Orders decline, returns soar, sellers: peak season is over

As Christmas approaches, many Amazon sellers have seen a precipitous drop in orders, which means that this year's peak season has completely passed. Some sellers have already started to "lay flat". Sellers selling Christmas products need to hurry up and clear their inventory, because Amazon announced that the disposal fee will double after January 18.

Sellers who did not need to clear inventory took the opportunity to make new development plans. Through events such as Amazon’s account suspension and video verification this year, many sellers have included compliance operations and steady development in their plans for next year.

Orders from many sellers have dropped significantly, reaching freezing point

In the past two days, many Amazon sellers have found that orders have dropped sharply and have reached a freezing point. One seller said that today's orders are heartbreaking; another seller said frankly that Christmas is when our hearts are broken.

This year's peak season seems to have ended earlier than in previous years! An experienced seller in the industry said that sales in previous years could last until the 23rd, but this year sales had already started to weaken significantly on the 21st and 22nd, with sales plummeting. More sellers reported on the order status as follows:

“—Today’s orders are down 10% from yesterday;

—Half cold;

——Sales began to decline;

——Sales volume plummeted;

——There is a flash sale tomorrow, I want to cancel it;

——No single cold ;

——Christmas is coming, and the orders have entered the winter season;

——The order quantity is really bad;

——Freezing point is approaching, and vacation begins. "

According to multiple feedback, sales have declined in the past two days, with Christmas products being the most obvious, and other categories of products have also been affected. Looking at the reasons for the decline in orders, this period of time is normal.

Christmas is as important to Americans as the Chinese New Year. Friends and relatives who want to send gifts to each other usually prepare the gifts early, so there is naturally no related demand as the holiday approaches.

Moreover, many Americans have already started their holidays a week before Christmas. Some people have a 15-day holiday from December 22 to January 5. There are also other different times. One of my friends said that his American colleagues started their holidays on the 20th. When they are on vacation and relaxing, the proportion of online shopping orders is greatly reduced.

"Foreigners are on holiday for Christmas, the off-season has arrived, and this year's peak season is so short!" a seller lamented.

The decline in orders has a lot to do with Americans’ consumption habits and also with Amazon’s delivery of goods.

Yesterday, a seller discovered that the labels of some Christmas-related products on Amazon have changed, and now they can only be delivered after Christmas. This is equivalent to directly sentencing Christmas-related products to death. From now on, such products can only be cleared out of stock or sold next year.

A logistics company in the industry has issued a notice that due to the Christmas holidays in Europe and the United States from December 24 to December 26, the local delivery service time will be extended. Hong Kong also has Christmas holidays with Europe and the United States, so some channels will have delays in transit through Hong Kong.

Specific factors such as poor logistics timeliness and delivery after Christmas have greatly affected the conversion rate of sellers' products, causing orders of many sellers to decline to varying degrees. However, what is more terrifying than poor orders is the upcoming wave of returns.

An experienced seller in the industry predicted: Amazon’s Christmas sales are coming to an end, and foreigners will go on holiday, so there will be a large number of returns after the holiday. Returning goods after Christmas is a routine operation in previous years, and some people who don’t follow the rules will return the goods after using them.

However, many sellers believe that the number of returns after Christmas this year will be more turbulent than in previous years. This year, many Europeans and Americans are in poor economic conditions, and there will be more people who want to get something for free than in previous years, so there will definitely be more returns in the future.

In addition, the prediction of more sellers returning goods this year is based on the current situation. This month, some sellers have already felt the frustration of returns, with one seller receiving 20 returns for every 20 he sold.

According to some feedback so far, the return rate in December this year is higher than the same period in previous years. Therefore, sellers infer that there may be an even higher return rate after Christmas.

As the peak season ends, many sellers are faced with the problem of clearing out remaining inventory.

Yesterday, a seller complained: "Several Christmas season shipments from Canada in September were signed for and put on the shelves today!" There are many similar situations. Due to logistics reasons, sellers' holiday products missed the sales node and faced large storage and disposal costs. On the same day, the seller sadly discovered that starting from January next year, the disposal fee on the US site will double.

