Selling off assets! A group of sellers who have deployed on multiple platforms have left the market at a loss

Nowadays, some sellers who have tried to expand their business on multiple platforms have already experienced the cruel reality. Some of the new platforms they operate have zero orders, some have meager profits and cannot make ends meet, some are struggling to survive at a loss, and some even directly sell their assets after the New Year ...

Cross-border sellers who tried to break out of the circle were hit hard again. An industry insider bluntly said: "After expanding into a circle of new platforms, it turned out that Amazon was the easiest one to do business with." Top sellers also believe that in terms of the current market size, Amazon is still worth exploring.

A group of new platform sellers are falling silently

Recently, a number of cross-border e-commerce companies have encountered operational problems, with orders falling to the bottom and profits not enough to cover various expenses, and they have to end up losing money. These companies that have problems include those operating mainstream e-commerce platforms, as well as some operating new platforms.

An insider reported that recently among the sellers of a Southeast Asian platform, at least five people were selling their assets. The platform made almost no profit and now has to face this cruel reality.

One of the sellers who was selling off his assets made a last-ditch effort in the relevant seller group to reduce his losses: "The company is completely bankrupt, is there anyone who wants to take over? If you need the company's air conditioners, tables, fans and other items, you can take a look.

Sellers who were touched expressed their opinions one after another: "This Southeast Asian platform is really not profitable. This is a channel that only price wars can be made. Chinese sellers will also face some problems in shipping, and it is difficult to appeal after the account is blocked."

The performance of another e-commerce platform is also not satisfactory. Some sellers have recently reported that due to the impact of the Russia-Ukraine war, the order volume of this platform has been hit, and many sellers' orders have reached zero or are close to zero.

One seller lamented: "Foreign consumers seem to have disappeared overnight. I'm going to be unemployed!" Another seller said that there were orders yesterday, but no orders today. Since the war, the orders have indeed decreased a lot. The store is still there, but the main force of European consumers are not buying. More sellers on the platform feel the same way:

“——I thought there was only no single item for clothing, but it turns out that all categories are the same;

——No orders for a week, so sad;

——I feel cold when I wake up in the morning these days;

——There are few orders in each store;

——We should be grateful even if we have orders in the single digits

I hope I can hold on.”

A company issued a notice that due to the depreciation of the ruble caused by the Russian-Ukrainian war, the company's orders on the platform dropped by 70%, and it is currently facing great pressure and challenges. Judging from the current situation and past experience, the future of this platform is not optimistic, and the impact may be long-term. I hope all colleagues will be mentally prepared. In the next few months, the company is very likely to be unable to pay wages and will be forced to reduce staff to reduce costs and maintain survival. Even if it is transformed to other e-commerce platforms, it will be a long and difficult process.

As everyone wailed, a seller on the platform came to a clear realization: except for necessities, all other products should be in trouble. Faced with the cruelty of high shipping costs and low orders, coupled with the sharp drop in the euro exchange rate, everything seems to be a waste of time. Now that the old sellers can't hold on any longer, new sellers entering the game would be idiots!

Another popular e-commerce platform in Europe was also criticized by sellers: "The platform is pretty good, and I originally had some money, but now it's all gone." The popular cross-border platforms in North America and South America, which were previously sought after by cross-border sellers, also performed unsatisfactorily. One seller joked: "I can only place two or three orders a week on these two platforms." Different sellers also reported different order situations. Some said that a popular platform in South America only placed one order a month, while others said that a popular platform in North America only placed one order a week.

Behind the cold feedback, there are a group of cross-border sellers who are experiencing the torment of blindly entering the new platform. Some people find it unpalatable and throw it away, while others simply give up and say goodbye to the unprofitable business.

From entering the new platform to the current situation, some cross-border sellers have suffered a lot of losses. One seller told a story about a friend of his: I have a friend who tried everything he heard was good, but ended up losing two or three hundred thousand yuan.

