cannot resist the temptation of rumors that cross-border e-commerce is an industry for getting rich quickly, so they rush in directly and invest millions of dollars at the beginning. This kind of play has no precipitation, and the final result is just to enter the market with passion and exit at a loss."

Take Shenzhen Bantian International Center, one of the gathering places for small and medium-sized cross-border e-commerce sellers, as an example. Last year, this area was bustling with people, and a nearby restaurant was so popular that there were almost no parking spaces all year round. But now this place is very deserted, with a large number of people in the industry packing up and leaving every day. The entry and exit of these small and medium-sized sellers also reflects, to a certain extent, that the number of people employed in the cross-border e-commerce industry has indeed decreased a lot compared with previous years.

A very obvious change compared to last year is that not only has the enthusiasm of sellers for cross-border e-commerce platforms such as Amazon declined significantly, but outsiders have also lost interest in cross-border e-commerce, which has made life increasingly difficult for Amazon investment managers and others.

In 2021, players' enthusiasm for entering Amazon was unusually high. Around March, news began to spread that the positions of investment managers were full. Because each investment manager has a limited number of admission tickets, a large number of small and medium-sized sellers who were not "favored" complained aggrievedly: the investment managers were too arrogant, and the messages sent out always received no response.

In 2022, the attitude of the investment managers changed drastically, and they began to actively contact the sellers. One seller said that around May, two or three investment managers actually sent him group messages, inviting him to register new stores. Back then, the sellers were begging the investment managers to give them places.

"Amazon is having a particularly hard time recruiting students this year. We have undertaken Amazon's investment promotion work, and as investment promotion managers we are already very satisfied if we can help them recruit a few sellers every month." An insider said that many investment promotion managers now basically cannot survive the probation period because they are unable to recruit sellers.

The cross-border market is cooling down, and sellers are no longer enthusiastic! Cross-border sellers and service providers are closely related. They prosper together and suffer together. At present, cross-border sellers are having a hard time. Sales volume has decreased year-on-year, and the demand for shipments is also inevitably declining. Logistics practitioners can naturally feel the "cold market".

At the beginning of the year, a salesperson who had just entered the cross-border logistics industry said that he had not completed a single order since he entered the industry, and he had been receiving a basic salary of just over 4,000 yuan every month. However, the consumption in Shenzhen is very high, and he could no longer bear it. Not only newcomers, but even senior logistics practitioners who have been in the industry for a long time said that there is a severe shortage of goods this year. When they "scanned" office buildings around the company to develop new customers, many cross-border e-commerce companies were "empty", even though these companies were still doing well in 2021.

"The logistics industry is in a particularly severe situation nowadays. In previous years, the cabin space was fully occupied at this time of year, but this year it is extremely difficult to get any cargo," said a senior freight forwarder. In the past, cross-border sellers would ship goods as soon as they had them, often on Monday or Wednesday at the latest. Now, many customers are waiting for prices to drop on Thursday or Friday before shipping, because many cross-border sellers may realize that it is difficult for freight forwarders to collect goods, so when they fail to receive goods on Thursday or after this date, they have to reduce the price to collect goods, and thus delay shipping until this time.

Sellers will have no orders, their profits will be greatly reduced, and their survival will be threatened. The important self-rescue method that cross-border e-commerce companies have thought of is to reduce the scale of operations, so since this year, news of layoffs has frequently been reported.

"A friend of mine has been working in the field of cross-border e-commerce independent sites for more than ten years . In the past two years, his performance has not improved and he has been losing money. He had no choice but to resign from his company half a year ago." There are many similar examples in the cross-border circle.

It is reported that there is a big man in the industry who is working on both Amazon and independent websites. When the Amazon account blocking wave came last year, almost all of his Amazon accounts were wiped out. At the same time, the progress of the independent website was not smooth. Since the independent website has always been based on the site group model, the disadvantages of this model have begun to emerge and it cannot adapt to the current development status of cross-border e-commerce. Therefore, large -scale reforms have been carried out since this year , and site groups have been cut on a large scale. Now only a few sites are retained on the independent website.

There are also sellers who adhere to the business logic that they have to lose money before they can make money, but this logic is actually unsustainable. In serious cases, it will even drag down all profitable departments, so when the storm comes, they simply lay off the entire independent station department. "To be honest, I will definitely not use our own products. I even look down on our products. And in terms of research and development, many times the company just changes the packaging of the product. In essence, many products are the same." A seller himself dislikes the products he sells. For consumers with many choices, he realizes that his products are not competitive at all.

Is pessimism spreading? In fact, this is just a normal market correction

In summary, it can be found that before the Amazon account ban wave in 2021, the cross-border e-commerce online shopping boom brought about by the epidemic was making this industry flourish. In about a year, cross-border e-commerce "fell from the altar" in people's hearts.

"I have no confidence in the entire cross-border e-commerce industry now!", "This year is the worst year, and the future will be even worse", "Saving life is the most important thing, I don't want to make money, I just want to stay alive"... More than one seller is expressing their concerns about this industry.

However, Li Shaozhong believes that the current decline in both traffic and order volume is actually just the beginning of the cooling down of the "abnormally high fever" cross-border e-commerce industry, which will gradually return to normal. This is a good thing to a certain extent!

If the 2019 coronavirus pandemic had not occurred, the current market conditions would actually be normal.

