The inventory capacity of many sellers has been reduced by another 2,000, and the internal competition on Amazon may intensify

Today is the first day of the Mid-Autumn Festival holiday. Many people are already traveling or returning home, but there are always some cross-border people who are on duty. This morning, these sellers found that Amazon unexpectedly updated the storage capacity. A few people were happy to receive an increase in their quota, but most sellers' storage capacity was reduced again, with a decrease of about 800-2000.

Some sellers are worried that the continued reduction of inventory capacity will lead to further involution on the platform. From the feedback, low prices can indeed help to quickly improve the ranking, but the curse of price increase will cause the ranking to drop, which makes it difficult for them to land. Many such new sellers ran out of funds after a sprint, and some lost millions in three or four months and finally left the market. The top sellers were also forced to join this fierce battle, and they did not hesitate to lower prices and raise bids to defend their rankings.

At present, the spiral strategy, the tightening of storage capacity and the impact of clearing warehouses to recover funds will make it difficult to change the low price situation in a short period of time; and the operating costs such as freight and advertising fees have reached new highs, and sellers are looking forward to the platform's price rising. When will this stalemate turn around? The head of Amazon business of a major seller in the industry said that Amazon's overall inventory level is still higher than in previous years, and it may take a year to digest this inventory.

The inventory capacity of many sellers has dropped again

Amazon is indeed not following the usual path. It was supposed to update the inventory capacity on Monday, but many sellers refreshed the backend for half a day and still couldn’t wait. On the first day of the Mid-Autumn Festival holiday, Amazon updated the data, and the result was another round of wailing.

This morning, some sellers found that Amazon unexpectedly updated its inventory capacity. According to seller feedback, only a few sellers had their replenishment limits increased, while most sellers had their inventory capacity cut:

"——It's reduced by 2000, I'm going

——The storage capacity that was increased with great difficulty was gone in an instant

——The storage capacity has dropped by another 800

——I dropped a lot today

——It dropped by less than 2,000

——The inventory went straight into the red and we couldn’t ship any goods.”

Some are happy while others are sad. Some sellers are happy to see the increase in storage capacity, with amounts ranging from 100, 1000, 1800 to 2000, so they rush to build positions. However, some sellers say helplessly that even after a 2k increase, they are still in the red.

Seller @跨跨熊二Bramble believes that the platform's repeated reduction of inventory capacity is bound to lead to further intensification of internal circulation, such as the popularity of low-price spirals, the activation of large coupons, long-term flash sales, increased advertising efforts, the use of overseas warehouses, etc., which are additional costs to increase inventory capacity and ensure continuous supply; in the external environment, foreigners have no money, skyrocketing shipping costs and unstable timeliness, the depreciation of the US dollar and the overall trade environment are all unfavorable factors.

There are many low-price rankings, but it is difficult to get a ranking

Price competition this year is unprecedentedly fierce. The reason is that some new sellers enter the market with the idea of ​​grabbing a position at a low price, and are ready to grab market share with a wave of low prices; the way to fake orders is blocked, and the promotion of new products relies more on low prices; in addition, due to the excessive stocking of industry dividends last year, sellers now need to clear their warehouses to recover funds, and the continuous shrinking of inventory capacity has forced sellers to speed up sales. The combined effect has led to the current widespread low price situation.

In fact, new sellers can indeed quickly improve their rankings by offering low prices. Their expectation is to raise prices after they are ranked higher, but the reality is that once the price increase loses its price advantage, their rankings and order volume drop rapidly, making it ultimately difficult for them to get higher.

"There are several such sellers in my category. They start by using low prices to spiral toward the top 20, then use ultra-low prices to sprint toward the top, and then replenish goods in large quantities so that they can rush up in the future. But he underestimated the market, and ended up spiraling for three or four months before he could not hold on. As soon as he raised the price, his ranking dropped, and he lost several million. Last month, two more such sellers came, and one of them is from a Shenzhen company with 100 employees. In this market this year, out of 10 people who entered at a low price, 9 withdrew at a loss, and the only one who was lucky enough to make it to the top." said a top seller.