In this regard, an industry insider analyzed: "We have opened a lot of new platforms, including Southeast Asia, North America, and Europe. The boss always thinks that products that do not sell well on this platform can be put on other platforms for trial. As a result, the staff's energy is scattered. They have to adapt to new platforms, and the products themselves have some problems. The current new platforms are not as competitive as various marketing accounts say. The reality is that there are fewer people and less traffic, and the more they operate, the more painful it is. At present, Amazon still feels like the platform with the highest profit. Amazon has not yet established itself, and switching to other platforms is likely to be a loss. We should focus more on products and less on platforms."

Some veteran sellers also bluntly stated that no matter which platform, operations are always related to products and have nothing to do with the platform. Uncompetitive currency will face low-price involution everywhere.

Sellers who try to break through the barriers here have been knocking on the door everywhere, and many of them have been frustrated. After some comparison, they think Amazon is still a better place to do business. However, there are also a few sellers who believe that Amazon is the best and are not interested in multiple platforms.

Amazon is still the default search engine for many buyers

While his peers were busy developing multiple platforms, one seller simply stayed focused on Amazon. He believed that the best he could do if he expanded to other platforms was to be on par with Amazon, so he did not need to waste time and money and could just focus on Amazon.

It is not surprising that sellers have such considerations. After all, Amazon’s strength is obvious to all.

Marketplace Pulse preliminary estimates show that sellers on Amazon's marketplace sold $390 billion worth of goods in 2021, a net increase of nearly $90 billion in a year. It grew faster in 2020, but even with the slowdown in 2021, its market has doubled in two years - from $200 billion in 2019 to $390 billion in 2021.

Sellers’ sales account for 65% of Amazon’s total GMV. If it were considered a gross domestic product (GDP), Amazon would be the world’s 37th largest economy.

With the addition of Egypt and Poland, Amazon has 20 global markets . Currently, the US site Amazon.com is still the most important market, accounting for nearly 47% of its total global visits, and Japan, Germany and the UK each account for about 10%. The top five sites (the United States, Japan, Germany, the United Kingdom and India) account for nearly 80% of network traffic, while Egypt and Poland, as well as previously launched sites, have contributed little to the overall GMV growth.

(Monthly website visits)

For many shoppers, Amazon is the default search engine. When they see something they like on Netflix or somewhere like Instagram or TikTok, they go to Amazon to find it, and Amazon can capture that demand without paying for advertising or additional fees.

A classic example is that within two weeks of the release of the hit Netflix series "Squidward Gaming," a global craze for squidward gaming apparel was triggered. In October, the top search term on Amazon was "squidward gaming apparel." The Amazon marketplace quickly responded to the trend, with hundreds of sellers actively selling related improvisations—especially sportswear.

For much of January and February last year , the best-selling apparel product on Amazon was a pair of high-waisted leggings that went viral on TikTok. Even a year later, the trend hasn’t died down, with shoppers still searching for them by searching “tiktok leggings.”

In the platform's global marketplace, the majority of Amazon's sales come from domestic sellers, followed by Chinese sellers, with other countries combined accounting for only a small percentage.

According to an analysis of more than 90% of the top sellers, in Amazon's four core markets of the United States, the United Kingdom, Germany and Japan, the market share of Chinese sellers in best-selling products has been increasing year by year: from 16% to 22% in 2017, from 23% to 26% in 2018, from 26% to 33% in 2019, and from 35% to 42% in 2020.

But 2021 was unusual, as Chinese sellers lost market share on Amazon for much of the year. By the end of 2021, only 33% of top-selling products came from China.

It was after the account suspension that many sellers began to try multiple platforms to reduce their reliance on Amazon and reduce the risk of being heavily invested in a single platform. However, in the specific operation of multi-platform, there are still many problems that need to be solved.

More cross-border sellers try multi-platform layout

Marketpiace Pulse data shows that in April and May 2021, Amazon suspended hundreds of top Chinese sellers involved in fake reviews. Since the end of April, Amazon has successively suspended nearly 300 top seller accounts. The total annual sales of these suspended sellers exceeded US$1 billion, including dozens of previously best-selling products.

