Sellers lost millions by taking out loans to work on Amazon alone!

The word "starting a business" sounds glamorous, but in reality, it is often a waste of time. Many people only see the glamorous side of successful people, and rarely pay attention to the twists and turns and failures. However, most entrepreneurs are often in debt and stuck in the quagmire.

Some of them took out loans to start their own businesses, and some used their years of savings to work on Amazon on their own. After taking risks and falling into countless traps, they are now heavily in debt and dare not move. Ordinary sellers are using their own personal experiences to teach novices those principles that they only vaguely understand.

The days of being at the top of Amazon right from the start are gone. After years of struggling in the cross-border industry, every seller seems to have his or her own story. Now that Amazon's ranking algorithm has changed again, how many big sellers can maintain their dominant position?

Amazon sellers lose millions in two years after taking out loans to start a business

Starting a business has always been an eternal topic for sellers. In the eyes of most people, Amazon in the past few years was a relatively friendly way for ordinary people to start a business. The myth of gold digging everywhere at that time ushered in a big explosion in this track. At its peak, there were many sellers who made a fortune every day, and a large number of followers rushed to Amazon to start their journey of making money.

However, after the bonus wave faded, the concerns of those who followed suit gradually emerged. From procurement costs to first-leg freight, to product promotion and basic expenses, they all need strong financial support. In order to continue to make money in this track, a group of sellers joined this gamble by taking out loans.

Seller Xiao Li is one of the representatives. He started selling on Amazon in early 2019. He was also groping in the dark when he first put products on the shelves. Unexpectedly, one of his products suddenly became popular. Xiao Li, who didn't know why, thought that his chance to get rich had come. Starting in 2020, he took out large loans and invested all his money in Amazon.

But the result was disappointing. After two years, Xiao Li's store sales dropped sharply, and his income also plummeted. He eventually lost millions and fell into many traps set by Amazon. Under heavy debt, Xiao Li became extremely anxious and dared not to move new products. His current profit barely covered his capital but was not enough to repay his debts, and the pressure was getting greater and greater.

Coincidentally, Xiao Zhao was also one of the sellers who went to Amazon to make money in 2019. However, Xiao Zhao's journey was quite tortuous. After leaving the operation, he started working alone on Amazon. Three months after joining, his profit reached nearly one million. He encountered spoofs along the way, and then he started to make links. In the following months, the profit continued to rise, which can be regarded as making quick money for nearly a year. However, since the end of 2020, Xiao Zhao began to take out loans because of excessive inventory accumulation and problems with capital circulation in the company. In the end, he owed nearly 10 million and dragged himself into it.

There are many similar examples of people who invested all their fortunes in Amazon with the mentality of getting rich quickly, but ended up with a dream of getting rich quickly shattered and heavy debts. A large amount of debt is difficult to repay, and they want to take a chance to repay the debt, but in the end they are still in debt and under great pressure; they are reluctant to leave the market after abandoning the previous efforts and profits and returning everything to zero. The sellers who followed the trend and took risks eventually fell into a dilemma.

After years of struggling in the cross-border industry, many sellers have their own experience of entering the Amazon industry: If you want to do business on Amazon, you first need to consider how much you have to leverage this lever, and how long the future return on investment and payback period will be. The era of picking up money on Amazon has long passed, and the days when wholesalers and young guys sold out their products as soon as they went online on Amazon are gone forever. Since Amazon began to increase fees and sell the same products, the performance of sellers on the platform has begun to decline.

Nowadays, if you want to enter Amazon, you need not only money, but also strong operational skills and psychological qualities. Although it is said that even a pig can fly if it stands on the wind, you must first be the pig . Although the words are harsh, they are practical.

"In the past few years when cross-border e-commerce was booming, you could operate Amazon slowly and at low cost with an investment of 50,000 yuan, but now you have to start at a minimum of 100,000 yuan," said a colleague in the industry. It is estimated that it will take more than two years for an average person to save 100,000 yuan, and it is difficult to bear the risk of failure in the later stage. For outsiders to do Amazon, practical operation is a big problem. In addition, with the current involution of the large market + platform promotion of compliance, sellers' profits are reduced, new products cannot be launched, there is no exposure and conversion, and the seller's account will be blocked as soon as the "sexy operation" is carried out, and all the previous efforts are wasted.

The 2020 epidemic was an important turning point for sellers to make money on Amazon. At that time, most sellers saw the "money prospects" of masks and tried to change their lives by taking advantage of the right time and place to enter the mask category. However, some sellers did not seize the key time point and entered the market too late, resulting in more than 10 million goods being left in their hands. Even so, some sellers still believed that Amazon was profitable, borrowed nearly 1 million yuan online, and chose to enter the lighting category, but ultimately lost both money and goods due to certification and other issues, and ended up running around with huge debts.