Starting January 18, Amazon Logistics Removal and Disposal Fees Will Increase Significantly

Amazon Logistics page shows that the fees for removing and abandoning orders from Amazon Logistics will change in 2022. The fees for removing and abandoning orders from the US site will increase significantly, and the fees for some products will more than double. The changes will take effect on January 18.

(Photo source: seller "Amazon USD")

The change information shows that for standard-size delivery items weighing 0 to 0.5 pounds, the removal or disposal fee for each item has increased from $0.32 to $0.52; for 0.5 to 1.0 pounds (excluding 0.5 pounds), the fee has increased from $0.35 to $0.75; for 1.0 to 2.0 pounds (excluding 1.0 pounds), the fee has increased from $0.48 to $1.14; for items weighing more than 2 pounds, the fee has increased from $0.67 + $0.35/pound (the portion exceeding 2 pounds) to $1.51 + $0.63/pound.

The fees for bulky items and items that require special handling have increased even more, all doubling. Apparel, shoes, watches, jewelry and dangerous goods may all be classified as "items that require special handling."

In the segment of large items and goods requiring special handling, the removal or disposal fee for each item of goods weighing 0 to 1.0 lb increased from $0.60 to $1.50; for goods weighing 1.0 to 2.0 lbs (excluding 1.0 lbs), the fee increased from $0.72 to $1.96; for goods weighing 2.0 to 4.0 lbs (excluding 2.0 lbs), the fee increased from $1.26 to $2.89; for goods weighing 4.0 to 10.0 lbs (excluding 4.0 lbs), the fee increased from $2.32 to $5.05; for goods weighing more than 10.0 lbs, the fee increased from $3.50 + $0.35/lb (the portion exceeding 10 pounds) to $7.25 + $0.63/lb.

Sellers lamented that costs have been rising every year, and now there is another considerable expense. For sellers who have previously prepared a large amount of inventory in advance and still have a large amount of inventory piled up, this is like adding insult to injury. The peak season has passed, and it is not easy to clear out the redundant inventory at a low price. If you want to avoid this expense, you can only prepare in advance and hurry up to destroy the goods before the price increases.

On the one hand, Amazon has increased the disposal fee, and on the other hand, it has relaxed the storage restrictions. Is this to allow sellers to adjust the pace of stocking?

Previously, Amazon notified by email that the inventory performance index (IPI) assessment for the first quarter of 2022 will be postponed to mid-December. Yesterday, Amazon US issued an announcement stating that it has increased the replenishment restrictions for many sellers in recent weeks, and starting from January 1, 2022, the inventory performance index score threshold for Amazon logistics storage restrictions will be reduced to 400. After the adjustment of this indicator, the proportion of sellers with storage capacity restrictions will be less than 10%.

Many sellers were overjoyed:

——"I'm so happy! The IPI threshold has been lowered! I almost cried when the European IPI just dropped to 498 this week, but now it's back to life. I'm so touched!"

——“Finally, I don’t have to take overdose!”

——"It's Chinese New Year, this lifting of restrictions comes at the perfect time."

Soon some sellers discovered that on the backend storage page, the storage limit for the next time period was displayed as “unlimited”.

Some sellers believe that the peak season has passed, and it will not be very effective for Amazon to relax storage restrictions now. However, the current stage is a critical stage for preparing for spring, and lifting restrictions is still good for most sellers. Although storage restrictions have been relaxed, replenishment restrictions still exist. For most sellers, this is the real bottleneck. "What's the point of lowering the IPI threshold and not increasing inventory? Most sellers' IPI will not be lower than 450, and the storage capacity is still strictly limited." said a seller.

On Monday, Amazon adjusted its inventory capacity as usual, and sellers responded differently. The standard for inventory capacity adjustment is still under question. Some sellers find it hard to believe that their inventory capacity has increased, while others bluntly said, "Is it because Amazon is still reducing its inventory capacity at this point that my sales are too poor, or is it because Amazon has too much inventory in its warehouses during this peak season?"

One seller was conflicted. He didn't want to ship anymore and wanted to save money for the New Year, but on Monday Amazon expanded the capacity by 400. Some sellers advised him to expand his vision. After all, in the first year of the epidemic, having goods was king. Even with daily price increases, orders continued to come in. The current global epidemic seems to be worsening. However, after mid-January 2022, the removal and order abandonment fees will increase significantly, and sellers still need to prepare stocks prudently.

