Is 2021 the worst year? 8 Amazon sellers tell their own experiences

In the first quarter of this year, a large number of newcomers entered the market and competition intensified; in the second quarter, Amazon cracked down on review violations, a large number of sellers were blocked, price wars became fierce, and many sellers lost money to maintain their rankings; in the third quarter, freight costs soared and profits were further diluted; in the fourth quarter, sales did not increase during the peak season.

"Involution", "cross-border philanthropist", "endurance", "losses" and other words have become the keywords for Amazon sellers this year. How are sellers doing in 2021? Ennet interviewed 8 sellers from all over the country about their revenue and profits this year. Among them are veteran sellers who have been immersed in the industry for 10 years, senior operators of large sellers, domestic e-commerce and foreign trade transformation sellers, and operators of new startups... Maybe you can see yourself in them.

Shenzhen Mumu has been working for Amazon for 4 years: its profits have been cut in half

Mumu is a typical Shenzhen seller, mainly engaged in 3C products. This year, Amazon's crackdown on fake reviews affected many 3C sellers, including some of the industry's top sellers.

Affected by the overall environment, Mumu's business this year has fallen sharply, with sales only two-thirds of last year, and profits cut in half. Entering the peak season, sales are almost the same as usual. I had hoped to turn things around during the peak season, but now it seems basically hopeless.

Profits have been greatly impacted. Based on its own analysis, Mumu believes that low price, VAT, logistics timeliness and returns are the four most important factors.

The price war had its beginnings in the first quarter and reached a fever pitch in the second quarter. Cross-border philanthropists appeared one after another, and some even suffered losses to maintain their rankings. Faced with rounds of increases in logistics prices (currently air freight and express delivery prices are basically breaking through 100), sellers have to raise prices to maintain profits, but price increases will inevitably affect sales.

In the context of price war, another problem that Mumu encountered this year was that he was not brave enough to launch new products. According to him, new products in the 3C category this year would lose money. Therefore, he could only rely on his old capital to maintain his business.

During the suspension of accounts this year, many of Mumu’s friends’ stores were directly closed. Seeing that many people around him were affected, he thought that he would definitely not be able to continue to fake orders. Not only himself, but also his peers rarely engaged in fake orders. But problems followed. Most of the operators in the 3C category had a fixed operation mode of fake orders. If this operation was banned, many operators would not operate. Therefore, it was difficult to recruit good operators, which became a pain point for him.

After the profit was cut in half, Mumu currently has almost no profit, but what he can do now is to maintain the old links, maintain the order volume, advertise carefully, and perform white hat operations, looking forward to the outbreak after the next round of reshuffle.

Wang Yang from Yiwu has been working on Amazon for 10 years: He has no orders for the products he has sold for several years

Wang Yang has been in the cross-border business for 10 years, and currently only deals with Amazon. Compared with last year and previous years, he clearly feels that the overall business situation this year is worse.

It is now the peak season, but Wang Yang's overall sales are basically the same as in the third quarter. There are obviously more competitors, and many of them are old sellers opening new stores. His intuitive feeling is that there are several products that had been sold for several years without any competitors, but this year there are suddenly more than a dozen competitors who imitate each other with the same goal, and they started a price war right away. As a result, the products that have been sold for several years were destroyed (no sales).

Not only has the sales volume become worse, Wang Yang believes that the logistics costs are sky-high, the timeliness is unstable, the endless warehouse delays, the storage capacity restrictions and other operational problems have always existed. Because of the logistics delays, the products that have improved cannot be delivered, and they can only choose more expensive logistics. It is a bit extravagant to talk about profits, and they just want to keep the goods. This year, many big sellers just want stability and survive in the competition, not to mention small and medium-sized sellers. Without financial support, many people have a hard time surviving.

Facing a series of difficulties, Wang Yang has his own persistence. To survive, he must first ensure profits. He said : "No matter how difficult it is, I will not be a free porter. I must make money. I extremely despise sellers who play spiral and involution. They cheat themselves and their own people and feed the Americans."

Zhang Qimei of Subei has made a net profit of 100,000 yuan this year in 2 years

Zhang Qi has been fighting in the domestic e-commerce circle for many years and has now squeezed into the top three on a certain platform. In order to expand new channels, Zhang Qi opened an Amazon account at the end of 2019. Compared with others, he has his own halo. However, in 2020, the first year of official operation, he lost about 130,000 because he had no relevant experience.

At the beginning of 2021, a batch of goods shipped had quality problems and were eventually taken off the shelves, resulting in another loss of money. But this did not shake Zhang Qi's confidence. He then carefully selected suppliers and re-launched other products, making a net profit of about 100,000 yuan so far this year.

