Hurry up and raise the price! 60% of sellers received notice of price increase, with the highest increase reaching 70%

When the power restriction incident just started to ferment last week, few sellers could have imagined that this notice would cause an uproar in the cross-border circle: the soaring sea freight prices were cut in half, half of the suppliers began to increase prices, and many cross-border sellers in Shenzhen were also cut off from power ...

Starting from mid-September, many parts of the country have successively issued notices on power and production restrictions, restricting production in a large number of factories, with the foreign trade and cross-border e-commerce industries being the hardest hit.

According to the Amazon Sellers Price Increase Willingness Survey released by E-net this week, half of the 40 cross-border sellers interviewed have received notices of purchase price increases from suppliers, with increases ranging from 10% to 30%, and a few increasing by 50% or even higher. In response to rising costs, 63% of sellers have raised prices, most of which have increased by 10% or less.

The only benefit of power restriction is the decline in shipping prices, with market quotes even being updated hourly. Take Matson for example, compared with the high of nearly 30 yuan/kg a few days ago, Matson’s regular ship quotes are now 15 yuan/kg, a direct halving. This makes sellers who have just shipped goods during the peak season regretful, but thinking of the future reduction in freight costs, many sellers still breathe a sigh of relief.

In addition to the supply chain and transportation links being affected, power outages also occurred in daily office work. This week, many sellers in Shenzhen were unable to work normally due to power outages in their office areas. Some sellers had no choice but to climb 15 floors to move their computers. Power restrictions are affecting the cross-border e-commerce circle.

60% of sellers received price increase notices from suppliers, some of which increased by 50%

In the past two weeks, many provinces including Guangdong and Zhejiang have implemented power restriction policies. Guangdong Power Grid said that it would implement a "two-day on, five-day off" power consumption plan from September 16, with staggered rest from Sunday to Thursday; Zhejiang Shaoxing, Wenzhou and other places have also begun to strictly control the production capacity of textile printing and dyeing, chemical fiber, plastic products and other manufacturing industries, and a large number of factories are facing shutdowns and production cuts.

Will this wave of power cuts have an impact on cross-border sellers?

From the perspective of procurement, as long as your supplier does not raise prices, there will be no impact. However, after the power restriction, raw material companies reduce production and raise prices, the downstream supply chain procurement and production costs increase, production capacity decreases, unit prices rise, and sellers' procurement prices are likely to rise, the only difference is the size of the increase.

Among the 40 Amazon sellers who participated in the "Price Increase Willingness Survey" , 60% have received price increase notices from suppliers, of which about 1/3 have increased by 10% or less, another 1/3 have increased by 30% or more, and a few sellers have increased by 50%, 70%, or even doubled. Some sellers have received price increase notices, but have not yet determined the specific increase; only 40% have not received price increase notices or "don't know".

( Pull down to see the full picture /summary results of the questionnaire )

Mr. Gao from Shenzhen is an Amazon seller and supplier. He has recently received frequent text messages from the power supply bureau warning of shutdowns, “The power was shut down forcibly the day before yesterday.” The text message requires that production be stopped during the off-peak hours (8:00-23:00). After that, the system detected that the power load of the line where he was located had not decreased, and the line was eventually shut down forcibly.

Mr. Gao said that they are currently considering using generators or changing to night shifts. Large equipment will be changed to night shifts, and generators with less power consumption will be used for production during the day. Even if this will affect production capacity, it is much better than power outages. The electricity cost of staggered electricity consumption is cheaper than during peak periods, but with additional expenses such as night shift subsidies, the cost is still increased.

Will the price of goods for sellers increase in the future? Mr. Gao said: "Yes, the upstream prices are also increasing. The increase has not yet been determined. Some suppliers have not yet confirmed to us how much the increase will be and when it will be increased." This is also the reason why some sellers have received price increase notices but have not been able to determine the specific increase.