Chinese sellers are an important part of the Amazon market. Although only a small part of the sellers were blocked, the issue of top sellers being blocked has caused a great sensation. Sellers who have violated the rules in their reviews are on pins and needles, fearing that the blocking will affect them and eventually end up like some of their peers, with layoffs and bankruptcy.

Almost all the sellers that Amazon has rectified are those who have violated regulations. While some of them have fallen, a group of newcomers are still eager to try. However, multiple related feedbacks have made more people see the reality.

After the New Year, many small and micro sellers reported that they were losing money, prompting fellow sellers to ask: "I asked several friends and they all said they were losing money. Is Amazon no longer suitable for startups and small and micro sellers?"

Some sellers bluntly stated that today's Amazon sellers are facing internal and external troubles. External factors include increased logistics costs and falling exchange rates, while internal factors include price wars among peers and high platform delivery fees and CPC costs.

As a small seller in the same industry, he said that he felt that the platform's policies and environment in the past two years were not suitable for newbies who had no experience with Amazon. First of all, in terms of policy, the cost of registration is increasing. At the beginning of the year, many people encountered second-instance review or account abnormalities when registering; insurance requirements for one year also have a fee; currently many categories require relevant certification information. If a product being sold does not have a certificate, it faces the risk of not being able to sell. Secondly, in terms of the environment, the entire market is seriously involuted, and price wars are depressing profits; Amazon's inventory costs and delivery costs have increased year by year, and freight costs have skyrocketed in the past two years. Recently, there has been a war between Russia and Ukraine, and freight costs will continue to rise. Coupled with the impact of the epidemic, the platform has too many uncertainties.

Perhaps seeing the uncertainty of the Amazon platform, some new sellers will consider skipping the fiercely competitive Amazon and directly exploring new platforms that they think are blue oceans. Some sellers whose accounts have been banned by Amazon also panic and open up new platforms to share the risks.

It is understood that in March 2021, Walmart opened its market to international sellers and added more than 6,000 sellers from China. Some sellers whose accounts were suspended by Amazon began to open stores on Walmart.

At the beginning of the year, an old Amazon seller planned to open up a new platform. He said frankly that there were several main reasons: 1. His company operates an Amazon boutique with many SKUs and can use the same products and pictures on many cross-border e-commerce platforms; 2. The company also has ready-made office space, warehouses, logistics personnel, etc., and the initial trial and error cost of opening up another platform is the labor cost; 3. Amazon is very competitive and the risk is very high, so they thought it would be better if a hundred flowers bloomed; 4. If multiple platforms can be turned around, the turnover will be faster, and there will be more channels to distribute customized products with large sales or slow-moving products.

There was a surge in new platform registrations. More than half a year has passed, and those sellers who blindly expanded into new platforms have also tasted the ups and downs of it.

When some of the results surfaced, people had different opinions on the issue of expanding new platforms. One seller in the industry said that in terms of our own situation, compared with Europe and the United States, the Southeast Asian e-commerce market is not interesting and it is a pity to abandon it. The platform has not made much progress, and various logistics problems have occurred frequently. I am planning to close down.

Should we deploy other new platforms? This is also a question. My suggestion: 1. Layout the top platforms by market region, such as Amazon in Europe, the United States, and Japan, and eBay in the United Kingdom, Australia, and the United States. 2. Layout platforms by category characteristics, such as eBay and Amazon for auto parts, Wayfair for furniture and home furnishings, etc.

Sellers who are interested in developing a multi-platform layout are also investigating which platforms are worth paying attention to besides Amazon.

5 platforms other than Amazon

Looking back at the e-commerce market in 2021, Marketplace Pulse sorted out the current status, position and potential of a number of platforms such as Amazon and eBay. Amazon ranked first, followed by eBay and Walmart based on the platform's GMV and future potential.