From 2014 to around 2017, the growth rate of the entire cross-border e-commerce was very fast. After that, everyone has clearly felt the sluggish growth of the market. Until the outbreak of the epidemic, people spent more time at home, which led to a surge in online demand and the bonus period of cross-border e-commerce arrived. However, the so-called bonus was only a short-term imbalance between supply and demand, and the crazy money distribution in the United States also stimulated people's consumption. It can be seen that the surge in sellers' orders in the first two years was only a product of special times. Unfortunately, many sellers mistakenly regarded special periods as normal market conditions. After making a lot of money during this period, they lost themselves and thought that cross-border e-commerce has always been so profitable. Little did they know that by the time consumers and the market adapt to the epidemic, this wave of online shopping is bound to fade a lot.

Observing the entire development trajectory of cross-border e-commerce, we will find that the entire industry is developing normally.

Many cross-border sellers feel that this industry is becoming increasingly difficult. Another important reason is the mentality. When the cross-border e-commerce market gradually returns to normal, they cannot adapt to the normal market situation psychologically. They may feel sad and disappointed now, just as they made more money in the past two years. They cannot treat these market changes with a normal mind. In addition, many people's negative comments after encountering problems are easily spread, and in the process of spreading, many news will be inaccurate. It is widely rumored that a certain cross-border giant has laid off 6,000 employees to more than 900. People familiar with the matter said that this statement is a bit exaggerated. The actual situation is that their cross-border e-commerce practitioners used to have more than 3,000 people, but now there are more than 2,000.

Having seen many ups and downs, a senior seller has adapted to the ups and downs of the market. "The current market downturn is normal. The global epidemic is still ongoing. What we need to do is to get used to the epidemic. The epidemic will not disappear in a short time. If we are always sad during this period without working hard, it will definitely not work."

Many industry insiders said that objectively speaking, although the current situation of cross-border e-commerce is not easier to make money than in the previous two years, the appearance it presents is actually very good for cross-border sellers.

First of all, the current market environment of cross-border e-commerce is not so good, and the risks are relatively high. In addition, price wars are rampant and the market competition is fierce. Many cross-border sellers are not profitable. The reason why there are still many voices of making money is that service providers need to harvest. However, a large number of people and money are pouring into the cross-border industry. Using low prices and spoofs to pave the way for others will only make the cross-border e-commerce environment worse. At this time, pouring cold water on the entire industry is not a pessimistic expression, but it will make the entire industry and start-ups develop more healthily and benignly.

Secondly, cross-border e-commerce has always had development prospects. No matter when, consumers cannot do without the products we sell. The 2019 COVID-19 pandemic has led to the rapid development of cross-border e-commerce and stimulated the penetration rate of online shopping. For example, the number of cross-border e-commerce online shoppers in the United States and Europe has increased significantly. In the long run, this has potentially increased the consumer group and laid a certain foundation for future sales growth.

Then, from the perspective of logistics alone, the entire logistics environment is gradually getting better this year. After adapting to the epidemic, overseas countries have gradually relaxed epidemic control. The problems faced by sellers in the past two years, such as low labor and high logistics prices, are gradually being resolved. After the capacity problem is alleviated, cross-border e-commerce will become easier and easier to do.

Finally, from April last year to now, the negative impact that should have been released in the cross-border circle has actually been almost released. Many sellers who only rely on fake orders or price wars have been eliminated. Most of the sellers who can successfully stay are high-quality sellers that have been tested by the market. They have become much more mature in both operational strategies and product control, which has played a great role in promoting the healthy development of the entire cross-border market.

What do sellers need to do to adapt to the changes in the cross-border market?

Many people who have been engaged in this industry in recent years have experienced various ups and downs. In this process, they will actively adjust their mindset and proactively adjust their strategies in line with market developments.

It is understood that when cross-border e-commerce was doing well in the past, consumers might start buying in large quantities when they saw that the products were cheap, and sellers could make money with their eyes closed. Now that the industry has begun to improve, the buyer experience has begun to improve, and there are more comparable product choices, this has forced sellers to make better products.

"It is impossible for every industry to maintain rapid development all the time. I have begun to feel the slowdown in the growth of this industry. We can say that the current cross-border e-commerce is in an adjustment period or a reshuffle period, during which only the fittest will survive." When everyone thinks that an industry can make money, basically only those who really understand it can make money. The editor has combined the views of many cross-border sellers. Under the current situation of cross-border e-commerce transformation and upgrading and the global economy facing short-term pain, if everyone wants to move forward steadily, they need to do the following:

1. Master the cash flow at hand and don't make too much investment. In many cases, cash flow is more important than profit. Although some cross-border sellers are losing money in the short term, they will not collapse because of cash flow. If they think that they can "recover their investment overnight" under the current economic situation, they will take risks and easily make some risky investments, or prepare a lot of goods. In the end, they may not make money, but may make their financial situation even tighter due to problems such as excessive stockpiling and investment.

2. Do a good job of increasing revenue and reducing expenditure. From the perspective of large companies, they need to look for new opportunities, that is, new markets or platforms, and not put all their eggs in one basket, and explore the second growth curve of business development.

At the same time, do not expand blindly, but make strategic adjustments according to market conditions to achieve resource balance.

"After the company's personnel optimization, our overall sales and profits have been slowly recovering since April this year. During this crisis, many colleagues like me have learned lessons and started to change their gameplay to adapt to market development. For example, in terms of delivery, we have gradually abandoned self-delivery and transformed into a small and high-frequency FBA model." Industry insiders said that before, maybe 50 sellers out of 100 people could survive, but as the threshold of cross-border e-commerce becomes higher and higher, in the future, maybe only 30 out of 100 sellers may survive. We must have better survival skills than our peers to ensure that we are not eliminated. This is not only the case in the cross-border e-commerce industry, but all businesses are the same.

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