Orders cut in half! A group of Amazon sellers will be forced out

Amazon sellers are struggling this year. When traffic and orders decline and they face a new round of cost increases, many people will find it difficult to sustain.

Orders and traffic continue to decline

In April, many Amazon sellers' orders are still sluggish. Some sellers said that since the Easter orders were cut in half, they have not recovered. This is not an isolated case. The orders this time also showed unstable characteristics, that is, they were sometimes good and sometimes bad without any signs, and one day was worse and the next day was better.

“I thought I was the only one with poor sales, but when I looked at everyone else, I realized it was the market that was bad,” a colleague gave feedback.

This situation can be traced back to mid-March . According to more relevant feedback, most sellers said that the market has been sluggish since mid-March, especially during the Easter period. There are no orders from advertising, and ACOS is getting higher and higher. Doing business on Amazon is as exciting as riding a roller coaster.

During the Easter period, many sellers said that their orders hit an all-time low .

As a typical example, he said that sales in March and April were very unstable, with a sharp drop during Easter, and many peers were complaining about poor orders. An Amazon practitioner joked: "The work has become much easier, and there is no need to ship anything!"

An industry insider believes that the decline in orders is related to the overall traffic of the platform. With the rise of platforms such as Temu and SHEIN, Amazon's traffic has been snatched away. Amazon's overall traffic fell by about 30% in the first quarter, and the overall order volume of sellers is completely incomparable with last year.

Even so, there are still sellers who are able to fight. Not only have they remained stable amid the decline, but their orders have even increased slightly after the Qingming Festival. However, their distress is reflected in their profits. Orders have increased, but profits have not.

Currently, Amazon is experiencing fierce competition in all categories, with price wars raging everywhere. One seller complained: "I have been selling products for $39.99, but now my competitors are selling them for $13.99. I don't know what they are trying to achieve!"

In the race of internal competition, it seems that none of the sellers are willing to give in. For example, one seller’s product used to have 20-30 orders per day and a gross profit of 30%, but his competitors forced his sales volume down to single-digit levels per day. Later, he directly offered a floor price, with the idea that since I can’t sell, you shouldn’t sell either, and everyone is out together.

This kind of strategy is a common competition among sellers. When the ecology is destroyed by a small number of people, it foreshadows the beginning of internal circulation.

As the internal circulation continues, Amazon has introduced new policies this year. The newly added warehouse configuration fees and low inventory level fees have made many sellers shudder. One seller lamented: "The fees are getting higher and higher, the prices are getting lower and lower, and the profits are getting thinner and thinner. It's getting harder and harder every day!"

Fees will further increase, and many sellers will be forced out

Recently , many Amazon US sellers have lamented again and again: "This time it's different!"

The "this time" refers to the latest type of fees that Amazon imposes on sellers. Currently, more than 60 % of Amazon's sales come from third-party sellers. Amazon already charges an average of at least 50% of fees from each transaction for services such as storage and transportation of goods .

Today, the fees that sellers pay to Amazon are increasing further, such as the recent additional fees that have caused sellers to question and be dissatisfied. The new fees will increase sellers' operating costs and affect their business, but everyone wants to use price wars to seize the market and rankings. They enter the game with a strategic loss mentality and do not care about the damage to their finances caused by operating costs in the early stage, until long-term losses drag them down .

As operating costs increase, those sellers who do not raise prices and continue to engage in price wars will be forced out one after another.

Thompson, who has been selling products on Amazon since 2009 and is the founder of Plugable, Amazon's best-selling USB electronics brand, predicts: "A lot of Amazon sellers are going to go bankrupt!"

Among the newly added fees, many sellers have strong opinions about the warehousing configuration fee, and they believe that this fee has a huge impact on their business.

In the past, Amazon sellers could choose the warehouses to which some goods were shipped, but now Amazon distributes sellers' goods to the nearest warehouses based on the distribution of customers. In this case, Amazon will bear the cost of transporting these goods between its own distribution centers. Amazon will definitely pass these costs on to sellers, so the platform charges sellers a new warehousing configuration fee.

Many sellers are facing declining orders and profits, and the new warehouse configuration fees are undoubtedly worse for them! Some of their peers even bear an additional one-third of the fees, and sellers do not know how to calculate or avoid Amazon's warehouse division rules.

Some sellers are also troubled by Amazon's new "low inventory level fee ". If sellers do not have enough inventory in Amazon's warehouses, Amazon will charge sellers fees, especially when too much inventory is stored in Amazon's warehouses, Amazon will also charge storage fees . This is difficult for sellers to understand, especially sellers selling seasonal products. Similarly, many people are not clear about the calculation logic of this fee.

The most direct way for sellers to avoid the above two fees is to use Amazon AWD and pay protection fees to Amazon.

Some sellers said that AWD charges are too high and are unaffordable for many sellers, and are not suitable for everyone. For example, oversized products or products with expiration dates cannot be stored in AWD. More importantly, some sellers already own or lease their own warehouses for long-term storage, or have long-term agreements with third-party logistics companies, which manage their storage facilities. For them, switching to AWD in the short term is not realistic.

In response, Amazon said that the fee changes at Amazon are much smaller than the fee changes announced by other major logistics service companies, and the average fee paid by many sellers for each item will decrease.

Sellers are in dire straits, but it is a win-win situation for Amazon. On the one hand, Amazon can offset some of its costs through new fees; on the other hand, by forcing more sellers to choose AWD, it also gains greater control over the supply chain.

According to an industry insider, Amazon's situation this year is an "industry winter" and sellers are having a hard time . Products with larger volumes on the platform are basically micro-profitable. The platform's greed is getting worse and worse, raising multiple operating costs such as advertising and logistics . The platform's rules are constantly changing, which further increases sellers' costs. Micro-profitable products will definitely not survive!

Problems at the sales end will soon be passed on to the factory, and then there may be problems with product supply ! With multiple superpositions, the platform sales price will definitely be unstable, and the price of goods will become less and less competitive! Sales will definitely decline, and profits will decline at the same time! Then, the competitiveness of the platform will also decline , and traffic will also decline! The price war within the platform will be further intensified! A vicious cycle, the outcome is self-evident!

Amazon

Order

Cut in half