Storage capacity restrictions also cause some sellers to miss out on new product launches. One seller said: "Last month, a friend recommended a product to me and asked me to make it. I said I didn't want to bother because I didn't have storage capacity. But today he told me that he made 30,000 yuan a day in profit from this product, or 150 yuan per item. That's great. A product has changed a person."

In 2021, sellers experienced more than just storage capacity restrictions. In this extraordinary year, Amazon is no longer "making money with your eyes closed". People have witnessed a series of major events such as Jeff's resignation, account bans, system crashes and tornadoes, and have also witnessed the turning point and transformation of the platform.

A roundup of Amazon's major events in 2021

1. Amazon US Station proposes insurance requirements

On February 16, Amazon US sent emails to multiple sellers, requiring them to provide proof of liability insurance for products sold through Amazon stores. The email stated: "Article 9 of the Sales Agreement stipulates that within 30 days after the total sales amount reaches US$10,000 for three consecutive months, the seller needs to purchase and maintain at least US$1 million in commercial general insurance, additional liability insurance or excess liability insurance."

Failure to purchase insurance within the deadline may result in the inability to withdraw cash or even a ban on sales. For stores that do not reach the monthly sales standard of US$10,000, they must also provide insurance certificates if Amazon requires them. Many sellers have already purchased insurance.

2. Amazon cancels its early reviewer program

Amazon informed sellers that starting March 5, 2021, it will no longer allow new registrations for the Early Reviewer Program, and will stop providing this service to sellers currently registered for the program on April 20, 2021. The four sites affected are the United States, the United Kingdom, Japan, and India.

For sellers who abide by the rules and do not fake orders, the program is a safe and efficient way to obtain reviews, and it is also very helpful for potential new products. Since then, sellers have lost another legal channel for obtaining reviews.

3. Remove ASIN-level replenishment restrictions and replace them with overall store restrictions

On April 22, the US site announced that FBA products are no longer subject to quantity restrictions at the ASIN level, but instead the overall store inventory quantity is limited based on different warehouse types and past sales. Sellers are now facing dual restrictions: inventory capacity restrictions due to substandard IPI scores, and total store replenishment restrictions. The replenishment quantity update every Monday has also become a focus of sellers.

4. Account blocking wave is coming

At the end of April, the main brand of Paton was banned, which kicked off a wave of bans that lasted for half a year. After that, the top brands such as Tongtuo, Zebao, and Youkeshu were banned one after another, causing an earthquake in the industry. The fuse of the incident was suspected to be the exposure of the review-seeking behavior such as "small cards".

The incident attracted widespread attention, and the Ministry of Commerce responded to it. On September 17, Dai Xuefei, Amazon's global vice president and executive president of Amazon Global Selling Asia Pacific, revealed that according to Amazon's statistics, a total of about 600 Chinese brands and 3,000 accounts were closed in this account blocking operation, including some large sellers. After this incident, a large number of Amazon sellers began to operate in full compliance.

5. Bezos, the "brother-in-law", resigns

Amazon founder Jeff Bezos officially stepped down as Amazon CEO on July 5, local time in the United States . The position was succeeded by Andy Jassy. Bezos will continue to work in the company after his departure and serve as the chief executive chairman of the board of directors.

6. AWS service interruption, Amazon front-end, back-end and logistics system failure

After several system bugs this year , Amazon AWS service experienced a major outage on December 8, Eastern Time. A large number of consumers were unable to access Amazon.com, and some functions of the seller backend page were missing or data could not be updated, affecting sales. The FBA logistics system was in disarray, warehouse employees and drivers were unable to identify shipments, and local warehouses were temporarily closed for one day and stopped accepting shipments. Long lines of delivery people formed in front of popular warehouses such as ONT8.

7. Tornado causes Amazon warehouse to collapse

On December 10, local time , the central United States was hit by a storm, and 19 tornadoes swept across five states. The tornado caused a large-scale collapse of an Amazon warehouse, killing six people. Sellers who had goods stored in the warehouse suffered serious losses. Some sellers said they received compensation emails from Amazon Logistics. For sellers who need to clear inventory, receiving compensation is not a bad thing.

