The past 10 years of Shenzhen sellers: from “making money while doing nothing” to mortgaging houses to save the company!

Shenzhen sellers' 10-year cross-border journey: witnessing huge changes along the way...

There are only a few days left until Christmas on December 25, 2023; for many cross-border sellers, the peak sales season for Christmas products has entered its final stage. This means that the sales results of Christmas products of relevant sellers have been released.

Some products sell like hot cakes, while others sell below expectations. A Shenzhen Amazon seller born in the 1980s, known as "Four Masters" by people in the industry, unfortunately belongs to the latter category. This year's Christmas season sales were dismal. In order to boost sales, he spent more than 20 million yuan on advertising alone, and his profits have been pushed to the limit...

When a single sales volume fails, the most common approach for sellers is to learn from the experience and try again next year. However, this approach seems to no longer work for Si Ye.

"The company has been losing money for four consecutive years, and it's finally time to say goodbye!" Si Ye thought about it and decided that handing over the company (including the store, team, etc.) that he had worked hard to run for 10 years to the factory he had been cooperating with was the best destination for him.

Today, the Fourth Master knows clearly that the building will not collapse overnight for no reason, and the hidden danger of "years of losses" was already buried during the glorious period.

"The performance has been growing rapidly for seven consecutive years, relying on the luck during the bonus period"

Before Amazon officially recruited Chinese sellers, Siye had already heard about this platform from his friends. At that time, he was working in a company in Shenzhen. At that time, many people around him smelled the business opportunity and tried to do cross-border business by registering US offshore companies, and they all made a lot of money.

Therefore, soon after the platform opened to Chinese sellers in 2012, Siye registered a US seller account. To be conservative, he just wanted to test the waters. As his friends around him became more successful, in 2013, Siye made up his mind to leave his job and focus on Amazon, mainly engaged in the LED Christmas light category.

Almost everyone who entered the market at that time, including Si Ye, dreamed of becoming rich overnight. However, what was unexpected was that the surprises brought by the cross-border e-commerce company Amazon far exceeded imagination, and the performance could not be overstated as "exploding geometrically".

"From 2013 to 2019, the company's performance has been growing rapidly." According to calculations, Amazon store sales and profits have increased by more than 50% each year, and Siye himself has grown from a single person to a team of more than 10 people.

The Amazon platform and the Christmas lights category are the two most indispensable "factors" in this brilliant life experience .

In recent years, cross-border e-commerce platforms have flourished, and Amazon is not actually the only choice. During the period of working , the company has opened stores on other sales channels such as eBay, AliExpress, Wish, Lazada, Shopee, and independent stations. In comparison, these platforms can indeed make money, but for the same investment, Amazon has the highest rate of return. In the end, the company still regards Amazon as its only sales channel.

The Christmas lights category is a field that we have been deeply cultivating and sticking to. Compared with other categories, this category has "unique" advantages.

"In the beginning, there were very few related products on the platform, and there was not even a follow-up sale. As long as the product was newly launched on FBA, orders would come naturally without advertising. For the company, the entire category was the most prosperous from 2013 to 2017, and the profit was beyond imagination. At that time, basically, if 10 million goods were sold, there would be a gross profit of 10 million." Si Ye said in detail that the Christmas light category is a product with a particularly strong seasonality, and all sales are concentrated in more than a month before Christmas, so it was not favored by some capital and big sellers at the beginning. During the peak season every year, everyone is busy with shipping and other matters, and there is no time or need to consider advertising, fake orders and other operational methods. Because the profit is too high, the logistics cost is automatically ignored, and basically only express delivery is done.

Si Ye has a clear understanding of himself. His performance has been soaring year after year, not necessarily because of his own abilities, but because he happened to be one of the early people doing cross-border business and happened to catch the bonus period, that's all.

The sellers’ wonderful stories are undoubtedly integrated into the operation of cross-border e-commerce.

"It's simply an era of making money without doing anything." When Si Ye joined Amazon, cross-border e-commerce was developing rapidly. Amazon gave countless grassroots people an excellent opportunity to "reverse their class struggle." Practitioners did not need fluent English or rich work experience. At the beginning, they only needed to be cargo movers. One after another, wealth-making myths emerged. Si Ye was lucky to be one of the witnesses and beneficiaries.

