A novice entering the cross-border industry suffers an annual loss of 5 million!

The world of cross-border e-commerce!

Regarding cross-border e-commerce, some people say that this year will be the best and easiest year in the next 10 years! However, 2023, which is crowned with such an evaluation, still makes a large number of sellers panic. Orders plummeted, advertising effects were poor, and they lost money every month. These things really happened to them, and continued to convey to the outside world that "cross-border is no longer a good time to enter the market."

Every year, people say that cross-border e-commerce is not easy to do, and every year, a large number of new players pour into this field. Everyone comes with hope, but most people return with disappointment, and only a few can really persevere. On the same Amazon, sellers may have different ways to make money, but they may experience the same way of losing money. Amazon has too many variables, and a large number of sellers go from being prosperous to going bankrupt overnight, often in just a few months.

These stories of sellers who lose or make money continue to restore and enrich the most authentic cross-border life.

Is it not a good time to enter the cross-border market? Newbie Xiaobai lost at least 5 million yuan on Amazon

"I just signed up for Amazon and am still in the self-study stage. I heard that this industry is very good."

“I feel that Amazon will invest less than Tmall and other platforms, so I want to give it a try.”

"I'm a factory owner. I heard that Amazon is great, so I plan to hire someone to work there."

…

The above scenario is played out almost every day. Domestic sellers on Taobao and other platforms, factory owners, and practitioners outside of e-commerce all want to enter the cross-border market to share a piece of the pie. At this time, old Amazon players often look down on them: Look, here comes another fearless person!

"Most people who sell on Amazon now are cannon fodder. People only think that cross-border business is profitable, but they don't know that cross-border business requires more money. The advertising fees alone are enough to make people feel distressed. Every click from consumers is a loss of real money. In addition, some top sellers have basically occupied all the ranking positions. It is difficult for newbies to stand out among a bunch of competitors."

In the view of industry insiders, as the times change, cross-border e-commerce has become a red ocean, and it is no longer a good time for newcomers to enter the market. Many Amazon sellers have indeed shown that in recent years, cross-border e-commerce has become more difficult and it has become increasingly difficult to make money.

Xiao Zhang (pseudonym) started working alone for Amazon in 2021. Although he made a small profit by chance, overall, the money he earned from working alone for several years was not as much as he earned from working for others, and the various pressures he had to bear increased suddenly.

For small sellers like Yu Xiaozhang, it is lucky not to lose money. Many small and medium-sized sellers have been busy for a long time, not only have they not made any money, but they also have a lot of inventory to be digested. Xiao Li (pseudonym) is one of them. He started doing Amazon last year and contributed 200,000 advertising fees to Amazon. In addition to getting a large number of unsalable inventory, he did not make anything else. Coincidentally, another cross-border seller also came forward to say that he started doing Amazon in 2020 and lost a lot of money. Until now, there is still a lot of inventory in the warehouse that has not been cleaned up.

As we all know, in the process of doing Amazon, many people often have to lose money to pave the way. This is because cross-border e-commerce has gradually become an asset-intensive industry, and sellers need to survive the early "investment period" before they can gradually see returns. How long is the investment period? Many people believe that the seeds for making money in 2023 must be planted in 2022 ! Because a link needs to be nurtured for at least half a year before it can see results, plus the time investment in other links, the saying that "the seeds for making money that year need to be planted the year before" is not an exaggeration.

It is also worth noting that as cross-border e-commerce operations become more difficult, almost every link in the business chain is full of "traps", which undoubtedly increases the probability of sellers losing money.

There are many examples like "a 90s guy lost 200,000 yuan on Amazon". Many people not only lost their savings, but also got into a lot of debt.

