A number of cross-border e-commerce companies collapsed at the end of the year

This year's Black Friday dealt a heavy blow to sellers, with mediocre response and low orders. In fact, not only Black Friday, but the entire peak season this year is not optimistic. To a certain extent, Halloween sales will set the tone for the subsequent series of holiday sales, but this year's Halloween was chilly everywhere, and the expected crazy "buy, buy, buy" did not appear.

Although there is still a month to Christmas, many sellers believe that this year's peak season is almost over.

Peak season sales account for an important proportion of the seller's annual GMV. Even many companies rely on this part of sales to support their annual performance. It is conceivable that if the peak season fails this year, many companies' cross-border e-commerce journeys will end. In fact, this wave of bankruptcies has already begun before the peak season, and many sellers did not wait for the "salvation" of the peak season.

The closure of a company is accompanied by a turnover of personnel. Some sellers have found during the recruitment process that the number of job seekers who need to find a new job due to the bankruptcy of their previous company has increased significantly. On the other hand, the rising office vacancy rate also proves that some companies are quietly "disappearing".

However, the sluggish peak season in the second half of the year was just the last straw that broke the camel's back. Looking at 2023, the sales slowdown has actually continued to affect cross-border e-commerce sellers.

This year, we often hear this sentence in the cross-border circle: This year is the worst year in the past ten years, but it may be the best year in the next ten years . Sellers should think carefully about how to move forward in the next ten years.

At present, cross-border e-commerce sellers generally have increased revenue but not profits. Anker Innovations is one of the few sellers whose profit growth is higher than the revenue growth. As for the future path, sellers may be able to find some answers from big sellers like Anker Innovations.

A group of operators left at the end of the year, the reason was: the company went bankrupt

The end of the autumn recruitment is approaching at the end of October, but Toby, a seller in Shenzhen, has discovered a strange phenomenon. In the past, after the peak of autumn recruitment in early October every year, there would be fewer job hunting operations. However, this year, it is almost November, and he has received quite a few resumes.

There are two main reasons why they left their previous companies: one is that the company went bankrupt, and the number of people who left because of this factor was significantly higher than last year; the other is that the salary was too low and they could no longer bear it.

Another seller also found a similar situation. He said that recently a large number of operators of large selling companies are looking for jobs.

As we all know, the peak season in the second half of the year is not only a feast for cross-border e-commerce sellers, but also a critical time for operations to get bonuses and commissions. If there are no special circumstances, they will not easily choose to resign at this time. Especially for large-scale sales companies, sales soared during the peak season, and the operation commissions are even more considerable.

The emergence of this phenomenon today shows that, against the backdrop of an economic downturn, cross-border e-commerce companies are under pressure, more and more sellers are unable to hold on, and their performance is dismal, while some companies with weak support are collapsing at the end of the year.

One day in early November , an Amazon operator in Shenzhen said that this was his last day at work, and he would not have to "move bricks" from the next day because the company had closed down. Although he was very reluctant to leave the company where he had worked for a long time, he had to accept the reality.

In mid- October , another Amazon operator in Chengdu was also depressed because of the company's bankruptcy and he suddenly faced unemployment. He shouted : "Is Amazon so difficult this year?"

In fact, it is not just Amazon. The development of the entire cross-border e-commerce industry this year is not ideal. One very obvious point is the reduction in the number of investment and financing and IPOs . The "2023 Q3 China E-commerce Industry Investment and Financing Data Report" released by the E-commerce Research Center of the China Internet Network Information Center and the "Investment and Financing Center of the China Internet Network Information Center" shows that there were 7 cross-border e-commerce financings in the third quarter, a decrease of 53.33% compared with 15 in the same period last year; the total financing amount was 510 million yuan, a decrease of 74.11% compared with 1.97 billion yuan in the same period last year.

The industry is in a downturn, and even old sellers are struggling to survive, so there is no need to guess the situation of new sellers with shallow foundations. For example, not long ago, an operator lamented that his company went bankrupt only one year after its establishment, and the boss's investment of nearly 5 million yuan was wasted.

Job seekers felt the chill earlier. In August, an operator shared his interview experience and said that this year's cross-border e-commerce market has declined seriously. "I sent my resume to dozens of companies, but only received interview invitations from about ten companies. In addition, during many interviews, the company's leaders would sigh and say that it was not easy to do business this year."

Another operator said he was shocked by the current salary: "A person with 4 or 5 years of experience who has worked in FBM and FBA boutiques only makes 7.5K, and now the price is being raised, the gross profit is very low, so the commission is not much."

