Orders are cut in half, sellers: "falling and falling" continuously!

Orders are cut in half, sellers: "falling and falling" continuously!

This year's cross-border market is still in a state of "volume". The market traffic of sub-categories continues to decline. In order to grab orders and maintain rankings, sellers are mostly engaged in price wars, stop losses, and low opening. However, after a series of measures, it seems that there is little effect.

 

"As soon as May came, the number of orders plummeted and the traffic disappeared. What happened to the beautiful country?" said a seller. Shipping prices and advertising costs have been rising, but there is no sign of improvement in the number of orders and profits. Instead, the advertising income of the platform has increased. It is expected that the number of orders before the peak season will still be not optimistic.

 

Since the algorithm was updated, sellers have frequently mentioned that "the new algorithm is unstable and is a drag", and some sellers said that they are afraid that they will not be able to achieve their performance targets in the first half of the year. New products burn money, and the sales of old products are hard to say. However, some seasonal products have broken the sluggish market situation and ushered in a small sales peak.

 

Thinking that the drop in order volume was the worst thing, sellers placed their hopes on big promotions and actively prepared for a big event. However, as the peak season was approaching, various problems continued to emerge in the logistics link. Popular warehouses were overwhelmed, packages were refused, goods could not be turned around, and freight rates on European and American routes increased again, causing a number of sellers to say that they could not bear it any longer.

 

The number of orders plunged sharply, and sellers said: "It's like going back to the days before liberation overnight."

 

"March warehouse configuration fees, April low inventory fees, June return processing fees", sellers who were complaining about Amazon's charging policy some time ago have changed their complaints to "a sharp drop in order volume". May, which was previously regarded as the peak sales period by sellers, seems to have failed this year. Since the beginning of the month, Labor Day and Mother's Day have come one after another, but most sellers' feedback is that the order volume continues to plummet↓

 

The order volume plummeted by 55%

Spending money on advertising every day, but no sales

The order volume was halved in mid-April, and it is getting worse now.

The market continues to be sluggish, like a roller coaster with orders coming and going

It was just good at the beginning of the month, but after the holiday, the order volume fell back to the level before liberation

 

According to feedback from sellers, orders have plummeted and been cut in half, and there are constant reports of declining platform traffic. Links that have performed well in the past are also starting to sell poorly. What's worse, one seller 's sales fell by 50% in April, and the number of orders continued to decline in May, which continued until after Mother's Day, when it hit rock bottom, with zero orders.

 

So much so that one seller bluntly said: "American people are busy protesting, so they forget to shop." This is not without evidence. Since the end of April, protests mainly by young Americans (the main force of online shopping) have broken out in many parts of the United States, and the problem has not yet been resolved.

 

Looking back at the same period last year, many sellers were still immersed in the joy of the holiday sales boom, but now the timeline of the peak sales season is a miserable face . "When you wake up, the orders have gone offline again." There is no peak season at all. At the same time, affected by the upcoming big promotion and the large-scale number scanning on the platform, some sellers will focus more on this . Industry insiders predict that sales will remain sluggish for some time to come.

 

Some sellers believe that the sluggish sales are not only due to the above factors, but also to the change of platform algorithms. In April, industry insiders found that Amazon began testing the new algorithm COSMO in the US site, which overturned the keyword ranking mechanism of the previous A9 algorithm with an algorithm that pays more attention to user intentions and purchasing behavior. However, according to feedback from many sellers, the conversion rate of the new algorithm is not stable at present, and it often fluctuates.

 

Many sellers have to spend a lot of money on advertising to save orders. A senior seller said, "Before Mother's Day, the advertising was so intense that the bidding was unbearable, but the orders still did not improve at all." In order to attract a lot of orders, the product prices have been pushed down to the lowest, with almost no profit. It is likely that they are doing charity for Amazon again.

 

Data shows that Amazon's advertising revenue in the first quarter of this year was $11.8 billion, up 24% from $9.5 billion in the same period last year. According to this trend, advertising fees are still Amazon's cash cow, and it is unlikely that Amazon will reduce costs by relying on a decrease in the proportion of advertising fees. In an environment of fierce competition, in-site advertising will only continue to grow.