But he still didn't dare to relax. The low-priced spiral sales had little impact on small sellers, but many of the customers coming in were big sellers with strong financial resources. If he made concessions, he would lose. So he could only protect himself and put high cost pressure on the other party.

"We, the top sellers, dare not place ad spaces. Even though the profits are low, we have to occupy the ad spaces tightly and cannot give them any chance. Otherwise, they will come up and start competing for the top positions, and then it will be a new spiral. Now I only look at whether the ad is at the top and don't care about the bidding price," said the seller.

The cruel low-price situation: if the top players don’t raise prices, it will be difficult for the overall price to rise

At present, with the background of the sharp increase in shipping and advertising costs, many sellers want to collectively raise prices to protect profits, reverse the current low price situation, and refuse to be cross-border philanthropists. Some sellers even called for joint price increases with their peers in the industry.

One seller wrote: "Shipping costs have gone through the roof, wouldn't it be nice if everyone raised their prices together?" But reality has dealt them a heavy blow. The two cruel realities of the current price war among sellers are as follows:

1. Contradiction: If the top players do not raise prices, it will be difficult to raise prices overall

The top sellers control most of the traffic and orders. If they do not raise prices, the sellers below them will have no confidence to raise prices. The worry is that after raising prices, the ranking will fall behind, which will affect orders and make the gap between orders and top sellers even larger.

One seller said frankly that price has a direct impact on orders and rankings to a large extent. If the top sellers raise prices, low-price sellers may take the opportunity to move up, and then low-price sellers may use their own advantages to rush to the top. Therefore, the top sellers who are currently ranked high will also have concerns, fearing that their positions will be lost.

2. Confrontation: Novices charge, veterans endure

The top sellers dare not raise prices easily, and the situation where everyone is selling at low prices seems to be trapped in an endless cycle. The low-price strategy is difficult to curb, and new and old sellers are in a confrontation: new sellers are rushing at low prices, trying to grab a position by spiral tactics; old sellers have been enduring, watching various costs rise, and dare not raise prices easily. A seller helplessly sent a text to ask his peers: "Didn't you say that you would raise prices together?"

In this confrontation between new and old sellers, old sellers may have more advantages.

A colleague analyzed that the veteran sellers have a lot of experience, and the accumulation of the past few years makes them not afraid of the price war that lasts for a year. During the epidemic last year, many people made a lot of money, and the profits were lucrative, and they could live on this money for 1 to 2 years. Moreover, the previous weights also allowed some veteran sellers to guarantee a small profit and not lose money. They survived by lying flat, and hoped to outlast the low-price players in the process; while new sellers who entered the market at super low prices can only operate in the short term, and nine out of ten will end up exiting the market.

When will the turning point come? The price war may last for a year

At present, the price war situation among Amazon sellers is not optimistic. When will the turning point of the low-price game come?

The head of Amazon of a major selling company in the industry said frankly, "We are also paying close attention to this issue and have discussed it with some peers, suppliers, service providers, etc. According to feedback from many parties, this game may last for a year, until the eve of next year's peak season."

During the epidemic last year, many sellers saw a significant increase in sales, especially in the peak season in the fourth quarter. A large number of sellers were out of stock due to a surge in orders. This gave many sellers confidence and also strengthened their confidence in stocking large quantities. Some sellers stocked several times more than in previous years.

Last year, the cross-border e-commerce market was improving, and a large number of new sellers rushed in at the beginning of the year to seize the market. However, the market gradually cooled down after the peak season, and the large amount of inventory of old and new sellers could not be digested. In order to recover funds as soon as possible and increase inventory capacity, everyone would inevitably engage in price wars.

As for the turning point of prices, it ultimately depends on when the sellers' large inventories can be digested.

At present, many sellers in the industry believe that it is difficult to raise prices across the board due to the large amount of inventory and the game of ranking. Old sellers "might as well burn more money to survive and make money after outlasting their competitors." Everyone is waiting for the market to improve after a round of reshuffles.

Will the market price eventually return to its previous level? We don’t know. But before the price rises, everyone is waiting for a ray of hope with the number plate they have obtained by sacrificing huge profits.

Amazon, storage capacity, involution