Talking about this year's sales and profits, Zhang Qi said frankly that last year's base was small and this year's sales increased significantly compared with the same period last year, an increase of 777%, which has already met his personal expectations.

The substantial increase in sales is inseparable from the early preparations. Zhang Qi said that one of the difficulties faced by Amazon is the replenishment limit. Last year, he was a little overwhelmed. This year, he is well prepared and has a clear replenishment plan. This year, the replenishment limit is dynamic, so you must be prepared to create a shipping plan at any time. In addition, the shipping time is generally long, so you need to prepare the goods in advance and be ready to ship at any time.

Although sales and profits are relatively impressive, Zhang Qi still clearly feels that the internal competition is serious this year. Many categories on Amazon are engaged in price wars. At the beginning, he followed the low-price sales, but then the shipping price soared. The shipping price was 550 yuan/m³ in April last year , and it rose to 2,000 yuan this year, an increase of nearly 6 times. Later, he had to raise prices. After the price increase, the overall sales were not greatly affected, but profits were made. In this regard, Zhang Qi believes that price increases are not fatal, and the key lies in product differentiation.

Since joining Amazon, Zhang Qi has always insisted on compliance operations. He only has one account and has never made fake orders or reviews. He is also the only one doing Amazon business. In his opinion, illegal operations are like fare evasion. If you are caught, you can only suffer the consequences. In the future, Zhang Qi will insist on compliance. He hopes that the epidemic will end, the US will not go on strike, and the price of sea freight will drop ... He can find new opportunities.

Guangzhou Li Yue’s 5-year Amazon operation: advertising costs increased 10 times

As a senior operator of a large sales company, he has a clear understanding of the current state of the industry.

Li Yue entered the industry in 2016. After two months of study at a training institution, he went to his old employer to apply for an operations position. He said that the market was good at that time and orders could be placed as long as the products were put on the shelves.

Now he is working in a cross-border e-commerce company in Guangzhou. The company mainly deals with three categories: home appliances, 3C products, and toys. This year, the company expanded and recruited many new people, but it was difficult to promote new products. In addition, the market environment was not as good as last year, and sales were seriously unsold. There was even a situation where the entire store’s inventory was sold from March this year to now. So the company laid off new employees while asking old employees to help with the aftermath and clear the inventory. "Only two (new employees) who were good at English were left, and they were transferred to customer service." Li Yue said.

He believes that one of the difficulties in this year's business is restocking. Due to the cliff-like distribution of sales, sometimes the products ranked 10-20 are restocked and suddenly enter the top ten and are about to be out of stock. At this time, restocking according to the sales of the top ten will not only make up for the lack of inventory, but also take a long time to sell if the ranking drops.

"We have two different styles in one category. One is ranked 5-10th, with a daily sales of about 800-1500; the other is ranked 15-20th, with a daily sales of about 200. In the same category, the difference in subcategory ranking is less than 10, but the sales gap is so big."

With the peak season approaching, Li Yue's company's sales are still 1/3 lower than this time last year . Compared with last month, the orders of the store he manages have increased a lot, but compared with last year, it is still very low. However, the profit of the store is still optimistic, because it has always been a high-priced store in the category and has not been affected by internal competition.

Overall, Li Yue's company's sales and profits have decreased significantly compared to last year; in the store he personally manages, because of the launch of several hot-selling products, sales and profits have dropped by about 1/4, which is not a lot.

Li Yue listed several factors that affect profits, including the first leg, the second leg, advertising fees, exchange rates, and low-price involution of peers. The biggest factor is advertising fees. "Now the advertising fee for a link is as high as 8,000 to 10,000 US dollars a day, which is 10 times higher than last year." He listed the reasons for the surge in advertising fees:

1. The ban caused by illegal manipulation of rankings by black technology was too severe, and everyone ran to operate on the site;

2. There are too many new sellers, many of whom are big investors, and they start with a set of strategic losses;

3. The sales gap in the current rankings is cliff-like, unlike the step-by-step decline in the past, so if you want to ship goods, you can only squeeze into the top.

Amazon has recently cracked down on off-site ranking manipulation, which has pushed up the bidding for on-site ads. "Many people used to do this, so not many people played on-site ads, or they didn't play as hard as they do now. At that time, the bidding was very low, and everyone's sales volume was not much different, so everyone could make money."

Li Yue is under great pressure to clear inventory this year. The company's overall FBA inventory is much less than last year, but the two stores he manages personally have released several hits, and the inventory has increased two or three times compared with previous years. The company's overseas warehouses have already placed orders for goods until March next year, and are being shipped one after another. But Li Yue is a little uneasy. The epidemic has been recurring, and it will soon be time for a large-scale population migration. He is worried that there will be accidents with Amazon or the first leg after the Spring Festival.

