Another major layoff at Amazon!

Since the past two years, there have been constant news reports about big sellers going bankrupt, laying off employees, and shutting down. In the home furnishing category alone, many big sellers have collapsed. Now, the top bedding brand on Amazon Europe has also started laying off employees. What is going on?

Amazon's top home furnishing brand lays off 200 employees

Recently, Emma Sleep, a major home bedding brand on Amazon Europe, announced a layoff of 200 employees, accounting for 18% of the company's total headcount.

Industry insiders speculate that Emma Sleep's massive layoffs are likely to be a major change to operations and supply chain. After all, Emma Sleep has not experienced the same unfavorable performance decline as many big sellers that have laid off employees.

Back in 2022, the big sellers in the bedding category either suffered heavy losses or filed for bankruptcy, but Emma Sleep's performance was still growing. Data showed that Emma Sleep's revenue increased by 35% in 2022 to US$948 million. So far, the company has been profitable and growing for five consecutive fiscal years. In 2023, its revenue continued to grow, exceeding US$1 billion.

As a world-leading DTC brand, Emma Sleep was founded in 2013 and mainly sells home bedding products including mattresses, beds, pillows and duvets. In 2017, the company acquired the Dunlopillo brand and later sold products in more than 30 markets around the world under the two brands of Emma and Dunlopillo, with sales of mattresses alone exceeding 1.5 million.

Since its products are developed in Germany, naturally, European sites have become Emma 's main battlefield, and Germany and Poland are the two countries where it performs best. On the German famous review website Stiftung Warentest , Emma Sleep has been ranked first in mattress brands for many years.

On Amazon, Emma has many products that are hot-selling, and some of the products have thousands of reviews. Consumers praise its products for being soft yet not loose, fitting the body shape and being pollution-free, and are deeply favored by mothers and babies in many regions around the world.

Thanks to this, Emma Sleep has captured hundreds of millions of market share in Europe in just a few years. However, the current decision to lay off employees may be based on multiple considerations of channel business and global economic conditions. It is understood that Emma Sleep is currently opening offline flagship stores based on a pure e-commerce model, and the performance of physical stores has exceeded expectations.

Different from Emma Sleep , in the past two years, many home furnishing giants have failed to meet profit expectations, and some have even gone bankrupt.

Declared bankruptcy! Multiple home furnishing brands collapsed one after another

In November 2022, Made.com, founded by Li Ning in Foshan, Guangdong in 2010, was reported to have gone bankrupt.

It is understood that Made.com is an e-commerce company based in the UK, which is mainly responsible for designing and selling velvet sofas, armchairs, copper-frame beds and other products. Initially, its founder Li Ning sold sofas with a production cost of less than $300 to Europe at a price of $3,000. After discovering this business opportunity, he founded Made.com.

With its affordable yet high-end features, the brand has successfully stood out overseas, with sales reaching 315 million pounds in 2020 and listing on the London Stock Exchange in 2021. But the good times did not last long. After the company went public, its performance has been steadily declining, with a pre-tax loss of 280 million yuan in 2022 and a negative cash flow of 73 million pounds.

In September of that year , Made.com planned to lay off 35% of its employees by the end of October in an effort to save its declining situation, but it still ended up being shut down.

During the same period, Eve sleep, a well-known British mattress e-commerce brand, also encountered a cold winter. Due to continued losses and falling stock prices, Eve sleep announced bankruptcy and liquidation.

This is a brand founded in 2014, mainly engaged in the sales of DTC furniture products. Its products are often popular as soon as they are launched. The sales of mattresses exceeded 10,000 sets in the first year of opening. It took only 2 years for the company to go public. In 2017, its revenue reached 28 million pounds. Its star product, boxed mattresses, is very popular and has sold tens of thousands of units a year.

However, the rapid development of the home furnishing e-commerce industry is well known. If a company does not launch innovative products, it will be difficult to go far. Eve Sleep has been rehashing its boxed foam mattresses and investing more money in marketing rather than products, which has led to an unbalanced development situation and it cannot escape the curse of bankruptcy and acquisition.

In February 2023, the century-old mattress brand Simmons officially went bankrupt, which was a pity. Before that, Simmons was a well-known brand in the United States and a hot-selling product on Amazon. However, when the debt brought by the huge acquisition was unbearable, bankruptcy became the inevitable path. It is reported that before the bankruptcy, Simmons had experienced 7 bankruptcies, with a liability of up to 1 billion US dollars.

Looking at the mattress brands mentioned above, it is not difficult to find that the industry is born and dies quickly. Due to multiple factors such as rising inflation, declining consumer purchasing power, and the continuous emergence of competitors, product sales have fallen sharply, corporate losses have led to a wave of bankruptcies sweeping the world.

Will the global economy continue to decline?

As early as 2023, the global economic situation began to become unstable, market demand was obviously weak, and consumer demand as a whole was in a state of consumption downgrade. A wave of corporate bankruptcies occurred in many parts of the world, and forecasts for the economic situation from all walks of life were no longer optimistic.

At that time, the "World Trade Prospects and Statistics" released by the WTO showed that the growth of global merchandise trade in 2023 would decline significantly compared with the previous period, and 56% of the economists surveyed believed that the global economic growth rate would decline in 2024. The International Monetary Fund also previously predicted that the global economic growth rate in 2024 would decline slightly from 3% in 2023 to 2.9%.

They are most pessimistic about the outlook for the European market, with more than 70% of economists predicting that the region's economy will weaken this year. It should be noted that Germany, the economic center of Europe, has already shrunk its GDP by 0.3% in 2023. At the same time, their economic forecasts for the United States are also quite negative. Compared with the previous survey, the number of economists surveyed who believe that the US economy will grow moderately or achieve growth has dropped by 20%.

In response to the economic downturn and reduced income, many cross-border platforms have begun to increase various fees. It is not just Amazon that is increasing various logistics costs and advertising fees, but also many other platforms. For example, in the past six years, the logistics costs of Latin American e-commerce giant Meikeduo have more than doubled. At the beginning of this year, the freight rate was increased again, and the freight rate of some small commodities was increased by about 10%.

Correspondingly, after TikTok gained a foothold in the US market, it also joined the ranks of those who increased commissions. At the beginning of 2024, it announced that it would increase commissions. Starting from April 1, 2024, the commission rate for small stores will increase from the original 2% to 6%. After July 1, this rate will rise to 8%. At the same time, the scope of subsidies for sellers has also been narrowed, and only sellers with high sales can receive part of the subsidies provided by the platform.

All the above signs show that, whether it is the downward economy or the increase in various fees, the easy money-making of cross-border e-commerce has become a thing of the past. In the future, more challenges are waiting for sellers.

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