Layoffs, misjudgments, price wars, Chinese sellers flee Amazon

Welcome to the WeChat subscription number of “Sina Technology”: techsina

Text | Edited by Zhao Jiahe | Gale

Source: Zinc Finance

Not long ago, Amazon released its 2022 Q1 earnings report. The financial report shows that its sales in the quarter were 116.4 billion US dollars, an increase of 7.2% in the same period, which is also the worst record in 20 years for Amazon’s e-commerce business growth rate of less than 10% for two consecutive quarters.

It can be seen that Amazon, as the largest international e-commerce platform at present, has been unable to maintain its high growth rate, and its development has shown a decline.

Also cooling down, there is also the Chinese Amazon cross-border business that was known as “earning 30,000 yuan a month”. According to Jiyouji data, in October, November, and December 2021, compared with the same period in 2020, the number of jobs recruited for Amazon operations dropped by 40%, 31%, and 38%, respectively.

One of the reasons for the general consensus is that the repeated economic shocks and industry turmoil caused by the epidemic have caused many cross-border enterprises to decline in profits, and have no choice but to shrink their teams and even lay off employees. But this is not the only catalyst. As the main cross-border e-commerce platform today, the repeated conflicts between Amazon and domestic sellers have also caused deep grievances between the two sides.

Bankruptcies, layoffs, price involutions, misjudgment of titles… The outbreak period that began in 2020 has attracted many people to rush into Amazon’s e-commerce, and how many people are now self-deprecatingly calling themselves “subhumans”.

Zinc Finance interviewed the working life of three Amazon e-commerce operators. Although it is still too early to draw a conclusion on the future of this industry, it is becoming more and more difficult to at least enter the game and make money.

“After changing four companies, I still haven’t escaped layoffs”

Dong Yu 25 years old Hangzhou Main home furnishing category

Dong Yu, 25, is now the Amazon operator of a Hangzhou-based cross-border e-commerce company. Less than two years after graduation, this is the fourth company Dongyu has changed in this industry. Looking back on the twists and turns of the road now, she is still a little helpless.

In July 2020, like tens of thousands of young people, Dong Yu, who just graduated from the Department of Foreign Languages, also fell into employment anxiety. At that time, there were many recruitment positions, and “accepting inexperienced” Amazon e-commerce operations became her first choice after weighing.

When he joined the first two Amazon e-commerce companies, Dong Yu found a common problem, that is, these companies seem to be too “young”. In other words, most of his colleagues are fresh graduates with the same inexperience as himself. . Not only that, but even before the trial period ended, the second company appointed Dong Yu as the “supervisor” responsible for the company’s newly opened Japanese site.

Dong Yu, who feels that she is being reused, is very motivated, even if she is the only one to do the work of the Japanese station, she does not care too much; but when the company uses the performance indicators of the main US station to ask her to start the Japanese station, Dong Yu, Yu was dumbfounded.

Now it seems that this is undoubtedly a big cake or even pua for the newcomers: opening a new site store on Amazon is a long-term operation, starting from scratch to select products, distribute goods, list prices, and place advertisements. These never happen overnight.

Taking the performance of the main site in the United States, which has been in operation for many years, as an indicator, it is undoubtedly clear that this newcomer needs to be a “bearer”.

“Actually, the cost of recruiting new people is low, and it is easy to squeeze.” This is what Dong Yu understood when he left his post.

Amazon is different from Taobao and other domestic e-commerce models. The operational capability of a series of processes including product selection, distribution, pricing, and advertising is a very critical factor. Dong Yu told Zinc Finance: “But now the high-level operators often have high salary requirements, so most companies choose to hire cheap and obedient Xiaobai. But in fact, the overall operation capacity of the store is not up, it is simply impossible to do it. of.”

After two lessons learned, Dong Yu has begun to doubt himself, and once had the idea of ​​changing careers: after changing a few jobs, the operation of Amazon’s stores is far more complicated and cumbersome than expected; She felt like a “throwaway cabbage”.

For the first time, she posted Xiaohongshu with anxiety and doubts, but unexpectedly received hundreds of likes and comments. “It was only then that I found out that there are so many friends like me.”

The third company is mainly engaged in large-scale categories such as home furnishing. Compared with the first two, the work arrangement and performance formulation are much normal. Coupled with the epidemic stage in early 2021, because the recovery speed of domestic factories and supply chains was faster than that of foreign countries, it also allowed Chinese cross-border sellers to obtain a “bonus period” that is not too small.

The combination of various factors gave Dongyu the idea of ​​”long-term development”.

After working for a period of time, although the sales volume is increasing, Dongyu gradually found that the profit of the store is getting less and less. The biggest impact is the shipping cost, which has doubled from 10 yuan to more than 20 yuan per kilogram of goods. “At that time, at most 126 boxes of 16 kilograms were shipped at one time, and the freight cost alone exceeded 40,000.”