Other platforms seem to be lackluster. Wish, Google Shopping, Target, and others promised to provide marketplaces but didn’t deliver. Wish is still made up mostly of Chinese sellers, but the platform has made little progress in turning that around; Target is doing well but is invitation-only, so it’s still a marketplace with a few hundred sellers.

Shopify is not a platform, but with the explosion of the DTC model, Shopify's scale has reached 45% of Amazon's market, and its future potential may allow it to compete with the latter.

(Image source: Marketplace Pulse)

For several platforms mentioned in the coordinate axis, such as Walmart, Marketplace Pulse has analyzed the changes in the number of sellers and their advantages, which sellers can refer to.

Walmart

Walmart's global e-commerce sales reached $75 billion in 2021. The platform's market size has nearly doubled in 12 months, with 130,000 third-party sellers and nearly 5,000 new sellers added each month, significantly higher than in previous years.

Walmart opened its market to international sellers in March last year and added more than 6,000 Chinese sellers. "The advantages of Chinese sellers in the global cross-border e-commerce field are very obvious," said Michelle, vice president of global procurement at Walmart, at a Shenzhen conference.

(Data on new sellers added by Walmart each year)

Walmart CFO Brett Biggs said that Walmart's delivery service WFS has completed 25% of sales on the platform. More than 90% of the goods sold on Walmart are provided by third-party sellers. Walmart has adopted the same strategy as Amazon, packaging a huge catalog of goods into a controllable experience, which is the role of WFS.

Target

Target uses an invitation-only system, so there are only 440 sellers on the platform in the nearly three years since its launch. For these selected few, this is usually their fastest-growing channel. Target continues to stick to this strategy. "On Target Plus, our approach remains the same. We will continue to be very carefully curated to complement our store and online assortments." Its CEO Brian Cornell said.

( Number of sellers on Target platform)

The result of careful planning is that a search for "wireless headphones" on Target turns up 675 products, more than half of which are sold by Target. Walmart has about the same number as a retailer, but adds 20,000 through its marketplace, while Amazon has millions.

Etsy

Etsy has added nearly 3 million sellers to 12 million in the past 12 months, up from fewer than 7 million at the start of 2020. The number of active sellers has also doubled in the same period.

Due to the COVID-19 pandemic, the number of sellers joining Etsy began to accelerate in April 2020 and has remained high since then. New sellers are mainly from the United States, the United Kingdom, Canada, Germany, Australia, France, India, Turkey, Russia and Spain. With the surge in new sellers, there are more than 125 million products for sale on Etsy; at the beginning of 2020, this number was only 60 million.

( Etsy new seller icon)

eBay

eBay has 800,000 stores and millions of sellers. The vast majority of top sellers on the platform have an eBay store. 30% of these sellers joined eBay in the past five years, and 45% joined more than ten years ago. Sellers are mainly from the United States, the United Kingdom, Germany, China and Australia.

New sellers are increasing on eBay, but its core is mostly veteran sellers with a lot of experience. Since sellers are leaving as fast as new ones are joining, the total number is not increasing.

(Number of new eBay stores added each year )

Wish

Wish has more than 600,000 sellers, and the number of sellers from outside the United States and China is increasing rapidly. In 2021, nearly 30% of new sellers came from other countries such as Mexico, the United Kingdom, Brazil, Canada, Morocco, Italy, Sri Lanka, France, Vietnam, and Australia. But 96% of the most active sellers (with at least 100 ratings) are still located in China.

(Locations of new Wish sellers added each year )

In the short term, Amazon's position as the world's leading e-commerce platform may not be shaken, and it is easier to get higher output by deepening the cultivation of this platform; but in the long run, over-reliance on a single platform is obviously brewing major risks. Among sellers, there are different opinions on whether to multi-platform. Sellers can make targeted choices based on the characteristics of different platforms, combined with company strengths and product lines.

Amazon

Selling assets