8. Amazon launches pilot program to shorten payment collection time to 3 days

Amazon announced a pilot program, and some sellers received an email notification that the payment time will be shortened to 3 days. The email stated that starting from December 16, 2021, all confirmed orders of sellers will be retained for three days after the actual delivery date. For example, if the seller ships on January 1 and the actual delivery date is January 5, the sales proceeds will be paid starting from January 9.

Sellers' plans for next year: compliant operation and steady development

After a series of changes this year, some sellers believe that the Amazon after 2021 will be the real Amazon, with no fake orders, no black technology, all operations are in compliance, and everything is back to zero.

In particular, Amazon's heavy blow to crack down on review violations has resulted in multiple sellers' accounts being blocked, with some of the top sellers being the first to be hit. After being blocked, these stores did not recover as quickly as before, and many big sellers' accounts are still suspended.

When seeing the increasing number of bloody account suspension cases, sellers in the industry began to be cautious, abandoned illegal behaviors such as fake orders, and carried out normal white hat operations. What happened to those white hat sellers today?

A seller introduced his white hat operation. Since we experienced a platform raid in May and June, we used real legal person information to register new stores and passed the video review. All work was ready and we started compliant operations. After the products were put on the shelves, orders were placed the next day. After about half a month of "naked running", daily sales reached 15 orders, exceeding expectations, and then rushed all the way to the top 50 of New Releases.

A month later, several reviews came in. However, due to the product category, Amazon identified it as a pesticide and removed it from the shelves. After we restored the link, sales began to plummet. In order to stabilize sales, we went through QA, did off-site promotion, and increased advertising investment. Sales gradually recovered. After several flash sales, the daily sales of the product exceeded 40 orders. During this period, we continued to invite reviews and use vines in the background. We got reviews and sales, but unfortunately the good times did not last long. The warning letter arrived as expected, followed by a decline in traffic and sales.

The seller said that because he did QA and off-site work, he was not a pure white hat operator. In the future, Amazon's trend will require sellers to be fully compliant and perform pure white hat operations.

Another seller directly set up an Amazon white hat operation team and has achieved some results. He said that the Amazon white hat operation team we added from 0 to 1 in May this year had sales of 600,000 US dollars in December.

This newly added operation group is an elite group. Currently, the team has only two operators. They use pure white hat methods, do not use black technology, do not send tests, and do not use off-site operations. All traffic comes from Amazon, which fully complies with the rules of the platform. The store is extremely safe. And because there are no similar products in the market, the product has a relative advantage. This white hat operation group not only has relatively considerable sales, but also a very high gross profit margin.

During the operation, the ranking increase mainly depends on Amazon advertising. Currently, Acos has increased significantly, but sales have doubled, so we are willing to spend advertising fees. Next, we will focus on expanding in the pure white hat field.

In this regard, peers believe that white hat tactics may be suitable for any category and any product. Everyone can slowly accumulate traffic, customers and reviews, rely on product advantages, and compete fairly at the starting line. If you use black technology and other means, even if Amazon does not knock you out, you will be knocked out by China. You can get a glimpse of this by referring to the recent example of the so-called "e-commerce queen" monopolizing traffic and being banned from the entire network.

Currently, many sellers are trying to operate in compliance with regulations and use pure white hat methods to obtain orders. Some sellers have already achieved success. On the white hat road, some deviated sellers may not be able to escape Amazon’s review, thus affecting their hard-earned rankings and sales.

When recent orders began to decline and the peak season was about to end, many sellers began to make plans for 2022, and they included compliant operations and steady development into their plans.

An old seller in the industry made plans for next year. In 2022, stability is still the main line. Some of his ideas are:

1. Deepen the existing product lines and improve the competitiveness of your own products.

2. Develop on multiple platforms and seek progress while maintaining stability.

3. Reduce the number of personnel and generals, stop allowing barbaric growth, and reduce unnecessary expenses.

4. Financial and tax compliance is the key point.

This idea has been recognized by some peers. In the coming year, everyone will operate in compliance and develop steadily.

At present, the Amazon platform has passed the period of wild development and the period of making quick money. If sellers want to operate for a long time, they may only be able to develop through white hat operations and cooperative operations. During this period, sellers may move relatively slowly, but seeking speed is definitely not a major trend, and seeking stability has become the consensus of most people in the industry.

Amazon

Clearing inventory

Abandonment fee