Loss of 3 million overnight! The factory faces many difficulties in transforming to become Amazon

A foreign trade factory owner who owns 8 properties in Shenzhen and has achieved financial freedom said that he doesn't want to be out of touch with the world and wants to do something, so he plans to join Amazon. Netizens said: "I'm so worried about his house!"

In recent years, more and more factories have transformed to work for Amazon. Especially after Amazon experienced a major outbreak due to the epidemic last year, there has been a wave of transformation.

However, this road is not so easy to walk. Many factories suffered heavy losses. Some factories not only did not make any money, but also almost lost their entire fortune.

Lost 3 million overnight, the factory transformed into Amazon and suffered heavy losses

Not long ago, a seller said that there was a large-scale factory producing nose hair trimmers and razors. It started its own Amazon business at the beginning of the year, but all operations ran away in October, and now it has a pile of FBA inventory.

This incident has attracted the attention of the industry to those factories that have transformed to serve Amazon.

A freight forwarder observed that in the past two or three years, more and more factories in Boluo County, Huizhou , have transformed themselves into factories for Amazon. Previously, they only did OEM work, but now they have rented offices in Guangzhou and Shenzhen, recruited talents, and started to plan for Amazon.

In fact, it is not only Boluo County . In recent years , factories have sprung up like mushrooms to develop Amazon business. Especially after Amazon experienced a major outbreak due to the epidemic last year, there has been a wave of transformation.

There are three main reasons why factories transform themselves to sell to Amazon : First, domestic competition has become increasingly fierce in recent years, and more and more factories are struggling to survive and need to explore new profit points; second, they believe that Amazon is a huge opportunity and want to reap the benefits, or want to build their own products into a brand in a certain category and become a benchmark in the industry; third, they are jealous of seeing that the Amazon sellers they cooperate with are making a lot of money.

Factories with price and supply chain advantages are always full of confidence before entering Amazon, but doing business on Amazon is not as simple as opening an online store and selling their own products, so failure is obvious :

A factory owner "heard" that Amazon was very profitable, so he quickly hired an operator to sell mobile phone cases, power banks and other products on Amazon. As a result, he lost more than 2 million this year.

A factory that relied on fake orders to create popular products, used one account to fake several products at the same time. After faking 300 orders in one day , the account was blocked, but the operation was still going on to ship the products, resulting in a loss of 3 million overnight.

There was also a factory with an annual output value of 600 million that wanted to expand its presence on Amazon by spending a lot of money. It equipped itself with a luxurious team including operations, promotion, art, photography, and data. However, it did not make any money, but instead lost several million a year.

Dilemma: Lack of operational talent and inexperienced bosses...

People in the industry often say: "Without good products, any marketing on Amazon is empty." Factories happen to have this natural advantage. Compared with other sellers, they have a better understanding of their products. Their internal development and quality inspection teams can help them avoid pitfalls such as infringement. They also have strong financial strength and price advantages. But why is it still so difficult to succeed?

"I supply goods to some Amazon sellers, and they are all doing very well. Why is it that when it comes to me, I am failing?" said a factory owner distressedly.

Industry veterans said that a successful online product (brand) relies not only on supply chain and financial strength, but also on R&D, technology and talent.

The shortcomings of the factory in this regard are obvious to all, including:

1. Being overconfident in one's own products, thinking that as long as the product is good, it will definitely be successful, thus neglecting the marketing end;

Second, the boss has no relevant experience, which leads to two results: one is that everything is done completely according to the operation ideas, and the other is excessive interference in the operation;

3. Some factories still use B2B thinking to do Amazon business when they are transforming . A typical point is that they will write the listing as an instruction manual .

4. The operation method is simple and crude, regardless of the platform rules, it is just a word "brushing";

5. Most of the factories are located in remote areas, making it difficult to attract capable operational personnel.

"Every time I approve a document, they find people faking orders. I don't understand what's going on and it's really a headache!" said a factory owner who has lost more than 2 million yuan. "Now I'm hesitating whether to continue doing this or give up and go back to working in the factory." Their problems are the same as those of most factories that have transformed to run Amazon businesses. Their product quality is very good, but they still use factory thinking when operating. The operations level of the people they recruit is limited, and operations are simply faking orders.

The problem of "talent" is a pain point for these factories. There are two ways to solve this problem: one is to hire people to do the work and open up new land by yourself; the other is to cooperate with an agent operation company on the market. According to the phenomenon we have observed in recent years, since it is difficult for factories to recruit suitable operation talents, they often take the second approach. Data shows that more than 80% of those who seek Amazon's operation are factories or traders.

However, we all know that Amazon's agency has not had a good reputation in recent years, and many factories that have cooperated with agency companies have complained bitterly, saying that they have been ripped off. For example, one factory said that it had paid 300,000 yuan for agency fees after working with an agency for a year, but in the end it did not make any money, and after calculating the accounts, it found that it had lost more than 1 million yuan.

If a factory wants to transform itself into an Amazon, it must be prepared to not make money for a year

Nowadays, cross-border e-commerce is a big trend. It is understandable for factories to try to do Amazon, but they must recognize that this is not a business that can make money everywhere or make quick profits. There is even a high probability of losing money. Some senior sellers pointed out that if a factory wants to transform into Amazon, it is best to be prepared to not make money for a year.

Because Amazon requires sellers to put up a lot of money just to prepare inventory, not to mention other things. Previously, a furniture factory was preparing to sell furniture to Amazon, but after calculation, it found that it would take three months to prepare 5 million in inventory, which made it sober. "I was so scared that I decided to learn how to do it first," he said.

Therefore, if you don’t know much about Amazon, I advise factories that are planning to develop this business not to enter the market easily. Some people think that as a factory, the cost of products can be kept low, so even if they don’t make money, they won’t lose money. But in the end, you will find that as more and more new sellers enter the market, everyone is opening up with low prices, and the advantages of factories are minimal.

In fact, if factories just want to break through the difficulties of operation, they don’t have to go through Amazon. It is also a good choice to focus on factories. For example, there are factories that are doing well through in-depth cooperation with Amazon sellers. They can also make money by working hard and doing their best in their fields. Why give Amazon what you have worked hard for? Wouldn’t it be better to spend hundreds of millions of dollars to buy cars and houses?

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