To save costs, a group of cross-border sellers are fleeing Shenzhen

The aftermath of Amazon's account suspension has erupted. As price involution continues to impact profits, a group of cross-border sellers are busy reducing their scale and saving costs to save themselves. They are laying off employees, moving to smaller office spaces, fleeing Shenzhen and moving to inland cities ...For a while, "a small ship is easier to turn around" became the consensus of many cross-border sellers.

A group of cross-border sellers are fleeing Shenzhen

Recently, the downsizing of Youkeshu was exposed. After the Amazon ban crisis, Youkeshu’s number of employees has been reduced to more than 500 people, and the number of offices has been reduced from 24 to 4. It is really sad! Even the top sellers are in such a bad situation, the survival of small and medium-sized sellers is even more worrying.

Since the second half of last year, many sellers whose accounts were banned by Amazon have begun to lay off employees and improve efficiency. Like Youkeshu, these companies have begun to shrink their scale, moving out of large offices in high-end office buildings and looking for a relatively small location to work.

Sellers who have not been affected by the ban or have been less affected do not dare to expand blindly. Instead, they maintain the status quo or reduce their scale according to the market industry to deal with unknown crises.

All of a sudden , some sellers who downsized and moved out of their original offices began to flee Shenzhen and move to inland cities for development, and recently more and more sellers in the industry have done so.

Seller Wang Tian moved his office from Shenzhen to his hometown Maoming. After his account was blocked by Amazon, the company's business shrank and most of the dozens of people on the team resigned. Later, he simply moved back to his hometown and started a small team again.

Tian Wei, a seller of adult products, also worked in Shenzhen before. Later, all of his company's more than 200 Amazon accounts were blocked, and his team was reduced from several hundred people to five. In April this year, he moved to Humen, changed his product category, and continued to seek development on Amazon.

After his profits were severely hit, Amazon seller Ah Chao felt the fierce price competition from his peers. In order to save costs and maintain profits, he decided to move from Shenzhen to Changsha. According to him, Changsha has a good e-commerce environment, and the industry benchmark seller Anker Innovations is there. In addition, Changsha also has some cross-border e-commerce operation talents. The personnel cost and rental cost are lower than Shenzhen, and his own operating costs will also be reduced accordingly.

Similar to the above sellers, more industry sellers reported their current situation:

"——After the epidemic, I moved my Shenzhen company to Nanchang. The rent here is only a quarter of that in Shenzhen, and the labor cost is about one-half to one-third of that in Shenzhen. In addition, the expenses are low. Although the income is a little less than that in Shenzhen, the savings are higher. I will survive first;

——I moved from Shenzhen to Changsha, and it feels pretty good;

——Moving from Shenzhen to Chengdu, there are some freight forwarders here, so shipping is quite convenient;

——I moved to a small city in Guangxi near Guangdong. I have never met my peers in real life, but the advantage is that the cost of living is low and the goods can be shipped quickly to the freight forwarder in Shenzhen. "

As a group of cross-border people fled Shenzhen, more cross-border e-commerce companies also moved into some inland cities.

Changsha, Wuhan and other cities have become popular destinations for sellers

Where do these cross-border sellers who have fled Shenzhen like to move to? Based on feedback from many industry insiders, they generally move to several directions:

1. Move back to my hometown, reunite with my family and continue to run the Amazon business on a small scale;

2. Move to a second-tier city in Guangdong, which is not far from Guangzhou and Shenzhen and has an advantageous geographical location;

3. Relocate to inland cities with some supply chain advantages or a relatively cross-border e-commerce atmosphere. Changsha, Chengdu, Wuhan, Yiwu, Xi'an, Hefei, Zhengzhou and other places have become popular choices for sellers to relocate.

There is no doubt that Shenzhen is a well-deserved cross-border e-commerce base camp, with a large number of sellers and mature supply chain, freight and other resources. However, as market conditions change, cross-border sellers relocate their company addresses and set up layouts in other cities, which reduces operating costs to a certain extent and is also a good choice.

However, after fleeing Shenzhen, these cross-border sellers have many problems to solve. The three major difficulties mentioned by Wang Tian are : talent, supply chain and logistics. Due to the shortage of Amazon operation talents in his hometown, they almost have to train from scratch, and there is definitely a certain gap between the purchase and delivery of goods and Shenzhen.

After moving out of the office, Tian Wei is more optimistic. According to him, since he had a certain foundation in Shenzhen before, he only needs to leave the goods to be shipped with the previous freight forwarder. As long as the operation is in place, it doesn't matter where the subsequent cross-border e-commerce business is operated.

An industry insider said frankly: After moving out of Shenzhen, the core issue that sellers need to solve most is the problem of operational talent. However, this has both advantages and disadvantages. The disadvantage is that compared with Shenzhen, other cities are relatively short of operational talent; the favorable factor is that the retention rate of cross-border e-commerce operational talent in inland cities is higher. Most operators are not as impetuous as those in Shenzhen, frequently changing jobs, and will not easily ask for a salary increase, let alone start a business after working for two years.

Previously, a seller in the central region also mentioned that in fact, cross-border e-commerce talents are crucial to the development of the company. There are many talents in the cross-border industry in Guangzhou and Shenzhen, but the demand of employers is also great. There are certain talents in Zhengzhou, Xi'an, Nanjing and other places, but there are not many corresponding companies. Relatively speaking, the employees of sellers in the central region do not change jobs easily, and the stability of the personnel can form a long-term accumulation.

Although there are many benefits for cross-border people to move to inland cities, these sellers who flee Shenzhen all have their own frustrations, the most prominent of which is profit.

The price war is still going on, and sellers’ profits are being squeezed

Last year, Amazon banned a large number of sellers, including some of the top sellers. After their accounts were blocked and their funds were frozen, the top sellers drastically cut prices to clear their inventory in order to recover funds. The price war intensified, and the price war between sellers is still continuing.

A home furnishings seller said that recently competitors have cut prices again, from $19.99 to $12.99, but they have no intention of stopping. Now that Amazon's advertising costs have risen sharply, competitors have no profit and are already losing money.

Another seller also found that many new products on the Amazon platform are sold directly at low prices. On the basis of selling at low prices, they continue to report activities and make 20%-50% discounts, and then strategically lose money for a few months.

When the price war continues, many sellers choose to keep up with their peers and sell at low prices to maintain product rankings and lay the foundation for subsequent development. When more and more sellers begin to compete on price, make strategic losses, and seize category positions, the sellers in this category are brought into the vortex of low-price sales, and the sellers' profits are collectively reduced.

For most small and medium-sized sellers, when their profits are continuously reduced or even incur losses, if they want to hold on longer, they will try their best to cut costs, save expenses, move out of more expensive office locations, and relocate to inland cities with lower operating costs to wait for the next round of explosive growth opportunities.

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