The company's advertising expenses exceeded 20 million yuan a year and it fell into a normal loss.

Many people in the game may also know that they are making money by luck, and they know that the luck of this industry will not last forever. The increasingly crowded track and rising costs are the best evidence. However, a group of practitioners who are eager to enjoy the dividends of cross-border e-commerce have no time to take into account the undercurrents under the rapid growth of the industry. The still-running performance has also diluted the vague anxiety to a certain extent. In the end, many people choose to continue to be optimistic until the beautiful bubble is "punctured". Over the years, Si Ye has gradually discovered that the money earned by luck by his peers around him has been lost by their own ability.

2020 can be called an important watershed for all cross-border sellers. After the outbreak of the COVID-19 pandemic, the global offline economy was affected to varying degrees, and consumers turned to online shopping. Cross-border e-commerce ushered in a blowout development. Practitioners once again felt the "money-making pleasure" of Amazon's early opening in 2012. Many Shenzhen sellers became rich overnight due to the pandemic, and some companies in South China City even rewarded their employees with BMW 5 Series.

However, the bonus from this epidemic is slightly different from the prosperity at the beginning of cross-border business. There are more competitors in cross-border e-commerce and more unstable factors in the cross-border sales chain. Among them, cross-border logistics, as an important link in product sales, has frequently lagged behind, and many people have unfortunately been abandoned by the times in this test of life and death.

The always vigilant Si Ye was temporarily blinded by the prosperity brought by the epidemic, and he made mistakes and lost his way. Si Ye had never expected that a mistake would start the company's four years of consecutive losses.

"The epidemic did have a certain impact on the company's operations in the early stages, but overall there were mostly positive incentives, and product sales and profits were in a state of rapid growth. It was precisely this abnormally high revenue that laid hidden dangers for subsequent operations." It is understood that in 2020, due to the hot sales, Christmas lights products were sold out very early. Si Ye decided to press on with the victory and at the end of November, he sent more than 10 million worth of Christmas lights by express delivery. Unfortunately, there are unexpected events. Even during the epidemic, even with express delivery, the logistics timeliness was still too poor. By the time the product was finally successfully put on the shelves, it had perfectly missed the peak sales season for Christmas products. In the end, this batch of goods that was originally highly anticipated turned into a hot potato.

As we all know, if the sales of products, especially seasonal products, are not good during the peak season, sellers need to deal with the unsold goods in time after the big promotion, otherwise they will face huge storage costs. At that time, Si Ye was "worried" about this batch of goods for a long time, spending time and effort to sell at low prices, move warehouses, change labels, etc. In the end, he calculated that this batch of goods not only did not make money, but also swallowed up all the money he had earned before, and the entire peak season was wasted.

"Excessive speculation is the best explanation for the Waterloo in the peak season of 2020." Reflecting on his past mistakes, Si Ye believed that the main reason was that he failed to control human nature and lost himself in the inertia of sudden growth in performance.

At that time, there were many people like the Fourth Master, who exaggerated the business opportunities and automatically ignored the thorns behind the business opportunities. They were severely tripped up by the uncollectible payments and the continuous storage costs. In more serious cases, they even never recovered and their shops could no longer continue.

In 2021, Siye Company failed to return to the growth trend and fell into the quagmire of losses again. However, it still seems to be optimistic about cross-border business and even set a small loss target for the company: to survive within 10 million yuan in losses...

"At that time, I still fantasized that the company could return to the industry bonus period before the epidemic. I thought that a loss of less than 10 million was just a strategic loss. After a period of internal competition, competitors would automatically withdraw and performance would get better again. But in fact, the door to internal competition has been opened and cannot be closed. Perhaps some peers were indeed forced to leave, but more and more peers rushed in every year. The already narrow living space of the Christmas light category is getting tighter year by year..."

In 2022 and the year 2023 that is about to pass, the company continued to suffer normalized losses.

During the recent Black Friday and Cyber ​​Monday, the company’s performance was exceptionally bleak, with the combined revenue of all employees far below expectations. While sales remained sluggish, pressure on the cost side also suddenly increased.