 

 

As we all know, some sellers promote new products at low prices, some as low as $2.99 ​​or $3.99. In addition, they usually invest a relatively high advertising budget in the early stage, and the advertising space is always at the top of the homepage. With the money piled up, the ranking and sales of new products can rush very quickly. After a period of time, if the new product is successfully promoted, the seller will have the possibility of turning a profit. Otherwise, it will be under serious losses, the product price increase is unsuccessful, and the advertising budget cannot be reduced, and it will become a discarded child. This is also an important factor that many novice sellers fail.

 

Due to factors such as the decline in orders and the surge in advertising costs , sellers’ profit margins have been squeezed. Either both sales and profits are falling, or there is sales but no profit. One seller said: “The first half of the year is coming to an end, and the profit target has only been achieved by 40%. I’m afraid that the performance will fail again.”

 

More than one seller has had the same experience. "Two new products failed to be promoted, and my capital chain was almost broken , " the seller lamented. Without orders, there was no profit. In general, the more orders a seller places, the more inventory he or she will have. However, due to the optimistic market, many sellers still have more inventory than they actually have. Gradually, they are looking forward to an increase in orders while holding back on payments. The financial pressure increases suddenly, and in the end, they have to spend money on advertising and consume inventory, and the profit is even lower .

 

A senior seller pointed out: In the sub-category market, most of them open with a price war mode. "Whenever a competitor in a category market starts to lower its price, several competitors will follow suit." The price war is on the verge of breaking out, followed by various flash sales and large coupons.

 

If you don’t compete, your ranking and sales will continue to drop until you exit the market, and the initial investment will go down the drain; if you compete, you will sacrifice profits to maintain your ranking and sales. However, the seller also pointed out that products that can cause price wars are often highly homogenized products. These products often have something in common, that is, they have low ratings but high return rates, which requires sellers to start with their own products and improve the core competitiveness of their products, so as to avoid price wars and build their own moats .

 

However, as the saying goes, some are happy while others are sad. At a time when many sellers are depressed about their sales, some sellers are still seeing an increase in sales. Blogger @Amazon城哥said, "Last year, I launched two products and opened two stores. Now, there are less than 300 orders per day, of which advertising orders account for about 50%, and ACOS is only 15%. I am quite satisfied."

 

Coincidentally, a seller said: "The order volume in May increased by 10% compared with the same period in April, and increased by 40% compared with the same period last year." Some sellers also said that their order volume was sluggish in March and April, but the order volume began to pick up in May.

 

According to sellers’ feedback, whether the order volume in May has increased depends on the category. In the past, it was mainly seasonal categories such as gardening and sports and outdoor activities, and this year is no exception. Not only is the traffic high, but the order volume is also good. An outdoor sports seller said, "The order volume in May has increased a lot, and even some out-of-stock items have started to increase again."

 

The sales growth of seasonal categories is mostly related to people's habits, such as gardening and outdoor sports. Specifically, searching for keywords related to garden categories in Google keyword trends, such as moss pole and monstera plant support, usually reaches its peak in May, and sales peak between May and June. The golden sales period for sports and outdoor categories is July, and sales are expected to continue to grow between April and July, reaching a peak in July.

 

However, seasonal products also have their drawbacks, with some sellers saying that if they are not careful, they will have to wait until the New Year with inventory. For example, in the heating category in 2023, many sellers were still preparing a large amount of inventory due to the boom in orders in 2022, but they never expected that Europe and the United States experienced the warmest winter in history, which led to a large number of sellers piling up inventory. It is predicted that Europe and the United States will have warm winters in the next three years, so the "volume" of this category this year can be imagined.

 

Warehouses are overflowing, freight rates are rising, and sellers can no longer bear it

 

With the obvious downward trend in the number of orders, sellers have pinned their hopes on the big promotion and started to prepare intensively, ready to go all out. However, as Prime Day is approaching, unexpected problems arise at a critical juncture: during the peak season for stocking, many Amazon warehouses are overwhelmed, and shipping costs have risen again, making sellers anxious.