Xiao Liu (pseudonym) is working to pay off his debts after his failure in working on his own. It is understood that he has been losing money almost all the way since he entered the market, and has lost more than 500,000 yuan in total. At the beginning, Xiao Liu was like many people. He carefully understood the categories, the hot products, the customer psychology, the platform gameplay, actively communicated with the account manager, and actively learned the experience shared by other sellers. He spent a lot of time choosing some popular categories and products to do, and believed that success would favor those who are prepared. Because he was too optimistic, he did not care too much when he lost money at the beginning. Instead, he had a gambler mentality during the operation process and stocked a large amount of a potential product, thinking that the hard work would pay off, but in the end it turned over and he could not bear the losses!

For sellers with relatively large scale, they have to pay more "tuition fees" during the start-up period, especially in the initial stage.

According to an insider , "Factory Manager in the Wind", in the early years, cross-border e-commerce was still in the bonus stage, and many sellers had to lose millions before they could find out how to make money. In the past two years, the investment of new sellers has increased. Several colleagues around me tried Amazon last year and basically lost more than 5 million. " The biggest difference between Amazon and Taobao is the cost . Among them, the warehousing and distribution deductions eat up the bulk of sales , and the advertising fee accounts for a very high proportion . Many sellers' ROI is only a few 1 points, which is unimaginable in domestic e-commerce , so the initial investment is huge. "

Although sellers with strong financial resources have more trial and error costs, they, like small sellers, have two options in front of them: they may start to make money after losing money, or they may suffer serious losses after losing money.

“You can’t be impatient about cross-border e-commerce. You have to persevere. It’s normal to lose some money at the beginning. It will naturally go bankrupt over time.” This statement has always resonated with countless sellers. Many examples have shown that the more Amazon sellers are willing to lose money, the greater the loss will be in the end. This statement may not work for all cross-border people, but it does make sense.

Many people are rich and willful, thinking that they can only make money by losing money first. Little do they know that losing money on Amazon is a bottomless pit. If they only know how to lose money but don’t know how to learn from experience and lessons, and cannot calm down and focus on researching products, they will never make money!

Same Amazon, same money-losing formula

"On the Amazon platform, losing money is the norm, and everyone loses money to a certain extent. Almost every seller is madly complaining about Amazon while rolling up their sleeves and working hard." Recently, Weibo blogger "Ailin Mingyue" shared her experience of losing money on Amazon, which resonated with a large number of sellers .

" It started happily. After spending several weeks selecting products, I finally found a product that can be called a blue ocean product. It has a high gross profit margin, only 3-4 sellers in total, good sales and a very stable price, and the product categories and materials are all familiar and good at me. These factors gave me a lot of confidence, so I invested a lot of money and made 3-4 more variants than regular sellers. I purchased nearly 1,000 sets in total, spending about 160,000 yuan. Including the cost of the first leg, taking pictures and videos, the total cost was nearly 200,000 yuan.

Waiting for the peak season to come. This product has seasonal attributes, and although it can be sold in the off-season, the sales volume is not good enough. It is reasonable that the sales performance is average when it is just put on the shelves. Fortunately, the profit is gratifying, so we are still optimistic and waiting for the peak season to come.

The spoilers opened the market at a low price. When the product first started to float, the factory said that there were customers who had placed large orders, using cheaper materials, making some appearance changes, and giving away a lot of accessories, which was considered a small iteration. Sure enough, after these peer sellers put the product on the shelves, they started to open the market at 1/3 of the price, and the reviews quickly increased, and the sales in the off-season were as good as those in the peak season.

The gloom in the peak season. Finally, the peak season is here, and I am greeted by a screen full of my peers, super low prices, and rising CPCs. Although I receive orders every day, the sales are not as big as I imagined, and the profit is just barely acceptable. If I hadn't prepared so much inventory at the beginning, I could actually make a small profit. However, I have too much inventory, so I can only continue to persevere.

There are more and more new styles, and the prices are getting lower and lower. At first, several competing products did not reduce their prices quickly, but their sales and rankings have fallen a lot.

The performance of the rising stars. New sellers have emerged one after another, gradually taking over the positions and rankings of players with old styles and high prices. However, the old sellers cannot lower their prices to the same level as these new players, because the materials used in their products are better, and the shipping costs this year are also very different from last year, all of which have pushed up the cost of products.