Regarding the difficulties faced by Amazon this year, Li Yue believes that as long as there are no major problems in the US market, the current situation will gradually improve. In the future, the industry will have more and more sophisticated requirements for operations, such as English proficiency, product selection ability, and independent product optimization ability.

Dongguan Amazon migrant workers Meiya 5 years of experience: annual profits shrunk significantly

Amazon Migrant Worker has been running Amazon for 5 years, and only works on the Meiya site. He did not hold out much hope when the peak season came . Amazon's storage capacity restrictions were still in place . Once a product became unsalable, it would have a significant impact on the sales rate, and it would be difficult to handle the inventory. Therefore, he did not stock up too much in the stocking phase before the peak season .

Regarding the peak season this year, Amazon Migrant Worker expects that the annual profit can only reach 60-70% of last year . He said: " Last year was a special year, it was a year of explosion , this year many sellers ' profits will be greatly reduced . Due to the profit effect last year, many sellers entered the market this year to get a piece of the pie, and new sellers will compete with low prices at the beginning. This year, the most discussed issue is the price war and the issue of charity. I have been dragged into it, but it is not a loss-making business . "

In addition to the price war, there are other factors that affect profits this year, such as sharp price increases for shipping and express delivery , rising cost per ad clicks, falling exchange rates , and price increases by suppliers . The combination of these factors has ultimately led to severe dilution of sellers' profits.

The biggest problem it is facing is the limited storage capacity . The shipping time is too good. The goods shipped in June and July took 60 days from the departure of the ship to the receipt. In order to replenish the goods in time, express delivery is often used, which is very expensive . This also affects profits.

Compared with previous years, Amazon migrant workers said: " The money earned this year is definitely less , but I heard that many sellers lost money. In the business world, there are always gains and losses. In addition to looking at the results, it is also important to know how the losses were made. This year's difficulties are difficulties at the macro level. The factors that affect profits are basically the same for everyone, but there are definitely some differences for each seller . "

In addition, against the backdrop of Amazon's major overhaul this year, many sellers in the industry have experienced account closures , which has also greatly affected profits.

Amazon migrant workers believe: "The key to doing business on Amazon is the product , not the operation. Good products don't need too much effort to promote. It's difficult for a product to dominate on Amazon . It's good enough to be ranked first and have stable sales. I never thought about squeezing into the first place in the category. The first bird to stick its head out gets shot. I would rather stay in a corner. Doing business requires a long-term perspective, not just making quick money . "

Although this year has been relatively difficult, he remains optimistic about Amazon and the development of this platform in the next few years.

Shenzhen Chen Zhen, a one-year Amazon seller: I don’t have much hope for the peak season

Domestic e-commerce sellers are entering Amazon. Chen Zhen is one of them. He calls himself an "experienced newcomer". "Because I have worked on Taobao before, I can understand very basic questions at a glance."

Chen Zhen's company has a factory. Currently, its domestic business is mainly offline. In terms of cross-border e-commerce, he has laid out two lines, Amazon and independent stations. On Amazon, he adopts the boutique model, mainly focusing on the kitchen category.

For Chen Zhen, the rules of cross-border e-commerce and domestic e-commerce are similar, and the difference lies in the product selection process. For example, factors such as product size and weight, foreign customs, and logistics costs must be considered when selecting products, and commission requirements are also different. "When we first selected products, we mainly looked on Tik Tok, where there are many (products). After all, you can't live there or experience local customs, so we can only speculate from some third-party platforms through videos posted by locals and other content."

At present, its main products are supplied by its own factory, and some products are also transferred from outside.

Chen Zhen reviewed the situation and concluded that this year's profits would definitely not be as good as last year's. Advertising expenses doubled compared to last year, which basically consumed all the profits. Add to that the shipping costs, etc. and all in all, small products were not very profitable. Large items were okay, but they were also affected and the profit margins were not that high.

Among the factors that reduce profits, advertising costs are the largest, followed by shipping costs. These costs have more than doubled compared with the same period last year. Chen Zhen's company mainly sells small and light commodities. Currently, the advertising costs in this category have risen a lot, and the cost per click is about 3 US dollars.

This year's price war also had an impact, but Chen Zhen said he could bear it. In terms of operations, because of advance stocking, the company's replenishment process was basically smooth, and there was no shortage of goods by combining several methods of delivery. "I am an experienced newcomer. The experience I lack now can be made up in a short time, such as understanding the rules, and there are some so-called pitfalls that must be avoided at a low cost." Chen Zhen is very clear about his situation.

The peak season has arrived, but Chen Zhen has not seen the moment "a moment ago". Putting aside the advertisements, he can only look at the basic micro-profit. Combined with this year's environment, he does not have much hope for this peak season and can only hope for next year.

