Lost 2 million in 3 years, the seller said: survive first!

Amazon Sellers in 2024: Survive First.

In the years when cross-border e-commerce was growing wildly, a large number of peers rushed into the market, so there were many sellers who became rich and listed. But it only takes a moment to fall from the top to the bottom. After the account closure wave, cross-border e-commerce entered the slow lane, and the competition in the stock market became increasingly fierce. Many sellers suffered losses or even withdrew.

If this is the case for the top sellers, we can see the plight of small and medium-sized sellers . It is common to see sellers suffer losses of millions due to blind expansion, losses of 200,000 yuan in one year of starting a business, and daily advertising expenses of tens of thousands of dollars... This can be said to show the various types of sellers. Now more sellers are thinking about how to survive.

Looking back at the first half of this year, overseas consumption is still weak, and most cross-border sellers' performance in the first half of the year was lower than expected, with sales falling or profits halved. However, the low-price "bullets" that Amazon has recently fired at competing platforms such as TEMU may open up new territory.

As the big sale approaches, rounds of accidents are coming one after another. After a large number of links were misidentified as plant or seed products, sellers continued to report new problems, which undoubtedly made the situation worse.

After entering Amazon, sellers lost 2 million in 3 years

In recent years, the cross-border e-commerce market has become normalized, and competition among peers in the industry has become increasingly intense. Sellers who used to flock to Amazon are all worried about the decline in order volume, and more and more people's performance has turned from profitable to flat, declining, or even continuous losses.

Some time ago, Aiyi Home Furnishing, which owns the brand molblly, announced its withdrawal from cross-border e-commerce, shocking countless people in the industry. It was once the second in the mattress category on Amazon, and its omni-channel revenue reached 1.37 billion yuan in 2023. According to peers, Aiyi Home Furnishing's withdrawal from cross-border e-commerce was affected by many factors. One of the reasons was recognized by many people in the industry. The boxed mattresses had a high risk of damage, and the profits might not be as much as the losses.

When profits are no longer the norm, abandoning them has become the best option. The ever-bustling cross-border industry is never short of stories, and this is not the only big seller who has chosen to quit Amazon.

In 2017, Jason, a seller who entered Amazon, relied on the rapidly growing cross-border e-commerce environment at the time and achieved an annual GMV of 150 million yuan in just 4 years. With an optimistic attitude towards the prospects of cross-border e-commerce, Jason significantly expanded the scale of the company in 2021 and even prepared goods worth more than 40 million yuan.

But reality is often cruel. At that time, Europe began to increase taxes and e-commerce platform policies gradually tightened. Under multiple pressures, Jason's company's profit margin continued to decline, a large amount of inventory could not be removed, and core employees left one after another. The annual GMV fell again and again, and this year it was only 3 million. In desperation, Jason chose to sell the account he had run for many years for 300,000 yuan.

Some big sellers have suffered continuous losses due to multiple factors, such as the lack of profits or the inability to handle redundant inventory. This is reflected in the financial reports of big sellers such as Zebao, Kuailetong, and Youkeshu. Some big sellers have to choose to withdraw due to the difficulty of continuing, but this is just a microcosm of the cross-border circle. We will give the lens to small and medium-sized sellers, and you will find more cross-border situations that present stories.

Seller Xiaoli is one of the representatives. He has traditional foreign trade experience and domestic online sales experience. In 2021, Xiaoli and his friends entered Amazon with a budget of 500,000 yuan each. Xiaoli, who was originally enthusiastic about starting a business on Amazon, never expected that he would suffer consecutive losses in the next three years.

According to Xiaoli's feedback, the company's focus in the first three years was mainly on learning and developing new products. However, due to the lack of dividends and insufficient entrepreneurial mentality, Xiaoli paid a lot of "tuition fees" in the process of conquering Amazon. In the first year, it lost 700,000 yuan, mainly in the red ocean category; in the second year, it lost 200,000 yuan; and in the third year, it lost 180,000 yuan.

After years of losses, the partners also chose to withdraw in the third year. In summary, Xiaoli paid 2 million "tuition fees" on Amazon for products, rent, staff salaries and other expenses of the team in three years. However, based on his optimism about Amazon, Xiaoli did not think about withdrawing after the continuous losses, but chose to focus on advantageous categories, focusing on improving profitability and surviving first.

"Survive in 2024 first" coincides with the thoughts of many sellers. The cross-border e-commerce market is slow but growing, which means there are still opportunities. In view of the current situation, more sellers believe that the first priority is to stabilize the basic market, rather than emphasizing the market and profits. As mentioned by cross-border sellers, compared with making a loss, no orders will make people more anxious.

Another part of the losses is focused on workers who have accumulated enough experience in operations and other positions. They choose to take out their savings over the years and take a chance on Amazon. Among them, a few lucky ones get to make a lot of money, while most of the unfortunate ones lose money and either stick to their posts or leave. They all have their own misunderstandings.