 

Since May, many warehouses in the popular West Coast of the United States have experienced serious warehouse explosions, abnormal turnover, temporary closures, and refusal to accept goods, resulting in a large number of sellers' goods being unable to enter the warehouse on time. Specifically, the current warehouse explosion situation is the most serious↓

 

SMF3, GYR3: Severe warehouse overflow, trucks queuing and unloading slow

GYR2: The warehouse was severely damaged in the early stage, and the warehouse has been temporarily closed and no goods are accepted.

XLX7, VGT2, LGB8, SMF6: The reservation is full, and the liquidation will not be accepted.

ORD2, IGQ2, MDW6: There are cases of postponement

XLX7, ALB1, ONT8, SBD1: cargo height is limited, cargo exceeding 1.8M (75IN) will be rejected

 

According to the freight forwarder, as early as the beginning of May, several Amazon warehouses were overwhelmed, with GYR2 being the worst hit. The warehouse has been closed and will reopen soon. Other warehouses are experiencing slow unloading, full appointments, overwhelmed warehouses and refusal to accept goods.

 

As Prime Day approaches, the surge in sellers’ inventory is one reason for warehouse overflows, and another reason is Amazon’s massive layoffs that have led to a labor shortage. At the same time, the severe weather in the western United States, including high temperatures, drought, heavy rains, and floods, has hindered the region’s power supply and logistics.

 

"The more peak seasons there are, the more Amazon warehouses lag behind," one seller complained. It is reported that during peak seasons, Amazon warehouses will inevitably encounter various problems when preparing goods, especially warehouses in the western United States. At the end of last year, Amazon added a new warehouse configuration fee to try to change the frequent warehouse overflows in the western United States, but now it seems to have little effect. Even at the beginning of this year, several warehouses were closed due to snowstorms.

 

The impact of warehouse overflow on sellers is self-evident. Sellers’ stock cannot be stored or put on the shelves normally, which is likely to cause a stock-out crisis. Consumers cannot receive the goods, which affects consumers’ shopping experience and may lead to bad reviews, complaints and other problems, which in turn affects the store’s performance and repurchase rate.

 

To make matters worse, warehouses are overflowing and shipping prices are also rising , especially on European and American routes. "The freight rate per large box on the US West Coast route is about $4,200, $5,300 on the US East Coast route, and $3,500 on the European route," said a freight forwarder. But on May 15, the freight rates on the European and American routes were notified to increase by $10,000.

 

This also confirms that major shipping companies issued notices to increase peak season surcharges in early May. At that time, a freight forwarder said that "basically there will be 1-2 rounds of increases every week, and some companies even adjust their freight quotes more frequently." Not only that, a shipping company also notified that it would impose an additional peak season surcharge of US$600 on European routes from May 22 to 31.

 

Although the container market is in the traditional off-season, shipping giants have raised their shipping rates. Take CMA CGM as an example. Since May 15, its freight rates from Asia to Northern Europe have been raised to US$2,700/TEU and US$5,000/FEU, an increase of 23% and 25% respectively. The freight rates from Asia to the United States have also been raised. The shipping and shipping surcharges for the basic ports in the West and East of the United States have increased to US$4,393/FEU and US$5,562/FEU, an increase of 22% and 19% respectively.

 

Mediterranean Shipping Company (MSC) also released the guaranteed space rates at the beginning of this month, which will be effective from May 15 to May 31. Specifically, the freight rate per container on the US West Coast route has risen to US$8,000, while the freight rate on the US East Coast route has risen to US$10,000.

 

The notice in mid-May was just the "appetizer" of the price increase . Recently, several companies have begun to announce freight increases starting June 1 and price increase plans in mid-June .

 

The increase in freight rates can be traced back to the May Day holiday, when major shipping companies implemented flight reduction measures, resulting in insufficient capacity and container shortages . A freight forwarder said that "customers' bookings have been scheduled until mid-June, and some routes are even hard to find." The shortage of containers has led to a large number of goods being piled up at ports, and the increased backlog costs for a company have reached millions a year .