As more and more companies go bankrupt and fall into survival difficulties, the office leasing market has also undergone significant changes. Shenzhen, where cross-border e-commerce companies gather, has the highest vacancy rate of Grade A offices among the four first-tier cities of Beijing , Shanghai, Guangzhou and Shenzhen. According to Savills data, the vacancy rate of Grade A office buildings in Shenzhen in the third quarter of 2023 increased by 1.3 percentage points month-on-month to 28.3%, much higher than Beijing's 19.5%, Shanghai's 19.1% and Guangzhou's 20.9% in the same period.

At the same time, rents also fell. In the third quarter, the average rent of Grade A office buildings in Shenzhen fell to 168.9 yuan per square meter per month , which is equivalent to the average rent level in the second quarter of 2011 (168.4 yuan per square meter per month) . In other words, the average rent of Grade A office buildings in Shenzhen in the third quarter of this year returned to 12 years ago .

Previously , "The Factory Manager in the Wind" said that because office rents in Hangzhou had dropped a lot, he was able to move his e-commerce company to an area closer to the city center.

In order to increase the occupancy rate, some property companies in Shenzhen have resorted to various "rental methods". Some companies give away iPhones/Huawei phones for transactions over 300 square meters, and some parking lots offer a 50% discount.

However, this is not very attractive to cross-border e-commerce companies, because for them, if overseas consumption does not take off, everything is in vain. However, judging from the peak season promotion this year, the future overseas consumption demand is not optimistic.

Halloween and Black Friday are both a success, and this year's peak season is over

At present, two of the series of big promotions in the second half of the year have been launched, but they have both failed.

As the beginning of a series of holiday promotions, Halloween, which focuses on humor and fun, really gave sellers a "fright". Not only did the orders drop, but the sales cycle was much shorter than in previous years. Sellers who prepared a large number of products and prepared to take a gamble during the promotion finally had to clear out their stocks at a "discounted price". Some sellers even started a clearance war 10 days before Halloween.

One seller said that his sales volume dropped by 25% compared to October last year because his expectations were too high and he had stocked up a lot of extra goods, so it was very painful to clear out the stock.

But after all, Halloween is more of a home ground for sellers of seasonal products, so many sellers continue to pin their hopes on the upcoming Black Friday. Black Friday in 2023 will be on November 24, but Amazon's Black Friday promotion has already started as early as November 17.

Before the promotion started, many authoritative organizations had very "beautiful" forecasts . Adobe Analytics predicts that this year's "Black Friday" shopping season (November 1 to December 31) will see online shopping sales in the United States reach $221.8 billion. Statistics from the Brazilian National Trade Confederation (CNC) also show that the Black Friday promotion that will begin in Brazil at the end of November 2023 is expected to bring in sales of 4.64 billion reais (about $950 million), setting a record for the highest sales since the launch of the Brazilian Black Friday promotion in 2010.

But the real situation of sellers is: "Waiting for orders!"

“——Did the platform forget to inform buyers that the Black Friday sale was brought forward?

——The order volume is extremely low, even lower than usual;

——There is no sense of a big sale at all. I am afraid it was a fake Black Friday.

——We have already offered the lowest price of the year, but the traffic is still not good enough;

——The worst promotion in my career has happened, bar none.”

Even though there is still a month to Christmas, based on the performance of the two major promotions, Halloween and Black Friday, many sellers have already come to a conclusion about this year’s peak season: this year’s peak season is over.

In fact, in late October, before Halloween, we could already vaguely hear such voices. That is, the peak season had just begun, but some sellers were already pessimistic about this year's sales.

Overall, the reasons for the Waterloo of this year's peak season can be attributed to the following four points:

1. High inflation squeezes global consumption capacity

Now, high inflation is weighing on consumer spending. Deloitte 's October index shows that U.S. consumers expect to spend an average of 18% less in the next four weeks, and save and invest 20% less, a significant drop from summer spending intentions.

As if foreseeing such a result, major American companies have unanimously slowed down their seasonal recruitment plans this year. According to data from executive training company Challenger, Gray & Christmas, Inc., as of October, Amazon, Target and other companies announced 573,300 seasonal positions, the lowest level since the same period in 2013.

2. The autumn promotion consumed some of the purchases in advance

In the past, after the July summer sale, there was a series of holiday sales in the second half of the year, but since the addition of an autumn sale last year, the sales of holiday sales have begun to weaken. The 2023 Amazon autumn sale will be held from October 10th to 11th , which almost overlaps with the Halloween sale.

According to Prosper Insights & Analytics , 43% of Americans who plan to shop during the holidays say they typically start their holiday shopping by November. The main reasons they shop early are to spread their budget (60%), avoid the stress of last-minute shopping (46%) and avoid crowds (45%).