I couldn't bear to leave the outlets. The inventory had been stored for too long, and Amazon's backend would provide timely help, such as recommending outlets with a 30% discount on the suggested retail price. I was a little reluctant to leave, so I offered an 20% discount, but it had little effect. I also missed a good opportunity to clear out the inventory.

The less loss, the more profit. Too much inventory, the greater the pressure , so I can only start to sell at a lower price. The less loss, the more profit, and I will bleed myself bit by bit.

Long-term storage surcharge. Starting from April this year , surcharges will be charged for goods stored for more than 180 days, and the long-term storage surcharge will be increased for goods stored for more than 270 days. The more this product cannot be sold, the more losses will be in the future, and the inner anxiety will be full, so the advertising investment will be increased, the price reduction will be increased, and the attention will be increased.

I couldn't stand the input and output, and the pressure was even greater. I spent more time on this product every week, but the number of orders and advertising acos control were not ideal, so I had to start various on-site operations, such as bundling with hot-selling products for discounts, large coupons, display ads, test scene main pictures, etc. Unfortunately, the input was 200 points, and the output was only 20 points, and the pressure increased again.

Clearing inventory, selling at bargain prices. It is said that there is no inventory that cannot be cleared, as long as the price is low enough. So the sale was carried out at bargain prices, and the price was reduced to the same level as those who had been disrupting the market by low prices for who knows how many waves, thinking that it could be cleared out quickly. However, contrary to expectations, those old competitors were also reducing their prices, and the bargain prices had become the regular prices of others, which meant that there was no advantage in reducing the price, but this was already a blood loss price.

The shoe has dropped. After various calculations, it is still the most cost-effective to clear the goods in bulk on the site with the least loss, so I create a removal order. After clicking these orders, the platform reminds me that once the order is submitted, it cannot be withdrawn. I don't want to see these stocks anymore, so I click to confirm and finally say goodbye to this batch of goods.

I finally breathed a sigh of relief. "

"Erin Mingyue" said that there are countless people who lose money on Amazon. If one trick fails, you may lose everything. If this is the experience of a novice seller, it will probably be very painful. For many experienced sellers, this is also a blow. It is another experience accumulation, and it also reminds them to pay more attention to the speed and time of product listing and grasp the key nodes.

Xiao Zhang also feels the same way. He believes that the current market information is very transparent. Most homogeneous products can meet the main needs of consumers, and few sellers can create market barriers with their products alone. Even for R&D sellers, patents and technologies cannot completely make them the best. Price wars have become an important means for sellers to break through the siege. Everyone is suffering from the mentality of dragging their opponents to death, and in the end, both sides are often hurt ... In fact, under the premise of Amazon's current product homogeneity, operations can avoid about 70% of losses by conducting research on market capacity, competition intensity, and competing products. After selecting a product, promotion nodes, product entry points, targeted customer groups, and stocking channels are all trivial and important nodes... The market for each product is different, and formulating promotion methods based on specific products is a lifelong issue for sellers. Different products, different market environments, and different listing times for the same product will all be very different. Moreover, now that Amazon has increased its fees in various ways, how to maintain links and reduce expenses is also an important and complex task.

It can be seen that cross-border e-commerce is accelerating from blue ocean to red ocean, product profits are also decreasing at an accelerated rate, and the overall profit margin is declining year by year. Compared with previous years, products with a gross profit of about 25% take relatively longer to find. On the one hand, with the increase in cross-border competition, a hot-selling product often faces the fate of being imitated by peers and snatching orders at low prices. There are many cases where the hot-selling period of three to five years in the past has been reduced to two years or even lower. On the other hand, the Temu platform has been running wildly, snatching traffic from other platforms. Many sellers have either seen a sharp drop in orders or cut prices to maintain sales, and their profits have been further reduced. These have brought challenges to sellers' operations.