Xiao Lin, a seller who lost 800,000 in 3 months, started selling on Amazon by selling general merchandise, and then switched to selling high-quality products. His deepest feeling was that "Amazon is in a state of serious internal competition, profits have dropped a lot, and advertising bidding has become higher." He admitted that many products only cost 1 US dollar per click, but the profit of a product is only a dozen or twenty yuan. How many clicks can this amount of money withstand? After being deceived and falling into traps, Xiao Lin finally had no choice but to withdraw from Amazon and turned to the Southeast Asian market.

After years of working on Amazon, the most common advice given by sellers is "Newbies should never rush into doing business on Amazon. Many people say how much money they make every day. Do you think it's true? If they really make money, will they advertise it everywhere? Before you get in, consider whether you are the loser." I am fearful when others are greedy, and I am greedy when others are fearful. The sellers who really make money are those who make their fortunes quietly.

Amazon is not easy to make money, sellers working alone for 8 months have no withdrawals

However, in today's cross-border e-commerce environment, it is indeed not easy to make money from Amazon. Since the beginning of this year, sellers have complained about the Waterloo of order volume much more frequently than the stable order volume, not to mention the surge. Some sellers who had high expectations for Amazon's autumn promotion returned disappointed, and after the membership day, many sellers complained that sales and rankings have been in a state of decline ↓

In August, they said sales would be good, and in September, they said next month. Sure enough, the best is always in the next month.

It is normal for sales to drop during a slow season.

Today was the worst, the advertising was also bad, and sales dropped by 30%.

I originally thought it was just my problem.

Don’t focus too much on sales, but first pay attention to whether the product ranking has dropped.

The same situation did not occur in a single category, but in multiple categories. Sellers generally reported that this year seemed to be stuck in the off-season, and consumers remained cautious about spending. Even during the big promotion period, many sellers said that their sales were not half as high as the same period last year. The big promotion did not bring good sales results, but made sales during this period worse. However, the sellers' rankings did not change, which also indirectly reflects the current situation of most sellers.

The most direct impact of the decline in order volume on sellers is that it is difficult to make money.

With the great ideal of making a big splash in the cross-border industry and creating his own world, individual seller Zhang Lin has been fighting on Amazon for 8 months. Looking back on March when he registered an Amazon account, uploaded products, shipped them, and sold a single order on the second day after the sale started, Zhang Lin now doesn't know where to go.

The incident started with an infringement complaint. Two weeks after entering Amazon, Zhang Lin received the first infringement complaint and his product was removed from the shelves. Then, two months later, another product was removed from the shelves for the same reason. Five months passed, and Zhang Lin launched nearly 30 new products, but the daily sales were only more than 10 orders.

At that time, Zhang Lin also found that the sum of advertising costs and Amazon's fees had completely eaten up sales, and even turned negative, which meant that he was working for nothing every month. Zhang Lin tried to control the total daily expenses by reducing advertising expenses, but the withdrawals after one month were directly zero, and Zhang Lin was dumbfounded.

Like Zhang Lin, there are many novice sellers who just learned some operational knowledge and started working alone on Amazon. They entered Amazon with enthusiasm, but they did not have deep operational experience and mature strategies. A series of radical and blind operations made it difficult for them to survive quickly on Amazon. Instead, they would become part of sending money to Amazon. Once the operations are unfavorable in the later stage and they are burdened with huge debts, they are likely to fall into traps frequently, become stepping stones for some sellers, and finally leave Amazon's table.

"Under this year's environment, the situation of old sellers is already unclear, let alone newbies working alone," this is the perception of many sellers. The best of them are making a small profit, the second best are just breaking even, and the third best are seeing a serious decline in orders, with profits not covering expenses. They generally complain that "the success rate of launching new products is too low recently." Nowadays, many sellers working alone only want to break even and maintain links in the early stage, and make a little money to live in the later stage; some sellers working alone have started looking for jobs again, using their own stores as a backup.

Individual sellers are cautious, and veteran sellers who have been working on the platform for many years are also beginning to become rational. A Shenzhen seller admitted that "a few years ago, the boss made bold statements to us that the company would be listed soon", but now it has become "the overall environment is not good, and it's good that the company can still hold on." Sellers who were originally keen on store expansion are now shrinking their fronts and focusing more on existing resources, switching to high-quality products, and stabilizing cash flow.

In the past, if you searched for content related to "Is cross-border e-commerce profitable?" on browsers and video platforms , you would see many articles and videos with explosive headlines such as "Moms can make a fortune at home", "Amazon newbies earn tens of millions a month", and "Amazon sells products as soon as they are put on the shelves". However, this situation has decreased now.

Many people are gradually returning to the right track in their view of Amazon and will not throw large sums of money into cross-border e-commerce at will. It can be said that the current market environment has also divided Amazon sellers into two categories: one is the sellers who have been working hard on Amazon for many years and have been constantly transforming and growing under the influence of the platform and environment; the other is the outsiders who were attracted by the so-called daily earnings and other exciting news, and were eliminated in the platform's rounds of reshuffles.