Amazon’s original intention was to add another event to boost sellers’ sales, but consumers have limited budgets. If they buy in this event, they will naturally have less money left for the next event.

3. The battle line is too long

This year's Black Friday has become Black Friday Week, and the shopping time has been extended from one day to seven days. The shopping festival has become a shopping season. This will lead to two results: first, the concentrated Black Friday traffic in previous years has been split; second, impulse purchases have decreased. Under the stimulation of the big promotion, people may buy on impulse. But as the sales period becomes longer, the time to make a decision becomes longer, and it is inevitable that people will be more rational.

4. Several major platforms start a battle for traffic

Amazon is still the main sales platform for most domestic cross-border e-commerce sellers, but judging from this year's peak season, Amazon has definitely become the target of a fight between several major platforms, especially in the United States, where Temu and TikTok have become well-deserved spoilers.

For example , Temu offered a lot of benefits during the Black Friday promotion, not only 90% off, but also a $200 coupon, plus any 3 products for free. With such a strong promotion, not only consumers, but also Amazon sellers were excited.

Under the combined effect of this series of factors, this year's peak season sales can only be described as "dismal". But in fact, not only sellers, but also platforms are troubled by the downward economy.

As a cross-border e-commerce giant, Amazon has set its sights on the world since its establishment, and has opened 21 sites in the United States, Japan, Mexico, the United Kingdom, etc. However, this year it had to stop its global expansion.

As early as 2021, it planned to launch four sites in Chile, Colombia, Nigeria and South Africa by May 2023. However, none of these sites have appeared now. Its latest market is Belgium, which will be launched in October 2022.

It is reported that this year is the only year in the past six years that Amazon has not launched any new sites.

Urgently adjust strategy and stick to profit orientation

Amazon's sudden brake releases a signal : the economy is at its worst. In today's economic situation, even giants have to bow their heads, and ordinary sellers are even more difficult to cope with.

Talking about this year's sales, one seller said helplessly: "Although our products are frequent visitors in searches and advertisements, it is clear that consumers are buying less." Compared with last year, this seller's sales have dropped by 30%, and this quarter is the slowest growing peak season in his many years in the industry.

Another seller mentioned a similar situation. He said that this year's market conditions are very rare, and their overall sales are very bad, with sales down more than 60% year-on-year. In order to cut costs, they had to lay off employees. Not long ago, when the peak season just began, they laid off four employees, and now they are the only one left.

However, not all sellers’ sales are declining. Some sellers’ sales have increased, and the increase is quite significant.

Gary, the Shenzhen seller mentioned above , said that their sales this year increased by 50% compared with last year. However, this is not a very happy thing for them, because it was achieved at the expense of profits. Although sales have increased dramatically, profits are almost the same as last year. In addition, they have to bear greater pressure on stocking funds, and the risk is greatly increased.

This trend of slowing sales is not unique to Amazon, but a common trend across all online platforms. Economic conditions are very challenging right now, with interest rates at their highest levels. As a result, most people will find it increasingly difficult to afford additional spending in the future .

In times like these, it is critical for sellers to assess their business and adapt to the economic restrictions they face. While slowing sales is worrisome, it also gives sellers plenty of time to think. Sellers can look at what is happening around them or what their competitors are doing.

The current cross-border e-commerce industry has passed the period of rapid growth. During this period, the role that market goods and general products that used to promote economic growth will gradually disappear. This is also the reason why many sellers are now increasing revenue but not profits.

Anker Innovations is one of the few sellers whose profit growth is higher than its revenue growth. When asked about the reasons, Anker Innovations said: "The company's profit growth is driven by both internal and external factors. From the perspective of internal factors, the company has been focusing on product categories since the second half of last year, optimizing and shrinking channels and categories with relatively low value contributions. At the same time, the company has focused more on effectively investing resources in key categories and key battles, and has received positive market feedback on key product categories, which has improved both gross profit and net profit. From the perspective of external factors, this year's average exchange rate has improved significantly compared to last year, and the cost side of the industry's upstream and international freight has improved, which has also had a certain positive impact on the company's performance."

Product strength has played a very positive role in the profit growth of Anker Innovations. Gary also affirmed: " Products are very important. " At the same time, he also said that after a year of volume testing, they found that this path was still not feasible, so they have adjusted their strategy for next year and decided to go for profit-oriented products.

Although for many sellers the current level is far from reaching the level of a brand, it will not be wrong to focus on specialization and excellence and be guided by product strength and profit.