"Operating costs are rising year by year, and advertising fees plus various hard cost expenditures such as logistics fees are increasing year by year, and the overall profit is getting thinner and thinner." According to calculations, the company's gross profit this year is only about 10%. Advertising expenses alone have burned more than 20 million, accounting for 15% of the overall sales. In order to increase sales this year, the profit has been pushed to the limit, but the result is still unsatisfactory.

Si Ye roughly calculated that from 2020 to now, from the perspective of cash flow alone, he has lost about half of his goal. Almost all the wealth accumulated during the peak period was used to save the company, and even all the properties under his name that could be mortgaged were mortgaged.

Just as Amazon can make people accumulate wealth happily, it can also make people's hard-earned careers vanish in an instant. In short, the speed of career collapse is much faster than the speed of wealth creation before ...

"Giving up is easier said than done"! Goodbye is not really leaving

Unlike his optimistic attitude when he first started losing money, this year, under this state of continuous losses, Si Ye clearly realized that he could not hold on any longer.

"After more than 10 years of e-commerce career, it's finally time to say goodbye. I have been holding on for the past two years, but now I can't hold on any longer. Everything is over..." After the defeat of Black Friday, Si Ye announced: I'm saying goodbye to the industry!

But for Si Ye, goodbye does not mean leaving the industry completely.

“When the revenue was losing money year after year, it’s not that I didn’t think about giving up. It’s just that it’s easier to go up the mountain than to go down. How can giving up be easy? Once you’re up there, it’s very difficult to get down because you’d fall to death immediately … Even if I say goodbye this time, I don’t really want to exit completely. Instead , I want to temporarily leave this industry for a while to reflect and adjust.” Si Ye said that after the company ran into problems, closing down and laying off employees might have temporarily stopped the losses, but having come all the way to now, he can no longer get away unscathed. The fate of the company not only involves the company and its employees’ future, but is also closely related to the upstream factories that have supported it for 10 years.

It is understood that since he started working, Si Ye has basically only sold goods for one factory. It can be said that he has been deeply tied to the factory over the years. During the epidemic, offline orders were bleak, and the factory's business was all supported by the company's cross-border e-commerce orders. If the company collapses, the factory may also be in trouble; in addition, when the company was struggling in the past two years, the factory also provided great support, and it still owes the factory a lot of money ... It is neither reasonable nor emotional for him to "leave easily."

The best solution that Si Ye can think of at present is to hand over the company (including stores, teams, etc.) that he has painstakingly run for more than 10 years to the factory with which he has been cooperating. Now, the company is negotiating to be acquired by the factory. The factory will directly take over the company. During the operation of the factory, Si Ye will provide guidance and support until the factory operation is on track.

"I don't want to see the company I have raised for more than 10 years go bankrupt. As long as the company can survive, I will do anything for it." Siye said that although he has encountered various difficulties over the years, he has never thought of evading responsibility, so suppliers are very supportive and understand his decision. Moreover, for trade sellers who connect factories and buyers to earn the difference, the market will only become more and more unfavorable in the future. As a trade seller, I can basically no longer play the Christmas light category. Factories can control product costs and have advantages in product pricing. After taking over the company, they will have a greater competitive space.

The evolution of the Christmas light category: From huge profits to a difficult situation

Stopping to look back, Si Ye discovered that the development and changes of the entire Christmas light category over the past 10 years were actually just like his own past cross-border life. No matter how dazzling it was, it would inevitably return to mediocrity in the end.

The "base camp" of Christmas light products can be said to be in Taizhou, Zhejiang. When the Amazon platform was in its bonus period, some factories in Taizhou were tempted by the huge profits of trade-type sellers and personally started selling goods. Later, factory-type sellers from Ningbo, which is close to Taizhou, also took the initiative to join the game. This means that Siye's competitors during the same period were not only trade-type sellers, but also factory-type sellers at the upstream of the industry.

Compared with trading sellers, factories have more advantages in production, stronger supply chains, relatively sufficient funds, and better capital games. Rumor has it that a Zhejiang factory seller entered the Christmas light category at a low price. At the beginning, he adhered to the principle of strategic losses. He lost 20 million every year for several consecutive years, and finally pushed several of his brands to the top of the platform. Later, he successfully sold the brand to an American company at a high price of 80 million US dollars...