Yesterday, a seller received a price increase notice from a factory in Dongguan, which would increase prices by 30%-50%. The notice stated that the factory had recently experienced large-scale power restrictions (working three days a week and resting four days a week), and the price of raw materials had risen sharply (reaching more than 50%), and that it was unable to overcome the cost pressure. The original price needed to be temporarily adjusted, and from now on, the price of new order products needed to be recalculated and evaluated before the quotation was determined.

( Supplier price increase notice )

At present, many factories have prepared generators and plan to produce in two shifts, but procurement price increases, delayed delivery or even non-delivery may occur at any time. "There may be no such thing as a delivery date. Next, it depends on the relationship with the factory and the ability to urge delivery." said a seller.

The increased risk of stocking up has made many sellers decide to raise prices. This wave of price increase notices issued by suppliers will accelerate Amazon sellers to raise prices across the board.

63% of sellers have raised their prices

The sellers interviewed in the questionnaire mainly operate in the United States and Europe. Regarding the current price war in their categories, 80% of the sellers said it was "serious" or "very serious"; 63% of the sellers have increased prices, of which 60% increased by 10% or less, and a few sellers increased by 20% or 50%.

( Pull down to see the full picture /summary results of the questionnaire )

What will the sales volume and profits be like after the price increase?

Among the 25 sellers who have increased their prices , 11 said that "orders are normal", "not much impact", "orders are stable/increased, profits increased", etc. after the price increase; 7 said "orders decreased, profits increased", and 3 said "orders decreased, profits decreased". Overall, orders may decrease after the price increase, but profits will most likely increase. Most sellers who have increased their prices said they would stick to it and continue to increase slowly and steadily in small steps; a few sellers said they would wait and see the rankings and the number of orders in the future.

Due to cost pressure, sellers are calling for price increases:

“The price has been increasing by one dollar at a time, and suppliers have already notified us that they will raise prices.”

“It’s been rising by 10% for two consecutive months. The cost is too high;”

"The price has increased slightly, but I don't think it has much impact on the order volume;"

"There are many good reviews and it's ranked high, so there's nothing wrong with raising the price;"

"The price has already gone up, otherwise the peak season will be wasted;"

"I have already raised the prices of my best-selling listings in the past few days. I sincerely urge everyone to raise their prices collectively and stop being so competitive!"

In addition, power restrictions have increased procurement costs and stocking uncertainties, and many sellers have accelerated price increases.

Industry big V @ Amazon said bluntly: "More than one supplier has notified of price increases! Everyone should be prepared for the price hike after the power rationing." "Today, the managers notified one by one that the price will be increased by 5%-10%. All departments should have to adjust the prices. I'm a little panicked, afraid that the supplier will suddenly say that the product is out of stock." said an operator.

Many categories are slowly increasing their prices. One seller found that her original price was in the middle and it had not changed for a long time, but now it was actually at a low level, so she raised her price and increased her profit a little. She said: "The shipping cost has dropped a bit, but the purchasing cost is still rising. I will hurry up to prepare the goods and send them out today."

In addition to the pressure brought by increased purchasing costs, the peak season is also an opportunity for product prices to increase.

Seller @Amazon五爷 is also calling on his peers to raise prices. He analyzed that October to December is the peak season of the year, and many products need to take this opportunity to clear inventory, but products that sell well, especially holiday products, can be increased in price. In the case of insufficient inventory, prices should also be increased decisively. The price factor in the peak season is not as obvious as in the past, and hot-selling products should seize the opportunity to make profits. Another senior seller also reminded: "Those that should increase prices can be raised little by little, and don't let price gouging (price fraud) prevent you from raising prices later."

Among the reasons that prevent sellers from raising prices, the low prices of peers and serious internal competition are the main reasons. Some sellers are also worried that a slight drop in ranking may cause a cliff-like drop in orders, and slow turnover may cause the inventory quota to be unable to increase or be compressed in the opposite direction. Comparing the prices of the same product last year and this year, many sellers are heartbroken, "Last year's $14.99 sold better than this year's $9.99, I am about to cry."