"Everyone must learn to understand and abide by the rules of the platform, find and avoid the pitfalls. Amazon is becoming more and more professional, and products with the same price and similar functions can have completely different sales volumes. Sellers must not only be good at marketing, but also focus on making products and understand and meet customer needs," said Xiao Zhang.

Too many variables! A large number of sellers went from being prosperous to going bankrupt overnight

Based on various opinions, the bonus period of the Amazon platform has indeed passed. If a newbie enters the market without any advantages, he will basically lose everything. From a time point of view, the period before 2019 was considered the golden period of Amazon's development. 2020 ushered in a wave of development climax, and 2021 was the year when the industry reached a turning point.

Currently, the companies that are doing well on the Amazon platform are: first, factories and brands with capital and strength that focus on vertical category operations. Second, old players who are very familiar with foreign trade products or experienced players who are expanding into new categories. These people are undoubtedly old players with a long time of experience. Marketplace Pulse data shows that among the top 10,000 sellers on Amazon’s US site, 20% of the sellers have been ranked first in the Best Seller list of the corresponding category for 7 consecutive years.

Marketplace Pulse data also pointed out that in 2022, 15,000 sellers on Amazon's US site received more than 100,000 orders, and these sellers contributed nearly half of the third-party sellers' market sales (GMV), a trend similar to previous years. Millions of sellers sell products on Amazon, but less than 10% of the top sellers control most of the sales.

Obviously, it is becoming increasingly difficult for small and medium-sized sellers to survive on the Amazon platform which is "monopolized" by the top sellers .

More and more Amazon sellers have realized that becoming rich overnight is just a coincidence, but going bankrupt overnight is something that can be traced back to a long time ago. Cross-border e-commerce has become a gathering place full of stories of great joy and great sorrow.

Xiao Wang (pseudonym) is one of them. Working alone on Amazon, he made a net profit of more than 1 million in just one year. He used the money to buy a house that year. After making money, he was confident and wanted to press on. So he bought 500,000 worth of goods. Unfortunately, the goods were still floating on the sea. A large number of competitors had appeared in Amazon's backend, and the value of the goods plummeted by more than half. To make matters worse, the store was closed due to authenticity issues... Until now, this batch of goods has not been processed.

Many large sellers, although they made a lot of money at one time, ended up losing more. An industry insider said, "I once had a friend who said he had millions of dollars but didn't know how to spend them, but a few months later the situation took a sharp turn for the worse and even paying salaries became a problem." There are many similar examples. Some Amazon sellers were still confident last year about going public, but after a year, they had to lay off employees to "save their lives."

There are too many variables in Amazon. Nowadays, " Don't borrow money to do business, it's better to earn less than taking risks " has become the consensus of a large number of cross-border sellers. However, until now, many newbies have been deceived by unscrupulous training institutions and think that Amazon is a profitable business. So they borrow money from banks to do Amazon. In less than a month, their accounts were blocked, and they didn't know how to deal with a pile of dead inventory!

“If you think that working on Amazon means just sitting and waiting to get paid every day and getting a lot of orders as soon as your products are put on the shelves, then you are too naive. If you work on Amazon with the mentality of getting something for nothing, you will only come in with a smile and leave with tears. If someone teaches you how to make money, then teaching you how to make money must be more profitable than doing it himself.” People familiar with the matter said that in the cross-border circle there are some people pretending to be big sellers, showing off Shenzhen’s top luxury homes all day long, or taking out very exaggerated advertisements to lure target groups into joining Amazon, and then defrauding them of money in the name of helping these people operate Amazon.

Countless examples have shown that Amazon’s golden age has passed. Now just investing money will most likely just serve as cannon fodder for medium and large sellers!

So can Amazon still do it?

Of course you can!

Industry insiders generally feel that compared to other platforms, Amazon is still fairer and more promising! As long as the seller operates in compliance with regulations and has funds and supply, it is never too late to enter the market. Survival of the fittest is the law of all walks of life . In addition, only a few people make big money. Those who lack independent thinking ability and do not recognize their own strengths often lose a lot.

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