In fact, it is getting harder and harder to make money on Amazon, not only because of the above reasons, but also because of the competition among platforms. In the past, Amazon has dominated the cross-border e-commerce market. However, with the rise of platforms such as Temu and Shein and the vertical expansion of local platforms in the United States, they have also begun to eat into Amazon's traffic. Newbies have tried other platforms, and veteran sellers have also begun to deploy on multiple platforms.

This year, in order to attract more sellers, Amazon has also proposed more supportive measures in this year's investment announcement, such as multi-site sales rebates, Amazon preferential benefits, 10% sales rebates for new products for a limited time, free storage, and other preferential measures, which are more powerful than in previous years. However, according to feedback from some sellers, these preferential measures have not attracted too many sellers, and the cross-border groups that used to chatter seem to be unimpressed by Amazon's investment.

However, the above situation is just the tip of the iceberg for Amazon sellers. Today, Amazon is also making frequent changes to enhance its voice.

Another big change, Amazon starts to focus on GMV?

A careful observation reveals that since this year, Amazon has been making changes to sections including the front page, reviews, five-point descriptions, and advertising space. Recently, Amazon has launched another update.

When browsing the BS ranking list, we can see a video play button at the bottom right of the main link image. Just click the button to watch the video immediately. Imagine if you attract users before they click on the link, they will be more likely to actively click on the link, thereby increasing the click-through rate and conversion rate of the product.

This is very similar to the function of Taobao. If Amazon learns from Taobao and applies this function to the search results page, users can watch videos directly on the search results page without clicking on the link, and learn about the product more directly and quickly. Of course, the premise of all this is that sellers need to lay out the video content well and fill the related video display positions below the link to prevent competitors from grabbing the display positions and dividing the traffic.

Many sellers say that Amazon is becoming more and more like Taobao, but they don’t know that its ranking algorithm is also quietly changing.

"Amazon is now paying more and more attention to sales. For the same sales volume, products with high customer price generate more GMV value," a seller analyzed. Amazon gives traffic and weight to high-priced products to generate more sales. For example, you sell a product for 10 yuan, and others sell it for 30 yuan. You are the BSR, but under the same order, others grab the BSR. You need three times the order to get the BSR back. Even if your major category ranking is ahead of others, your minor category ranking will not be updated because you have enough orders, but the sales volume has not yet reached.

According to the data, in the past, if there were enough orders or the seller was far ahead, the BSR could basically last for 2-3 days, but now sellers need to be far ahead in both orders and sales before Amazon will give them a stable position. This means that if sellers want to grab a better position, get better traffic and orders during the promotion, they must have a high average order value, at least higher than other sellers in the category, and it is best to get a better position in the early stage of the event.

On the other hand, Amazon's traffic ranking has also changed, becoming LD (Lightning Deal) > 7DD (7 Day Deals) > DOTD (Deal of the Day). As we all know, Amazon implements the principle that the shorter the event time, the more traffic support it provides, and the more obvious the seller's order growth will be. Before 2023, Amazon provided more traffic entrances, and DOTD was also easy to explode. But now, Amazon has removed the DOTD traffic entrance and no longer defaults to being ranked first in all activities .

Sellers need to grab more orders and traffic on their own so that product activities can get a better position within 24 hours , such as the top three on the activity page. Only then will Amazon pay attention and release their traffic .

In the past, many sellers may not have paid attention to the strike-through price, thinking it was just a superficial phenomenon. They only knew that if there was no strike-through price activity, an error would be reported, and the activity price might be lowered. But now it is not the case. The strike-through price is a sign that users can see a big discount during the activity. Especially through off-site promotion, the huge discount between the strike-through price and the activity price is also very attractive, so sellers are better off not to change the price.

Amazon's frequent changes are believed to be an effort to protect its GMV from being snatched away by others. However, every change made by Amazon seems to intensify competition among sellers, forcing sellers to move forward.

Amazon has always given more than 80% of traffic to the top sellers, and the rest to the remaining small and medium-sized sellers. This has also made it difficult for some new entrants and mid-market sellers to increase sales and even survive. In response to this, most sellers will first use low prices in the early stages to boost sales and keyword rankings, but this approach will only trap most sellers in an endless cycle of low prices, which is always a disguised form of charity. Sellers' sales will only get worse year by year, and profits will disappear bit by bit.

Some sellers said frankly, "If you want to compare prices, you can just go to Temu, why bother fighting on Amazon." The best way is to select products well and consider how to stimulate customers' desire to buy while ensuring product quality. Every change of Amazon is forcing sellers to move forward. Only by continuous innovation and exploration can they survive on Amazon.

Between change and constancy, can Amazon's long-standing bestseller maintain its dominant position?

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