Although some sellers who stocked up in advance still have inventory to be digested, overall, the power cuts will provide a boost, and prices on Amazon will rise again to cover the additional purchasing costs.

The huge impact of power rationing on shipping has exceeded many people's expectations.

Power restriction affects sea transportation, Meisen cuts prices by half, sellers lose more than 200,000 yuan for early shipment

Recently, the price of Matson channel has dropped significantly, with the general price reduction of about one-third. Some freight forwarders have reduced their quotations by half compared with the previous price. When Matson's price dropped sharply, sellers who had already shipped goods could not sit still and sighed that they shipped goods too early. Sellers who caught up with the high-priced shipments, after comparing the current prices, said that they had lost a lot. The price of ocean shipping is like a roller coaster, which has undoubtedly become the most exciting project.

1. Meisen's prices plunged, with the highest price falling by half

After the power cuts, one good thing for cross-border sellers is that the sea freight prices, which had been rising continuously, have plummeted.

On the evening of September 27, a seller in the industry mentioned that today's ocean freight rates are being reduced hourly. In the morning, the freight forwarder quoted 18 yuan/kg, 16 yuan at noon, 14 yuan in the afternoon, and 12 yuan in the evening, and some even 10 yuan. I really can't adapt to this wave of price cuts!

In fact, the recent shipping prices are just as this seller said, dropping too fast and too drastically!

Last week, the ocean freight prices were still high, and some freight forwarders began to signal a price reduction over the weekend. Currently, Matsun, which has seen a large price increase, has seen the largest price reduction, while prices for other ocean freight channels have fallen slightly.

Last week, the market price of Matson, where sellers shipped more goods, was close to 30 yuan/kg, and most freight forwarders quoted prices of 26/27/28 (corresponding to the prices in the West Coast, Central and East Coast of the United States, respectively). The high freight rates triggered complaints: "The freight rates are too high. I have been doing foreign trade for more than ten years and have never seen such high shipping prices!"

In just one week, the price of Matson has dropped significantly, generally from nearly 30 to below 20. In the past two days, the price of Matson channel has been falling all the way, and some freight forwarders have quoted close to 10.

More feedback from freight forwarders and sellers about Meisen's prices are as follows:

“ ——Our freight forwarder, Matson, has reduced its price by 7.5% today , and other freight forwarders have also reduced their prices ;

——The number of the regular ship of Matson starts with 16, and the number of the overtime ship starts with 14;

——Big dive, more than ten yuan;

——The current delivery price starts with 1;

——The price quoted on 16/17/18 dropped by nearly 30%;

——Meison has dropped to 13;

——The freight rates of Matson are falling rapidly, and the containers of regular ships are not full. "

When asked about the reasons for the price reduction of ocean freight, a freight forwarder briefly explained that supply exceeds demand, market rules, and the side effects of power rationing will become more obvious in half a month, which will also lead to a decline in shipping. At the latest, the price of shipping will also drop in half a month, and it will be reflected as early as after November 11.

2. The seller lost more than 200,000 yuan in shipping and lamented: It was too early!

The price cut by Matson is a big blow to sellers who have already shipped goods at high prices. One seller expressed his feelings directly: "I shipped goods ahead of schedule during the peak season, and all the goods have been shipped. Matson's shipping fee has dropped by 7 yuan. Get lost!" Another seller said bluntly that Matson's price has dropped sharply, and the price is too hurtful to me.

Many sellers who have already shipped out their peak season goods feel that they have lost a lot, after all, the price has really dropped. A seller in the industry did some calculations and found that this wave of ocean freight price cuts is equivalent to buying 1,700 shares at 23 yuan last week, and today it has become 14 yuan, which is basically a 50% cut, and two iPhone 13s are gone. Once you make the wrong choice, you will suffer a loss.

