Amazon launches full hosting! A large number of sellers are seeking to join

Yesterday, Amazon announced a new low-price store project to some sellers, officially launching a full-hostage counterattack. The positioning, division of operating rights, product selection requirements, price restrictions, logistics and delivery of low-price stores have become the focus of attention. After the low-price store goes online, a large number of low-price sellers will be eliminated due to the intensification of internal competition. At the same time, sellers have obtained a low-cost sales channel, and everyone is eager to try and is eager to open it.

The industry predicts that if Amazon has strong execution capabilities, it will win the battle for full hosting. Because of its pricing power, many sellers have made it clear that if they want to do full hosting, they will definitely choose Amazon.

Amazon joins full-service hosting, launches low-price store

Yesterday, Amazon held an internal closed-door meeting in Shenzhen to introduce a new major project - the low-price store - to the participating sellers.

According to the official introduction, the low-price store specializes in providing customers with white-label low-priced fashion, home and daily necessities products. The fulfillment and delivery are carried out by Amazon's warehouses operated in China, and it is expected that the products will be delivered directly to customers within 9-11 days. The low-price store is currently an internal invitation system. Amazon will begin accepting goods for storage in the fall of 2024 and open project registration this summer.

The project overview shows that the low-price store is positioned as a store within the Amazon main site . The low-price store entrance is set up on the amazon.com homepage, and the browsing interface is separate; the low-price store and the Amazon main site share the same backend, and the site is switched in the same way as the mall. The performance evaluation of the low-price store is separate from that of the main store and is conducted independently, without a follow-up selling mechanism.

In terms of business rights , sellers in low-price stores have the right to select products, set prices and participate in activities, but not the right to advertise. Amazon charges sellers commissions (the commission rate is the same as the main site), provides fulfillment and delivery, customer service and return support, and is responsible for on-site and off-site promotion.

In terms of product selection , this model mainly corresponds to white-label products. The brand is not displayed on the link, but can be displayed or not on the product . When selecting products , sellers should choose low-priced, low-weight and safe products with a price of less than US$20, a weight of less than 1 pound, a size of 14*8*5 inches, and non-spreadable and non-edible.

There is a price cap, and Amazon has set price caps for different categories. For example, the cap for screen protectors, electronic product lines, key chains, hairpins, makeup brushes, etc. is $7, the cap for pet supplies, banners, light bulbs, etc. is $8, the cap for earrings, rings, luggage, toys, sporting goods, etc. is $9, and the cap for mobile phone cases, charging adapters, pet clothing, etc. is $10.

The upper limit is between $11 and $20. Towels, lamps, etc. are capped at $11, hangers, towel racks, etc. are capped at $12, headphones, electric fans, etc. are capped at $13, wigs, curtains, etc. are capped at $14, scales, mops, etc. are capped at $15, skirts, carpets, etc. are capped at $16, backpacks, mobile power banks, etc. are capped at $17, swimsuits, small appliances, etc. are capped at $18, bedding sets, sleeping bags, etc. are capped at $19, and sweaters, coats, boots, etc. are capped at $20.

During the delivery process , different SKUs of clothing can be mixed, but non-clothing cannot be mixed. The shipped products are sent to Amazon China warehouse, and the warehouse directly sends small packages to end customers. Low-priced products are refunded but not returned. Sellers have no storage capacity restrictions and will not be charged overage inventory fees.

A participating seller introduced: "The low-price store is currently only available in the US site, and will probably be available in other countries later. Although technically, the low-price store and the main site have two separate search systems, traffic will be directed from the search page of the main site to the low-price mall. The goods in the low-price mall can only be stored in the Chinese warehouse, and goods below US$3 cannot be returned, and goods above US$3 can only be refunded."

A large number of sellers want to open stores, and low-price stores have both advantages and disadvantages

Backed by Amazon's huge user base and platform traffic, low-price stores will undoubtedly have a good start, so sellers in the industry have asked how to enter, hoping to reap the benefits of low-price stores as soon as possible. However, the low-price model, domestic direct delivery, logistics costs and other characteristics make the industry mixed with joy and sorrow about low-price stores, which will change sellers' operations in several ways:

1. Involution intensifies

Hearing that Amazon is launching a low-price store, many sellers are nervous, because a brutal price war is about to come, and sellers of low-price products are even more worried. In the future, the internal competition will inevitably escalate. Amazon will set up a low-price mall entrance on the homepage and will vigorously promote it to consumers. Under the continued economic pressure, the low-price mall will become the first stop for many buyers to shop.

Compared with FBA products, low-price stores can save nearly half of the logistics costs, which is the advantage of low-price stores. Moreover, low-price store sellers do not have advertising rights, so how is the traffic distributed? The answer is probably that the lowest price wins, and there will be a lot of competition within the mall. As the applicable categories of low-price malls continue to expand, most products have low-priced substitutes, and ordinary low-priced products that lack characteristics will soon be washed out by the platform. The low-customer unit market below $20 is likely to become the world of full hosting.

