Seller: 2023, continue to live.
" It was the best of times, it was the worst of times. "
For cross-border people, every year is the best cross-border era and the worst cross-border era . After experiencing the soaring sales in the pre- and mid-term of the epidemic and the survival of the fittest , the industry slowdown that started the year before last still has a continuous impact on sellers, and multiple data indicate that the industry is still in pain in 2023 . Not only are sellers in dire straits, but even Amazon, a giant, is having a hard time.
On Jan. 3, Amazon borrowed $8 billion from various lenders. At the beginning of the year, Amazon borrowed "huge sums" of money. Amazon's operation has frightened many people in the industry.
With a loan of 8 billion US dollars at the beginning of the year, Amazon released a negative signal in the market?
According to Reuters , last week Amazon reached a loan agreement with a number of institutions that will provide Amazon with $8 billion in unsecured loans.
According to reports, the loan, effective on January 3 , will mature in 364 days (January 3, 2024), but Amazon has the option to extend it for another 364 days. However, if Amazon decides to extend the loan term , the spread will also increase from 0.75% to 1.05% .
Regarding the reason for the loan, an Amazon spokesperson said: "Given the unpredictable macroeconomic environment, over the past few months, we have employed a variety of financing methods to fund capital expenditures, debt repayments, acquisitions, and working capital needs."
Obviously, negative consumption caused by crises such as inflation has already slandered Amazon. Whether it is the slowdown in growth throughout 2022 or the $8 billion in loans at the beginning of this year, this fact is attested to.
Some analysts said that Amazon's short-term loan is enough to show that the current situation of the consumer market downturn will continue for some time. Because applying for a loan means that its financial situation has reached a "stretched" state, and the tightening of liquidity indicates a broader economic headwind in the market in the future .
An $8 billion loan may not seem like a big deal to Amazon, which already has nearly $59 billion in long-term debt on its books as of now, excluding the new loan . In addition , Amazon also had about $35 billion in cash and cash equivalents at the end of the third quarter ended September 30. It also expected full-year sales to exceed $ 500 billion. Compared with these figures, $8 billion in loans seems nothing at all .
But this is even more strange, why would Amazon need such a "small loan"?
The $8 billion loan may be an indirect sign of Amazon's near-term liquidity crisis, analysts said .
In 2022, although Amazon's financial report shows that its revenue is growing, its various profits will decline severely, and its losses should not be underestimated. Due to high transportation, inventory and personnel costs , Amazon's operating profit in the first three quarters of 2022 will only reach $ 9.5 billion , which is far lower than the $21.4 billion in the first three quarters of 2021 .
In addition, in the first three quarters of 2021, Amazon's revenue net profit was as high as 19 billion U.S. dollars, but in the same period of 2022, it lost 3 billion U.S. dollars. In four consecutive quarters , its free cash flow was negative 19.7 billion U.S. dollars .
In order to reduce losses, Amazon has been shrinking the warehouses that have expanded wildly in the past three years. It also made a decision to lay off tens of thousands of employees at the end of last year. Its CEO Andy Jassey said that 18,000 Amazon will be cut in the foreseeable future . employees, up from a previous estimate of 10,000.
In the past year, Amazon's stock price has plummeted by 51%, and its closing price has repeatedly hit new lows. This has also caused its market value to be halved directly, from 1.7 trillion US dollars at the beginning of the year to about 834 billion US dollars . It was a loss of about $100 billion.
Due to various revenue and market conditions , Amazon had to say in a document submitted to the US Securities and Exchange Commission that market uncertainty is still continuing and that it needs $8 billion in loans for " general corporate purposes."
While the loan may not be strictly necessary, this move by Amazon is clearly a forewarning of bad conditions ahead for the industry.
In fact, not only Amazon, but also technology giants such as Microsoft and Alphabet are laying off employees to cut costs in response to economic headwinds, and many economists in the United States are also bad-mouthing the market, and sellers' "first hit" in 2023 will begin up.
Rising unemployment, recession … Sellers: This year will only be harder than 2022
According to the latest survey by the "Wall Street Journal", 65% of American economists believe that the United States will fall into a recession in 2023 , and the conclusion of Bloomberg 's survey is also consistent with it.
A poll by the National Association of Manufacturers ( NAM) also showed that 62% of manufacturers believe that the United States will face an economic recession in 2023.
In addition, according to Fed Chairman Daly , Fed policymakers agree that U.S. inflation is more persistent than expected and that interest rates may need to be raised above 5% and remain high for some time.
As for the next interest rate hike, Daly said that 50 basis points or 25 basis points are possible, after all, the CPI data has not yet been seen.
The negative impact of inflation also covers the US labor market. Daly said that the US labor market will continue to slow down in the first quarter, and there are no signs of spiraling wages and prices. It is expected that the unemployment rate will rise to 4.5% or 4.6% by the end of 2023 .
Rising unemployment means more consumers are facing financial crisis and cutting back on spending, which will lead to continued depression in the market.
Faced with these negative messages, some sellers smiled wryly, and in 2023 , they developed an instinct to get used to difficulties .
When referring to the market forecast in 2023, many sellers told Yien.com that they would face hundreds of thousands of storage fees at the beginning of the year, and even the profits in the last few months of last year were gone, and the remaining inventory is expected to Still have to clear until May . According to the market conditions in the U.S. market, maybe the “charity” can only be cleared during Amazon Prime Day.
Some sellers said that they are still working hard to clear the last wave of inventory, and they have not replenished the inventory. They may take a break to see the market performance after clearing. Some sellers even said that they should do some side jobs to support themselves .
In terms of strategy, some sellers said that in 2023, the battle line is still tightened, and the distribution model is no longer advisable. It is necessary to continue to deepen the category and make high-quality goods, stabilize the basic market, and then slowly expand the cake.
For this year's market situation, the vast majority of sellers believe that the ideal state is to seek progress in stability , but the reality is that they still have to continue to "live" .
It is foreseeable that the pain caused by inflation will not disappear quickly. The supply chain continues to be interrupted , the cost of raw materials remains high , and the demand in the consumer market is deeply weak … A series of crises are still hitting every seller.
I think 2022 is already suffering enough, and I think that there will be an inflection point in 2023 and the market will improve, but perhaps, the real darkest moment in the cross-border circle has not yet arrived.