Crazy internal competition! Amazon sales plummeted, and the price war caused the entire category to lose money

This week, many Amazon sellers reported that they were confused because they spent a lot of money on advertising but the number of orders had obviously declined. Many new sellers entered the market and started to sell their products at low prices without saying a word. The price war within the category became more and more intense. Old sellers angrily accused them of "doing charity and triggering infighting among peers."

In addition to the price war, sellers also face exchange losses. Since April, the US dollar exchange rate has started a new wave of decline. Today, the US dollar to onshore RMB exchange rate hit a low of 6.4061, and the offshore RMB has fallen to the 6.3 range, and sellers are beginning to get restless.

Bug sequelae? Sales of many Amazon sellers plummeted

In recent days, many sellers have reported that the number of orders has been decreasing, and some sellers’ sales have even dropped by more than half. What is going on?

One seller said that since the system bug, sales have been falling, and today sales are only one-third of the original. Many sellers on Zhiwubuyan said that sales have also fallen:

"The whole company is in a slump. I am crying. What is going on? Even the relatively stable products are starting to decline."

“It’s also bleak. The orders are only one-third of the original, and the number of visitors has also dropped sharply.”

"For home & kitchen categories, the number of orders has dropped drastically, but the keyword ranking is still on the first page."

"This month's sales are half of what they were in previous months..."

Some sellers think that the recent decline in sales is a bug sequelae, because the sales drop began after the 20th; another possible reason is that buyers are preparing for Prime Day. A seller tried to optimize but was not satisfied: "Store sales suddenly deteriorated, dropped by half, and all kinds of optimizations were done but there was no splash. I was very panicked when I saw the sales data."

According to feedback from some sellers, this wave of sales decline began in April, and the decline was even worse in May. If orders are declining, you should first check whether there is copycat sales. One seller said: "I thought the traffic on the Amazon platform had deteriorated, but I didn't expect it was copycat sales. I immediately contacted the service provider to deal with it."

Some sellers have seen a sharp drop in sales, while others have seen a sharp increase in sales, or even a small explosion. The specific situation depends on factors such as whether the product is seasonal and product operation. But one thing is certain: the fierce price war is taking away orders from high-priced sellers.

Amazon sellers are in a fierce price war, and one person is losing money for the entire category

Recently, many sellers have questioned whether their peers are doing charity. The current situation that has led to this question is that the number of new sellers entering the market has increased, and in order to quickly gain a foothold, the number of sellers engaging in price wars has increased sharply.

A seller said that this year, many newbies entered the market. Everyone does business on Amazon to make money, and when there are too many people, things get chaotic. Some people sell at a loss as soon as they enter the market, and there is no way they can make a profit. I saw a lot of extremely low-priced products, and when I clicked in, I found that they were basically new stores.

The seller said frankly that a product with a minimum price of 9.99 yuan and basically no gross profit has a cost of more than 10 yuan or nearly 20 yuan. Some sellers directly set the price at 6.99 yuan. Even if the price reaches the top, what will happen? It will not last long without profit. After the price is raised to 9.99 or 11.99 yuan, there may be profit, but the orders will definitely be cut in half.

There are too many cases of this kind of thing. A seller barely maintained a BS in a small category , selling the product at 9.99. After raising the price to 10.99, the order volume began to decline, and he had no choice but to lower the price back.

In fact, not only are new sellers fighting a price war, but some old sellers are also resolutely joining the price war in order to grab traffic. There are many products in each category at a price of a few dollars. These sellers are really Amazon philanthropists! They only want orders, not profits!

Colleagues with relevant experience said that from practical experience, low-price rush is really not feasible . Once the price drops, it becomes a fatal low-price game. The ideal of the seller is to make a strategic loss first, wait for the order to surge, and then frantically replenish the stock, press the price from the factory , and at the same time raise the selling price to keep the orders and profits.

But ideals are full, but reality is very skinny! When selling at low prices, competitors rushed up to fight. If one person lowers the price , a group of people will follow suit. In the end, everyone's products can't be sold. Some people spend a lot of money on advertising, and the CPC is getting higher and higher. Coupled with other costs, the profits of almost all sellers in the entire category will decline. It's really one person who makes the entire category lose money!

Some industry insiders said that the reason for the fierce price war this year may be related to a strategy mentioned by the training institution. What should we do if the order volume is not increasing? The magic weapon mentioned in this strategy is to reduce prices, even if there is no profit , to maintain the order volume is the most important thing.

Last year's epidemic pushed up the overall sales of cross-border e-commerce and increased the number of sellers entering the market . However, the epidemic in Europe and the United States will gradually end. After offline operations are reopened, many people will face difficulties. By then, there may be a lot of people crying to clear their inventory.

If you want to continue to receive orders and maintain profits, it is essential to make products with care. To a certain extent, innovation and differentiation can repel price wars. Otherwise, all sellers who engage in price wars will slowly disappear.

Because of the constant price wars, many sellers have cried out: "I can't take it anymore! Some people are really disgusting. They would rather cut prices to benefit foreigners than to kill their competitors. " The fierce price war has already put some sellers at risk of losing money, and the unstable US dollar exchange rate is eating into their meager profits.

The US dollar fell to 6.40

Today, another wave of decline in the US dollar exchange rate attracted the attention of many sellers.

Huitong.com reported that the USD/CNY exchange rate continued to fall today, hitting a three-year low of 6.4008 since June 2018, while the USD/CNY exchange rate fell to 6.4061 against the onshore RMB. Once the 6.40 mark is lost, the USD/CNY exchange rate will further decline to 6.3850 in the short term, and the long-term target may point to the low of 6.24 at the end of April 2018.

This wave of exchange rate decline has aroused sellers' vigilance.

An industry insider said that this year you can't rely on luck when exchanging currency. You have to exchange U.S. dollars as soon as they arrive. You should also be careful with foreign trade quotations and leave yourself more room. It is better to not compete on price and take fewer orders than to take orders and end up losing money.

Many Amazon sellers have the same view: Don't wait, the exchange rate has been falling for a long time, so you should quickly cash in. "I exchanged it at 6.399, and I exchanged it when it arrived. It's too volatile now," said a seller. Compared with the previous exchange rate of 6.44, today's exchange rate of 6.39 made the sellers feel a little painful.

Another piece of news sellers also need to pay attention to.

Zhou Chengjun, director of the Financial Research Institute of the People's Bank of China, said at the Moganshan Conference last month that under the conditions of RMB internationalization, we cannot control the RMB exchange rate. The Chinese central bank will eventually give up the exchange rate target. The RMB exchange rate is determined by the preferences, expectations and transactions of all global market players for the RMB. The RMB will continue to appreciate against the US dollar in the medium and long term. This is not only the result of China's continued economic growth and the continuous improvement of the relative purchasing power of the RMB, but also one of the consequences of the Fed's quantitative easing and continuous expansion of its balance sheet. If the RMB becomes the currency anchor of neighboring countries and countries with close investment and trade relations with China, these currencies will appreciate against the US dollar.

The price war on Amazon is currently in full swing, and the RMB will continue to appreciate against the US dollar in the medium and long term. Sellers must be prepared in advance in terms of supply chain management and pricing.

Sales volume, price war, exchange rate