A seller said: "Low-price stores have a particularly hard time hitting low-unit-price products. Traders are definitely no match for factories, which make every penny they can. If this wave of barriers and thresholds are gone, there will basically be no chance of success for low-unit-price products." At the same time, integrated industrial and trade sellers are eager to try it out, and frankly admit that this is a model that suits them very well.

2. Convenient for testing

Low-price stores ship from domestic sources. Due to the shorter warehousing distance, shorter warehousing time, and low inventory investment, the overall production cycle is more flexible, and sellers can test new products through small batch production.

Industry analysts believe that the overlap between the customer base of low-price stores and the main Amazon site will be a good testing platform, which can reduce testing costs and quickly issue payments. After the goods are shipped to Amazon's domestic warehouse, if the data looks good, you can consider upgrading to FBA. This is a value point of low-price stores.

3. One more sales channel reduces operating costs

Low-price stores have lower logistics costs, and they also have special rates for low-price, low-weight goods. Compared with standard FBA services, low-price stores can save up to 45% of costs in end-to-end fulfillment. For example, for a 4-ounce screen protector, low-price stores can save $1.5 and $0.12 in delivery fees and warehousing fees, respectively, compared with FBA, reducing costs by 45.4% overall.

Although the time efficiency of domestic direct delivery is reduced, most users of low-priced products have a high tolerance and can be self-satisfied. Sellers can use this new channel to sell at a lower cost. In an environment where Amazon continues to increase logistics costs, this is a good choice. At the same time, sellers' overseas stocking pressure is reduced, and operating costs are reduced.

Based on the above points, although the impact on low-priced goods is inevitable, most sellers are very interested in low-price stores and are actively asking how to open a store.

Compared with the enthusiasm of his peers, seller Li Bin is much calmer. Amazon invited some top sellers to participate in the project test. Before yesterday, Li Bin had asked the operation to use the new store for trial operation, but from the current situation, the operation of the low-price store is different from his expectations.

On the one hand, there are price restrictions; on the other hand, problems are prone to occur in the logistics process . If high-value products are transported incorrectly or damaged, the loss will be too great, and some low-priced products cannot be returned or can only be refunded. In addition, Amazon's full custody service has strict requirements on delivery time, and sellers must have strong product supply capabilities. It is also easy to have problems when testing products with low-priced stores, so it is better to use ordinary stores for testing.

" If sellers want to do it, it is best to run a trial operation of the store first. Anyway, I am not considering full hosting for the time being. I let the operation explore for a while, and the analysis result is that the investment cost is too high. "

Other sellers are not optimistic about low-price stores. "Low-price stores cannot be run. The white-label distribution model requires physical effort. Individual players have limited energy and must not be dragged into the game with the general trend. Accept the decline in general goods traffic, strengthen the optimization of the Listing page, and appropriately reduce prices, but the ROI must still be maintained above 100%. If you insist on the FBA model, you must go for FBA fine distribution." said a seller.

Amazon's full hosting may win

The impact of Temu and other platforms is obvious to all. Previously, Amazon has reduced delivery fees for products below $10 and commissions for low-priced clothing, hoping to retain its share of the low-price market, but the results have been limited. So Amazon took a radical approach and launched its own full-hosting service.

The seller pointed out that Amazon learned the lesson of domestic e-commerce being crushed by Pinduoduo, and deployed its forces early on to engage in a direct fight, thus avoiding being exploited by Pinduoduo on its super cost-effectiveness due to its stubbornness in its own business philosophy.

Judging from the feedback from sellers, Amazon's full hosting has already gained a lot of support before it was officially released. Unlike Temu and other platforms, Amazon leaves the pricing power to sellers, which is the key to the latter's control of profits. Sellers have captured this friendly signal and said frankly that since cross-border e-commerce has been fully hosted by everyone, if they want to do it themselves, they will definitely choose Amazon .

Seller Mr. Fu analyzed: "Amazon's full hosting is a beautiful business counterattack. From a business perspective, this counterattack is very powerful. If Amazon's execution is strong enough, I don't see the possibility of other platforms' full hosting winning. From the development of the cross-border e-commerce industry, this is a typical historical regression of bad money driving out good money. Amazon has degenerated from building a brand + FBA system for more than 20 years to a white-label era of price wars. To be honest, how big is the difference between 'Amazon' and Wish? It can only be said that it hurts the enemy by 1,000 and hurts itself by 800. No matter what, the seller is the one who pays the bill in the end."

Now, Amazon is inviting another group of sellers to participate in the Yiwu launch conference on July 5, and will announce the details of the mall project to the invited sellers on the day of the event. The participating sellers need to provide the invited store name, store email, etc. to verify the invitation. It is not difficult to imagine that after the low-price store project caused heated discussions yesterday, many sellers will rush to the Yiwu venue from all over the country.

If participating sellers wish to reserve a place in the project, they can contact their account manager and provide information such as willingness to participate, product selection plan, estimated number of goods to be stocked, etc., to take the first step in opening a low-price store.