 

It is reported that in order to ensure timeliness, foreign trade companies usually start placing orders for the second half of the year in May and June ; as Amazon Prime Day is scheduled, cross-border e-commerce sellers have also begun preparing for big sales , and the demand for transportation capacity between the two is also increasing. The person in charge of a Shenzhen supply chain company said that "the trend of price increases will last at least three months."

 

The continuous increase in freight rates has made it difficult for some companies to bear, and some companies have chosen to adjust their shipping plans and delay shipments. Some sellers have begun to re-evaluate the transportation costs of land and air transportation channels to avoid missing out on the big promotion. Here, the editor also reminds all sellers to make more forward-looking plans when shipping to avoid extra costs caused by temporary rush shipments; at the same time, choose a combination of multiple transportation methods to disperse risks and reduce costs.

 

The impact of rising freight rates on sellers is self-evident. Take the home furnishing giant Zhiou as an example. In 2022, due to the high sea freight prices, the company's performance growth was suppressed, and its freight accounted for 16.58% of revenue in 2022, up from 6.83% in 2020. The revenue in 2022 was 5.455 billion, and the freight cost was about 900 million. It was not until 2023 that the sea freight prices fell sharply, which led to a decline in the proportion of freight.

 

European and American consumption shows signs of recovery, these items may be hot sellers

 

In fact, looking at the trend of price increases, there may be human factors involved, but it cannot be denied that the European and American markets are showing signs of recovery, and Amazon still holds the top spot.

 

According to the Jungle Scout data report, 32% of American consumers reduced their online spending in the first quarter of this year, but more than half of consumers said that their spending in the first quarter was roughly the same as that in the fourth quarter of last year. Among them, 21% of Generation Z and Millennials increased their overall spending in the first quarter.

 

Despite the impact of inflation, European and American consumers are keen to tighten their purse strings and reduce online spending in the first quarter, but sales of 14 of Amazon's 24 product categories have increased, with the highest spending on arts, crafts and sewing, pet supplies, and beauty and personal care. They are more inclined to pay attention to product quality, ratings, and pictures and videos of the actual objects.

 

In March, Amazon Prime subscription service hit a new high of 180 million American shoppers, an increase of 8% over the same period last year. Even though it is surrounded by cross-border companies such as TikTok Shop, TEMU, and SHEIN, Amazon's position remains stable. Not to mention that these competitors are now "attacked" in the United States. TikTok has been trapped in the new bill; TEMU and SHEIN are struggling in the US "small exemption" system. It is reported that the two account for nearly one-third of the small exemption shipments.

 

With the arrival of the change of seasons, the search volume of some categories of products on Amazon is also showing an upward trend.

 

As mentioned earlier, seasonal products have been very popular recently. For example, the search volume for gardening supplies, such as potato planting bags and vegetable seeds, has also been rising recently. Keyword Scout data shows that the search volume for "gardening supplies" has increased by 719% in the past three months.

 

As summer approaches, searches for children's summer clothing have increased significantly. Specifically, searches for girls' summer clothing have increased by 594%, while searches for boys' summer clothing have increased by 858%. This shows that the popularity of children's clothing cannot be underestimated.

 

Adult swimwear is also a hot product recently. Recently, the search volume for swimwear on Amazon has continued to rise, especially for men's swim trunks and women's swimsuits. Not only has the search volume for the large category swimsuits reached millions of times, but the search volume for swim trunks has reached 1.1 million times. The popularity of women's swimwear is even higher, and the search volume mainly for the keywords "women's abdominal style" and "women's swimsuit" is increasing. Specifically speaking of brands, the large-size swimwear brand CupShe is very popular, with a 2195% increase in search volume in the past three months before April .

 

As the temperature rises, more and more foreigners are starting to increase their outdoor activities. Among them, travel accessories have the highest growth rate, and mini accessories are the most popular. In the first three months of April, the search volume for airplane travel essentials increased by 209%, and mini travel essentials increased by 730%.

 

In addition, sales of products including toys and games have also increased to varying degrees. However, although the above products are currently very popular, the editor still recommends that sellers make plans first and choose categories that suit them to focus on in order to avoid crowding.

Unit quantity

logistics

freight

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