Then, even this tiny “bonus period” for sellers is fleeting. According to a shareholder letter issued by Amazon CEO Andy Jassy recently: “The rapid sales growth brought about by the epidemic will only last until the first quarter of 2021, and then the growth rate will slow down as anti-epidemic restrictions are eased and people are no longer at home.”

However, the rising costs showed no sign of a callback. The sea freight of more than 20 yuan per kilogram of goods is still the same, plus the monthly operation cycle of goods, as well as the logistics and storage fees of Amazon FBA’s “goose plucking”, which has dragged the company into a mess over time.

After a few months in this way, at the end of 2021, Dongyu’s company was identified as “chronic death” by the Guangzhou head office due to excessive losses and withdrew its capital. The entire team was laid off and dismissed on the spot.

“The day before the dissolution, the boss had a meeting and talked a lot. He wanted to keep us on the condition of a salary increase of 500 yuan and become independent. But in fact, due to the recession some time ago, after several team optimizations and resignation, the company has only There are 4 people left, including HR.” Dong Yu told Zinc Finance.

“And I know that layoffs are common among small and medium-sized companies around me. Out of pessimism about the environment and the team, I still chose to be laid off.”

The price war is unstoppable

Kaki 24 years old Hangzhou Main table and chair category

Kaki now considers himself lucky because the company recently optimized new performance commissions and hard KPIs. “Maybe the company doesn’t want to get involved like us.” She told Zinc Finance with a smile.

You must know that in the cross-border e-commerce work for more than a year, Kaki’s most thought was: “Don’t fight again, all the cheap ones in the price war are foreign buyers.”

Yes, Chinese sellers on Amazon are also very rolly and often fight price wars.

What often happens is that all the products of the same category are greatly reduced in price, and Kaki has to follow. Sometimes even if I have already vomited blood and sell it, the price of other stores is still falling endlessly. At this time, whether to continue to fight the price war or to withdraw from the wait-and-see situation has become her biggest dilemma.

The most classic case that has appeared in the industry before is that a table sold for $8.99 directly rushed to the top of the category list, and the general price was 5 to 10 times that.

Including the “low-price spiral explosion style” invented by some big man in the industry, it is also called “the culprit of price war involution” by the majority of sellers. The specific method is: when new products are launched, they will be sold at a low price and at a loss, and then slowly increase the price after the sales volume has reached the ranking; after finding that the sales volume has declined, the price will be reduced again and the price will be raised again and again.

But in Kaki’s view, after the spread of this style of play, extreme involution of prices among commodities has also been formed.

“When everyone is playing like this, the competitive price will become lower and lower. In fact, the profit indicators of most sellers simply cannot support such a tug of war.”

At the same time, the platform side Amazon will not supervise or stop this bottomless price war. On the contrary, as the “cheapest e-commerce platform in the United States” for five consecutive years, Amazon is happy to see the price war, and even forced to lower prices.

Kaki suffered once, when the product was forced by the Amazon system to a price that was not profitable at all. If it was not sold at this amount, the shopping cart would be lost.

This is not an isolated case being targeted. Amazon is said to monitor the prices of items on the platform, and if sellers can’t offer lower prices than rival platforms such as Walmart, it will delete shopping carts, prevent sellers from shipping, or even suspend sellers’ listings.

Under the platform’s “robber system”, Kaki is not without other options.

“The purpose of lowering the price and rushing sales is to improve the ranking. In essence, it is to expose the products as much as possible and obtain the conversion under the maximum natural traffic.” Kaki said, “If you want to achieve the same, there are two options: burning advertisements and brushing orders. “

But Amazon’s advertising also requires bidding, and the higher bidder gets the weight. The data shows that the advertising expenses on the Amazon platform in 2021 will reach about 27 billion US dollars, of which 17 billion US dollars will come from third-party sellers; at the same time, third-party sellers will need to spend an average of 4.6% of their sales on Amazon advertising in 2021.

Just after the price war, I didn’t want to enter the “advertising war” again, so low-cost brushing has become the first choice for small and micro sellers such as Kaki. It’s just the most convenient channel – to find a service provider to brush the bill, but now Amazon has become a red line.

“At the beginning, Amazon won’t care about you. They will save a lot of money and settle accounts with you after the fall.” Kaki told Zinc Finance. In the most serious wave of bans last year, Shenzhen Big Selling Youkeshu had a total of 400 sites blocked and 128 million yuan in frozen funds, while another big seller, Tongtuo, had 54 stores blocked and more than 41.43 million in funds frozen.

Therefore, Kaki usually chooses to find some foreign real people on Facebook, twitter and other groups to “trust” and send them products for free. “This type of real consumer account has a relatively high weight, and it is not easy to receive praise; secondly, it is not easy to be blocked.”