A group of trade sellers who do not have relevant competitiveness are gradually facing the crisis of elimination. But overall, before the epidemic, the entire Christmas light category still had a lot of room for gold mining.

The turning point of intensified internal circulation occurred during the 2020 epidemic.

After the outbreak of the epidemic , more and more Zhejiang-based factory sellers saw the possibilities of cross-border e-commerce and rushed into Amazon one after another. At the beginning, they mainly pursued a low-price spiral strategy, and their operational level was actually not as good as that of Shenzhen-based sellers. In order to make up for the operational shortcomings, they then placed the operation teams in Yiwu, Ningbo and other places with relatively more talents, and gradually improved their operational capabilities.

This means that trade sellers have lost their competitive advantage on both the production and operation sides.

Siye predicts that more factory-type sellers will engage in cross-border e-commerce in the future, and the entire Christmas light category will become more and more popular.

"Before the epidemic, Zhejiang factories mainly did offline supermarket business. It can be said that 90% of the orders came from supermarkets all over the world, and only 10% came from e-commerce. With the impact of the epidemic and changes in the global trade situation, the offline orders of factories have become bleak year by year. In order to survive, they have to rush into the e-commerce track. Cross-border e-commerce has become the last straw for a group of people."

At the same time, competition among trade sellers is intensifying year by year.

In the first year of the pandemic, the legends of cross-border sellers making money spread everywhere, stirring the entrepreneurial hearts of workers one after another. At that time, the operating mentality of many cross-border e-commerce companies changed dramatically. The soaring revenue gave them the courage to leave their jobs and start their own businesses. Some companies exaggerated that "half of the operations staff went to start their own businesses." The first step for everyone to start a business was to choose to sell the same products as their old employers, and even the picture materials and promotion methods were exactly the same.

In addition, after a large number of cross-border e-commerce companies reaped the benefits of the epidemic in the first year, they also began to enter the Great Leap Forward mode from 2021 to 2023. Some people's procurement amount was 20 million in 2020, and the procurement amount in 2021 directly increased several times to more than 100 million.

"Everyone always likes to exaggerate business opportunities, thinking that this is a once-in-a-lifetime opportunity to make a fortune."

On the Amazon platform, both factory-type sellers and trade-type sellers are increasing year by year. Various new e-commerce platforms are intercepting Amazon's traffic. The number of people sharing the cake is increasing year by year, and the market cake is shrinking year by year, but the costs such as advertising fees are getting higher year by year ... When the dividends of the epidemic disappear with the end of the epidemic and the influx of competitors, the endless melee has spawned more malicious competition. Some of them have cut corners in the production process in order to gain a competitive advantage, such as using non-standard materials, and the products are seriously not in compliance with safety certification! Sellers who fantasize about getting rich overnight have felt the cruelty of market competition and have begun to lower their expectations. They don't seek to make money, but only to be able to sell goods at a loss.

The entire Christmas light category has evolved from competing in operations at the beginning, to competing in product innovation, and then to competing in low-price supply chains and capital . In this irreversible change, sellers have different outcomes. Just as everything has two sides, there are always sellers who successfully complete the transformation in the crisis and become the "trendsetters" of the new era; those uncompetitive sellers are at a disadvantage and face the possibility of being eliminated at any time.

Si Ye, who plans to leave the industry for a short time, is one of the typical representatives of the first generation of cross-border people. He was lucky to reap the early dividends of the industry, but unfortunately fell behind the times due to a series of deteriorating macro-environment!

Fortunately, several years of ups and downs in cross-border career have enriched the professional cognitive growth of many cross-border people, including Si Ye. In the future, they still have the opportunity to break through career bottlenecks.

"I will continue to pay attention to the development of the e-commerce industry, explore some new areas and try different business models in the future." After Si Ye decided to adjust his status, he returned to cross-border business again.

Cross-border e-commerce has undergone tremendous changes in the past 10 years. A new industry order has been established. Those who re-enter the market will face higher barriers to competition, and of course, a different story will begin. In any case, opportunities are reserved for those who are prepared. The era of "getting rich overnight" is gone forever!

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