"I didn't make any money on Amazon in three years, and I even lost hundreds of thousands," said a seller. In the three years of working on Amazon, no product was able to generate stable orders and make a profit, and they were basically sold at super low prices. The reason was simple: the selected category was too unpopular, the product demand was small but the competition was fierce, the CPC was high but the conversion rate was low, the advertising budget and advertising bidding could not be lowered, and the sales were mainly concentrated in the top five sellers.

Although they have worked on Amazon for many years, their friends may think they are making huge profits and are on the road to wealth by buying houses and cars. However, the reality is not rosy. They have been in a state of loss, which is a true portrayal of many sellers.

One year after starting his business on Amazon , seller Lin Bai complained to the editor: last year he suffered a net loss of 200,000 yuan, and there were still 100,000+ goods in the warehouse. In summary, the money-losing projects were mainly concentrated in product selection (speculating on products that sold well in the market), financial planning (wasting money on opening a 13% special invoice), and first-leg logistics (initially using Mason).

Some sellers attribute their losses mainly to advertising. "The daily advertising budget was about $50, or $1,500 a month. I lost so much money that I didn't even dare to throw away my pants," said a seller helplessly. The daily order volume seemed to be arranged by Amazon, just a few orders. He has been in Amazon for four months and has lost more than 20,000 yuan.

In the eyes of industry leaders, some cases of individual losses have some common points: they are rich and blindly confident. When they see others making hundreds of millions a year, they think they can do it too, but they do not analyze whether they have all the conditions to make hundreds of millions a year, such as research, technical staff, etc.

On the contrary, the solo sellers who started with tens of thousands of yuan have a higher chance of success. "The trend and experience are created with the lowest cost. Too many people gradually get on the shore in this way," a seller in the industry shared. Compared with some blindly confident entrepreneurial sellers, more successful sellers tend to be conservative and calculate carefully, keeping the advertising Acos within 10%. One seller has successfully bought two houses in Shenzhen through this move.

Some sellers choose to persevere despite losses and keep looking for ways to survive, while others quit and choose to return to being an employee. One operator said that his former colleague lost 700,000 yuan in two years working for Amazon, and this year he closed the store, cancelled the company, and became an employee again.

According to sellers’ feedback, a major factor in quitting Amazon is competitors’ pranks: “When I first started Amazon half a year ago, I could process 30 to 40 ASIN orders a day, with a gross profit of 30 yuan. But after being pranked by competitors, I had no experience and no way to appeal, so I had to liquidate my inventory and leave at a loss.”

Losses are not isolated cases, but there are also many sellers who make huge profits. We cannot generalize them all. There are also entrepreneurial sellers who lost hundreds of thousands in the first year, but made good product selection and advertising in the second year and successfully doubled the number of orders and doubled their net profit.

Looking at the losses and departures of sellers, it is not difficult to see that most of the resources and traffic are in the hands of a small number of sellers. For entrepreneurial sellers, the challenges and difficulties of entering cross-border e-commerce are gradually increasing.

Sellers’ profits are declining sharply. Can Amazon’s “bullets” pry them apart?

Looking back at the first half of this year, sellers mentioned more words like "declining order volume", "performance cut in half", and "reduced profits". There were very few positive words like "explosive orders", so much so that an industry insider bluntly said: "Compared to the ups and downs of the electrocardiogram, the order volume in the first half of the year is more worrying."

Whether it is the peak season or various festivals in the United States, the number of people who are pessimistic about the number of orders is far greater than those who are optimistic. The impact of the decline in order volume is self-evident, which directly caused the sellers' performance in the first half of the year to be in vain, especially small and medium-sized sellers.

"Last month, in order to boost sales, profits fell by 40%," one seller admitted. In fact, there are many sellers who are also experiencing a decline in profits. According to sellers' feedback, most of them have seen a continuous decline in orders in the first half of this year. Most of them have not achieved their revenue expectations, and their profits have been halved. A seller of household goods said, "Revenue has recovered in the first half of the year, but profits have fallen by nearly 30%."

In addition to the number of orders, the factors that affect their profits are the increase in costs, mainly reflected in logistics and advertising costs. Since the beginning of this year, Amazon's warehouse configuration fees and minimum inventory fees have been gradually implemented, directly eroding the profits of sellers. Some sellers pointed out that after the warehouse configuration fees came into effect, the delivery of a single box will cost an extra $20, which is estimated to be hundreds of thousands of dollars more in a year.

Advertising costs are also getting more expensive. Most sellers complain that the advertising costs have increased, but the number of orders has not increased. When they see their boss, they have to think about how to pass the buck. "Advertising costs have been fully raised, and sales have improved, but the proportion of expenses has reached 40%," said an operator, who was scolded by his boss and couldn't raise his head. And this is still a relatively good situation. Some sellers spend more on advertising. One operator revealed that the boss spent more than 10,000 US dollars a day to get orders, which is quite generous.

The cost is high but there is no conversion, so much so that some sellers have questioned it, "With $150 per day in advertising and a conversion rate of 0.0%, is there a problem with operational capabilities?" Some sellers also complained that advertising expenses have caught up with sales, which means that profits are eaten up by advertising and they have worked in vain for half a year.