But because the other party is far overseas, there is bound to be a risk of being pitted. Kaki had contacted an American nursery before. After the products were sent, the other party wanted to buy more products for free, and threatened to give a bad review if they didn’t give it.

After making several long-distance calls to negotiate, not only did I not receive the money for the product, but I also received bad reviews.

Although I finally contacted Amazon customer service to eliminate the malicious negative review, after that, Kaki’s mentality changed.

“I am very Buddhist now, that is, passively conform to the trend of the platform. For small and medium-sized sellers like us, we are currently either succumbing or hitting the wall everywhere.”

Can’t escape Amazon’s frequent “manslaughter”

Brat 24 years old Hangzhou main massage category

Brat, 24, just left his last company, and in his own words, it was Amazon’s misjudgment mechanism that made him feel “tolerable and unbearable.”

When he first entered the industry, Brat always felt that he might be the most unlucky existence among his colleagues: within a few days of joining the company, the number of products that were removed from the shelves already ranked first in the company.

“Everyone in this business knows that Amazon’s dog is what we love and hate the most. Because once the page turns into a puppy like Oliver, Frank, etc. smiling at you, it means that the product has been taken off the shelf.”

The cute puppy makes it difficult for Brat to get angry, and the reason why Amazon removes the product from the shelves also makes him laugh and cry every time.

“When I first entered the business, the outdoor products I was selling were judged as ‘weapons’ and removed from the shelves by Amazon’s system, just because I wrote ‘can also be used as self-defense in emergencies’ in the product introduction (listing).”

After that, Brat understood that Amazon’s censorship system had a huge loophole, or “digging a hole.”

Searching for misjudgment entries in the well-known cross-border e-commerce community, you can find hundreds of related complaints. As long as there is a little ambiguity in each link, it is easy to suffer Amazon’s “word prison” and fall into a long appeal period.

“There is still a glimmer of hope that you can appeal. The most fearful thing is not to give you the opportunity and conditions to appeal.” Brat told Zinc Finance.

Not long after the misjudgment of outdoor products, one of Brat’s popular massage products was once again judged by Amazon as a “professional special medical device” and could not be put on the shelves.

To raise an objection, you must present a medical device-related qualification, that is, a certificate from the U.S. Food and Drug Administration (FDA). “But his product is not a medical device at all, how to apply for a medical device certificate?”

In order to prove that they are “not a medical device”, they need to provide a “medical device certificate”, and they are caught in a logical cycle that can never prove themselves.

Brat finally wrote seven or eight appeal letters and one urging letter before it was put back on the shelves. But the average processing time for each complaint is about a week, and it took him half a year to put this product on the shelves.

Reviewing reviews, selling fake products, and linking multiple accounts are the easiest crimes to add to Amazon’s system. Once these are misjudged, they often end up being banned. There is a tens of millions of sellers in the industry, because it is suspected that he is operating multiple stores at the same time, and he is tragically banned, and the appeal is unsuccessful.

Even a few days after the opening of a new store, the second trial of the store will be triggered inexplicably, and the application materials submitted hard will be wasted.

For this overwhelming misjudgment complaint, Amazon has also officially apologized: “In our efforts to protect the community, we sometimes make some careful mistakes, and we apologize for the inconvenience caused.” It’s a pity that most sellers don’t appreciate it, and Brat is one of them.

“After all, this repeated misjudgment title is tormenting people, and at the same time, there is no sincerity to improve.”

When asked if he is going to start a new business on a well-known e-commerce platform, Brat told Zinc Finance that the major platforms are not in a good state in the current environment.

After a data survey, it was found that the Southeast Asian e-commerce giant Shopee has ushered in a large loss in performance this year. Following the closure of the Shopee French station in March, it recently announced that it will withdraw from the Indian market. Including the low-priced wish, known as the “US version of Pinduoduo”, the net loss in the fourth quarter of 2021 also increased by 90% year-on-year.

“It may be worth trying out independent websites and new platforms like tiktok now. But the traffic gap between them and Amazon’s big brother is still there, and I’m still in a wait-and-see state.”

Epilogue

It is worth mentioning that in the face of today’s downturn, Amazon still chooses its most commonly used “cost reduction and efficiency increase” as a coping strategy – in other words, letting sellers bear the cost.

On May 12, FBA fulfillment fees in the UK and EU will increase again, which will be the third increase this year. But does this approach really work?

According to data, the proportion of new sellers in China on Amazon has decreased, and the share of top sellers has gradually shrunk.

In the past few years, living less and making more money has created Amazon’s cross-border outlet. But “look at his building, look at his building collapse”, now, Amazon, standing on the downhill intersection, no matter what the next step is, it will become more and more difficult to retain Chinese sellers.

(Disclaimer: This article only represents the author’s point of view and does not represent the position of Sina.com.)

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-05-11/doc-imcwipii9304172.shtml
This site is for inclusion only, and the copyright belongs to the original author.