A seller who previously shipped goods at high freight rates said that in order to get all the goods to the warehouse by the end of November, all the goods for the peak season had been shipped in September, and nearly 10,000 goods were shipped to overseas warehouses. As a result, the warehouse suddenly expanded at noon today. In addition, the freight rate has plummeted by nearly 1/3 in the past few days, and more than 200,000 yuan has been wasted. However, according to past experience, ports will definitely be congested in November and December, there will be a shortage of trailers and truck drivers, the inspection rate will increase, and Amazon's warehouse processing time will be extended. It's okay to lose a little!

There are many cases similar to this seller. Sellers who have completed shipments before are complaining about the drop in freight rates. In the relevant seller groups, many people regret that they shipped the goods too early. There are also clear-headed sellers who believe that a small loss can at least guarantee inventory during the peak season.

Sellers who have not yet shipped their goods are happily waiting for opportunities. One seller believes that the time efficiency of the overtime ship from Matson is not bad and the price is cheap, so it is just right to rush to take an overtime ship to save some freight. Another group of sellers are still waiting and watching, they are expecting further price cuts for sea freight, fearing that the price will drop again the next day after they ship their goods.

3. Sellers beware: the price may be fake after the price reduction

When the freight rate of Matson dropped significantly, problems also followed. Some sellers asked whether Matson's delivery time had dropped recently. Other sellers had the same question and always felt that Matson was not faster than ordinary ones. Moreover, the quotations of different freight forwarders were also very different. When shipping to the West Coast of the United States, some quoted prices starting with 2 and some with 1, and they all said they were regular flights.

Some sellers suspected that the regular ship sent by Meisen was actually an overtime ship. Compared with the two channels, the overtime ship was cheaper. Some sellers even suspected that the Meisen ship was actually transferred to other channels.

Regarding this kind of problem, a freight forwarder in the industry said that sellers must be careful about the low quotes from Matson this week, as they may accept goods under Matson's gimmick, but they actually do not use Matson's channels. Because freight forwarders often get containers two weeks in advance, and the price at that time was more than 30,000 US dollars. Therefore, now they have to balance costs and can only accept large quantities of goods, half of which will go through Matson and the other half through other ships.

The freight forwarders who had bought the containers at high prices before also began to panic. Some have started to sell at low prices. The price of a Mason container that previously cost more than 30,000 US dollars is basically less than 20,000 US dollars this week. One freight forwarder said that he saw someone selling it for 18,500 US dollars, and another freight forward said that some were selling it for 17,000 US dollars.

Seeing this scene, the seller said frankly that it turned out that not only we are in a state of internal competition, but the freight forwarder has also started to involute!

The problem of internal circulation is particularly prominent in Matsun. According to the old goods in the industry, Matsun's containers are basically used by e-commerce companies. E-commerce companies have seriously speculated on the containers that have flowed out from the outside. The cost is less than 20k US dollars, but it can be speculated to more than 40k US dollars. The price of traditional ships is relatively stable, so it is difficult to speculate up.

The popularity of containers has dropped sharply, and container speculators are panicking

As container prices continue to fall, some people believe that the container market may collapse.

A freight forwarder revealed that after the power cuts, the container prices will soon collapse. This is because a group of scalpers maliciously speculated, buying containers at low prices and selling them at high prices. Some people can easily make $6,000 by reselling a container. It is this group of people who drove up the shipping prices. Now that the power cuts have been implemented, the entire export volume has been affected. Scalpers are eager to sell at low prices, and the prices that were maliciously driven up before will soon drop sharply.

Regarding this issue, the editor interviewed several freight forwarders. They all believed that the soaring shipping prices were indeed closely related to the speculation. Some people did make huge profits by selling containers, but the container market was not about to collapse.

After the big increase in sea freight prices, traditional factories have a lot of goods piled up. Considering the cost, they have not shipped them in time. When the price stabilizes, these factories will ship normally. Under power restrictions, production capacity will decrease, but it is not gone, it has just been reduced to a certain extent.

When will the shipping price stabilize? It is still unknown. Many sellers believe that the shipping price will continue to drop after the National Day holiday, because the current trend is that it is falling every day.