However, the "low-price store" project recently launched by Amazon (products priced below $20, sold in white-label form) has spread like a bomb in the cross-border circle, giving many sellers hope. At the end of June, Amazon held a closed-door meeting in Shenzhen to prepare for the project, which is currently in its initial stage and only invites some merchants to communicate.

Industry insiders generally believe that this is a bullet shot by Amazon at platforms such as TEMU. Amazon is trying to save more market and traffic with the "low-price store" project, thereby achieving the goal of sniping the expansion of platforms such as TEMU.

As we all know, in the past two years, Chinese e-commerce platforms including TEMU and SHEIN have been rising rapidly. In October 2023, the total number of users of the two major platforms reached 110 million, a four-fold increase over the previous year. The number of users is close to 90% of Amazon, and they rely on low-priced products.

There is a clear trend in the overseas consumer market at present, that is, the sensitivity to commodity prices is increasing. A US consumer trend report shows that 32% of Americans are cautious in spending, and 16% are very cautious. They are more interested in low-priced goods, which has also successfully allowed platforms such as TEMU, which focus on low-priced products, to grab more users.

Previously, Amazon reduced the commission of clothing twice to deal with the low-price strategy of platforms such as TEMU, which also received relatively good market response. This time, Amazon once again launched low-priced products and chose to launch products below $20, largely to expand the customer base and capture the users with relatively low income and who are looking for cost-effectiveness.

The categories that TMEU and other platforms are good at are fashion, home and life. It can be seen that the competition in this market will only be higher in the future, and the requirements for supply chain and price are also the same. However, in terms of specific models, compared with TEMU and other platforms, Amazon has made upgrades to allow sellers to have partial pricing power, and its status is between merchants and suppliers.

However, some sellers are also skeptical about Amazon's operating methods. Generally speaking, if the pricing power is given to merchants, Amazon will inevitably charge commissions, traffic, etc. One seller calculated the operating costs: "Assuming that the price of a product is $10, the commission rate is 15%, which is $1.5, and the logistics cost is estimated to be $3.5, plus the promotion traffic fee, the production cost of the product is compressed to a very small proportion." However, Amazon has not yet announced the specific charging details, and many sellers are still waiting and watching.

Amazon’s determination to seize the low-price traffic pool has already been revealed, but with the internal competition on Chinese platforms, can Amazon win the confrontation?

Before Prime Day, there were constant surprises such as rectification and misjudgment

As the big sale is approaching, Amazon sellers are facing not only the early rush of competitors to grab traffic, but also one problem after another from the sellers on the platform. As the saying goes, every big sale will inevitably cause trouble. After the sudden misidentification of multiple links as plants or seeds last week, sellers have encountered new troubles.

Verification of identity is endless. Many sellers reported that they received another "identity verification" email just after verifying their identity a week ago, and they felt that identity verification has become a normal thing. According to the email requirements, sellers must provide information within 10 days to complete the verification process, otherwise the payment of Amazon sales accounts may be shelved or the account may be deactivated.

During the verification process, sellers need to provide relevant business information, identity information, ID card, and bank account or credit card statements. Although many sellers initially said that this review was only for inactive accounts, many accounts that have been placing orders have gradually received verification requests.

Link Mistakenly identified children's products and removed from shelves. Misjudgments seem to have happened many times, and this time Amazon's strict inspection of the compliance of children's products has accidentally hurt many sellers, including sellers of toys, accessories, and home furnishings. Since June 18, sellers have been reporting that their listings have been identified as children's products by Amazon, and the platform requires sellers to provide relevant certification information.

After receiving the misjudgment notification, some sellers immediately sent an email to Amazon to appeal and provided relevant information to prove that their products were not children's products. However, not only was the appeal rejected, but the number of misjudged products continued to increase, and even some newly created listings were required to provide information. For this reason, sellers had to delete the words "kid or children", but many sellers' misjudged listings have not been restored.

A concentrated outbreak of account suspension. Some time ago, many sellers linked accounts for financials+phone reasons, which is also the collection account association we often mention. In common sense, sellers are used to binding the same collection card to different stores, but this is risky. Once a store has a problem, other accounts for collecting collection will most likely be linked together, and the success rate of appeals in this case is very low. At present, this situation is still continuing, and some sellers are still stepping on the thunder.

Obviously, as the promotion time approaches, the platform's various audits are becoming more and more stringent, and sellers are becoming more and more cautious. But even so, there are still sellers who go against the wind and commit crimes before the promotion.

Some sellers reported that Amazon had recently closed down a number of stores that violated the variant regulations, and they all received emails from the platform without exception. The content of the emails showed that the sellers' accounts violated Article 3 of the Business Solutions Agreement.

It is reported that this group of sellers used black technology to merge variants illegally and openly, and they would not be split. They were called "fictitious variants" by industry insiders. After they violated the rules, even if they were reported, they would only have their performance deducted instead of being forced to split.

Now that Membership Day is approaching, various accidents are happening one after another. Relevant sellers need to pay more attention to avoid affecting the order volume and account.

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