Amazon is scrapping plans to build 42 U.S. warehouse facilities with nearly 25 million square feet of total available space due to slowing sales growth. Consultancy MWPVL said Amazon also delayed the opening of 21 other locations and canceled several European projects, particularly in the Spanish market.
Last year, due to serious exchange losses and soaring shipping costs, foreign trade companies did not dare to take orders, and cross-border sellers did not dare to make up for them. This year is the peak season for Christmas and Black Friday. Down, foreign trade factories and cross-border sellers are full of expectations for peak season orders. However, it backfired. Foreign trade factories and buyers found that overseas orders were much less, and the gap compared with previous years was very large, which was almost the low-season level in the past. With the decrease in overseas orders and the closure of some warehouses by Amazon, many buyers have asked, is the peak season still busy this year?
On the one hand, due to changes in the international situation, energy shortages and inflation this year, consumer confidence in Europe and the United States has continued to slump, personal consumption willingness has declined, and a lot of non-essential spending has been reduced. The order volume of many foreign trade factories in Europe and the United States has declined, but the number of foreign trade orders from some Latin American and Southeast Asian countries has steadily increased.
On the other hand, many sellers miscalculated the form of this year and prepared a lot of goods according to the order volume of last year. Now that consumer demand has declined, coupled with various account reasons and logistics and transportation effects, there are still many inventories in Amazon's warehouses. This year, many sellers have been working hard to destock all year round. One is that there is no inventory, and the other is that the sales of orders in the first half of the year were flat, and cross-border sellers did not dare to stock up in large quantities in the peak season. The seller's stocking volume is reduced, and the orders of the foreign trade factory are correspondingly much less. And not only cross-border sellers are clearing inventory, but also overseas customers. For example, platforms such as Walmart are vigorously clearing inventory, and it has not been cleared until now, which shows the saturation of goods in overseas markets.
So will the peak season continue this year? The answer is yes. Christmas is an annual carnival festival in the West and Amazon's big promotion day. Despite the impact of the epidemic, people have reduced consumer spending, but some essential items still occupy the majority, and consumers have only reduced spending on some luxuries or non-essential items. Some Christmas items such as Santa Claus, Christmas tree, elk, various decorations, dolls, Christmas stockings, etc. are still hot commodities in the Christmas season. Moreover, China is still the preferred destination for Christmas orders. As long as Chinese companies are serious, they can still receive orders. After all, there are huge business opportunities in the Christmas supplies and gift markets in Europe and the United States.
Coupled with the continued decline in shipping prices this year, the reduction in the number of containers has alleviated port congestion to a certain extent. In the past, it took one and a half months for the cargo to arrive in the United States. This year, the US-Western route takes less than 20 days, and the freight rate has dropped by 45% compared with January. Many sellers have already selected high-season products, but they are not in a hurry to place orders. When the seller postpones the order, he can observe consumer preferences at any time to change the selection, and it will not delay the time of goods entering the warehouse.