Several freight forwarders in the industry said that at present, the ocean freight prices will continue to fall, but they will not continue to fall forever and will gradually stabilize after a period of time. One of the freight forwarders believes that in mid-October, the ocean freight prices should stabilize in a range, but the previous low prices of 6-7 yuan/kg will probably no longer exist.

Power rationing brings many "surprises", but it is hard for sellers to imagine that their own company might also be subject to power rationing.

Some office buildings in Shenzhen were without power, and sellers climbed 15 floors to move computers

A Shenzhen seller posted on Monday: "I climbed the 15th floor this morning to move a computer. It was like taking a shower. I will work from home before the holiday. I hope I can call after the National Day."

The number of sellers who have been cut off from power is still increasing. Yesterday morning, a seller in Pinghu, Shenzhen, complained that the company building had power cuts and everyone was walking back. Soon he received a notice : "According to the notice from the power supply bureau, due to peak power consumption, this office building will be cut off from power for one day. Today is temporarily adjusted to a rest day. If there are other situations later, we will notify you separately." Another colleague said that we have also received a notice that there will be a power outage.

( Swipe to see the long picture )

However, some companies experienced sudden power outages without any advance notice, or were notified of the power outage in the afternoon but started the outage in the morning, catching them off guard.

Yesterday, an office building in South China City was without power until 6pm . A staff member complained, "All the office buildings in South China City are fine, only our office building has a power outage. We suggest changing the line in advance. The power restriction in the industrial zone will not be easy to solve in a short time, and the office building will also be affected. The loss is too great. We have to change the line sooner or later, otherwise the loss will increase day by day."

It is understandable that costs fluctuate due to price limit policies, but if the company's daily office work is also subject to power restrictions and the work rhythm is disrupted, it will probably be difficult for sellers to accept.

As power restrictions continue, end sellers may need to raise prices

Previously, there were also analyses of the reasons for the power cuts, among which the argument that the power cuts were used to reduce production capacity and compete for international commodity pricing power was the most widely circulated and once dominated the screen. However, as the scope of power cuts in the three northeastern provinces expanded, civilian electricity also began to be restricted. Events such as "Shenyang traffic light power outage caused road congestion" and "A family of four in Dunhua, Jilin was trapped in an elevator due to a power outage" have successively become hot searches, and the argument that industrial electricity restrictions are used for international bargaining is no longer tenable.

On September 26, Xiake Island published an article analyzing the power rationing issue.

In mid-August, the National Development and Reform Commission issued a document that evaluated the completion of the "double control of energy consumption" targets in various regions in the first half of 2021. The results showed that the energy consumption intensity in some regions increased instead of decreased, and 9 provinces and regions were listed as first-level warning areas. The brakes were slammed on the line, which led to power restrictions in many places.

With coal prices running high and power coal in short supply, many places are facing tight supply and demand for electricity. More than ten provinces including Guangdong, Anhui, Zhejiang, and Jiangsu have begun to implement power rationing policies. If the power shortage situation is not alleviated, power rationing may continue.

Factory production is restricted and foreign trade is at the center of the storm.

It is reported that Keqiao District in Shaoxing, Zhejiang is the largest concentration of printing and dyeing textile industries in Asia, with printing and dyeing capacity accounting for nearly 40% of the country. Since September 22, nearly 200 printing and dyeing factories in Keqiao District have basically all been shut down due to power restrictions, and this will last until the end of September. A textile factory was affected by the power restriction and production restriction policy, with the daily startup rate of the workshop less than half, and most workers had to stop work and take holidays. Most printing and dyeing factories and textile factories are facing different degrees of shutdown. The previous backlog of inventory has fallen from a high level, and sales prices have begun to rise slightly. This is just a microcosm of many industries.

Ultimately, the increased price costs will be transferred to the terminal. From the comprehensive impact of power rationing, although the shipping price has fallen, the sharp increase in purchasing prices has brought new cost pressure. In order to maintain profits, most sellers urgently need to raise prices, otherwise it will be difficult to absorb this sharp increase in expenses.