In addition to Amazon, Chen Zhen also set up an independent website this year. He believes that independent websites are a higher form of cross-border e-commerce. "Amazon makes money, while independent websites are mainly used to build up their market share. I used to work in SEO, so I am relatively familiar with domestic e-commerce and online promotion. The only difference in the overseas promotion I am doing now is the platform and method. I just need to study the platform rules."

Shenzhen Foreign Trade Captain: Amazon and foreign trade income are half and half

On Weibo, “Foreign Trade Captain” is an active celebrity in the industry. He has many years of experience in traditional foreign trade. He tried Amazon last year and has been an Amazon seller for a year.

The Amazon site is an additional branch to make money. The captain said that the US site and the Japanese site are currently the main sites, and no other third-party platforms have been deployed except Amazon. Although he is a novice seller, he has not stepped into too many pitfalls: "The business is fine, we operate in compliance with regulations, and we are not afraid of account verification, but the storage capacity limit is a bit uncomfortable."

Last year's boom caused many old sellers to overstock. The team leader is relatively cautious in stocking up. There are not many new products this year, and the old products are not even in stock. The team leader said that there is no expectation for the peak season, and the stock will be replenished when necessary. At present, the sales of regular products have started to rise, and seasonal products are only tested on a small scale.

After just one year, the revenue share of Dazhangdu's company from Amazon and foreign trade has become equal, which is a good start for sellers who are transforming from foreign trade. The reason for this, he said: "The foundation is good. The most important supply chain is ready. Basically, we just need to operate it."

Next, the captain does not consider expanding to other third-party platforms, but is ready to try an independent website. "I have a friend who has made a fortune by running an independent website for two or three years." Regarding the high cost of independent websites, which is a common concern of sellers, he believes that no matter what others say, you can only know whether it is suitable if you try it yourself. "What's the use of just envying others? We must take action and make more money than them."

As a foreign trader and Amazon seller, the captain also gives some advice. He previously posted a blog post, revealing the phenomenon that some companies disguised themselves as factories to receive orders from foreign trade companies:

“Whether it’s foreign trade or Amazon, I suggest you visit factories more often. Visiting factories can really help you gain a lot, such as new samples, deeper communication with suppliers, and many other fun things.

For example, we have a large order, and after asking for quotes, we finally locked in two factories, one was willing to give credit terms, and the other insisted on a 30% deposit. Then I would definitely give it to the factory with credit terms, because the quantity is relatively large, and it was my first order, so I went to visit the factory myself, and talked about the other one during the conversation.

Then the factory said, "Oh, him, he is just upstairs from us. He doesn't have any machines, so he has to get the goods from us because we want to collect a deposit from him."

Fuzhou Xiaomei 1-year Amazon seller: Now Alexander

For many cross-border e-commerce practitioners, the end of operations is starting a business.

Xiaomei from Fuzhou used to be an Amazon operator. Last year, she started her own Amazon business. But the actual situation of starting a business was far from what she expected. "The first half of the year was fine, but the sales volume dropped a lot in the second half. In addition, I misjudged the peak season and thought that the orders would double during the peak season. I pushed a lot of goods to the store, and now I am under great pressure," she said.

Many sellers worry about the problem of tight storage capacity, but this is not the case for Xiaomei. She said she doesn't want to ship the goods at all and she would be thankful if the backlog of inventory could be sold out. However, judging from the current bleak order situation, this is not optimistic.

Xiaomei is not optimistic about this year's profit: "I can only say that profit is the same as work. If the accumulated goods can be sold out, it will be better than working. I am just doing small business anyway." High logistics costs, price wars, many competitors and reduced order volume have all affected profits.

Although it is not easy, Xiaomei will continue to do it next year. She hopes to develop one or two better products to maintain her livelihood. Compared with operating, the financial and mental pressure of starting a business alone is greater. Her mood fluctuates with the orders. She said she has to make money as soon as possible, otherwise her heart can't bear it.

For most sellers, 2021 is obviously a difficult year, which is caused by the macro-environmental factors caused by the epidemic, as well as the pain of cross-border e-commerce development to a certain stage. The pressure brought by operations always exists. Sellers complain while sticking to their posts. They are still full of expectations and hope to get through the winter as soon as possible and usher in the next round of explosion in the industry.

On October 26, the Ministry of Commerce, the Cyberspace Administration of China, and the National Development and Reform Commission issued the "14th Five-Year Plan for E-Commerce Development", pointing out that by 2025, the transaction volume of cross-border e-commerce will reach 2.5 trillion yuan, an increase of 47.92% compared with 1.69 trillion yuan in 2020. The huge increase of 810 billion yuan will be the growth space for cross-border sellers.

(All characters in this article are pseudonyms)

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