Since the outbreak of the title wave that has lasted until now, tens of thousands of Chinese sellers have suffered losses of over 100 billion! Confidence in Amazon has generally weakened in the cross-border e-commerce industry. Some sellers have chosen to leave the market, and some sellers are waiting and lingering. There are various signs that Amazon’s status in the hearts of Chinese sellers is gradually declining, and the market share of Chinese sellers is also gradually decreasing. The new crown epidemic, supply chain problems, seller closures and Amazon FBA inventory restrictions are the main reasons.
In addition, the market share of Chinese Amazon sellers in the UK, Germany, Japan and other Amazon sites is also declining. At the same time, new seller registrations from China have also declined, recently accounting for only 75% of all new sellers. Through a large number of seller research, the author learned that in order to reduce risks, some large Amazon sellers have gradually transformed from the Amazon SC platform to the Amazon VC platform, and direct supply to Amazon has become the safest strategy. For a time, there were crises, fleeing Amazon, exploring emerging markets, and building independent stations became a craze in the cross-border circle.
Is Amazon still trustworthy for Chinese sellers?
On an enterprise level, Amazon's retail business growth has slowed, but it remains a leader. Data shows that in 2021, Amazon’s e-commerce sales will account for 56.7% of total U.S. e-commerce sales, with a record high market share. From March 2021 to mid-January 2022, Walmart added about 8,000 sellers from China, accounting for 14% of its total of nearly 57,000 new merchants over the same period. At the end of 2021, the number of Chinese sellers on Walmart's platform was about 14.28% of its total merchants. Even though Walmart has grown its e-commerce share by nearly 50% during the pandemic, Amazon still leads Walmart by a factor of nearly 10. Amazon dominates in three areas: Apparel and Accessories, with a 14.6 percent share; Sporting Goods, Hobbies, Music & Books, with a 16.9 percent share; and Furniture, Home Goods, and Appliances, with a 24.5 percent share of Home Appliances. In this regard, Sun Hanshan, CEO of Price Chain, told the author: " For ordinary Amazon sellers, this year is still a good year, and competition will always exist. " Sun Hanshan believes that Amazon still has opportunities.
Weak European markets against the backdrop of the Russian-Ukrainian war
The Russian-Ukrainian war has a great impact on Chinese sellers in the Eastern European market, especially AliExpress sellers. AliExpress dominates the Russian market, and the transaction volume accounts for 35% of the total value of the Russian cross-border online shopping market. In 2021, the scale of e-commerce in Russia will reach 42.5 billion US dollars. The average buyer spending on cross-border shopping is twice as high as in 2020 and three times as high as in 2019. Among them, orders from Chinese sellers account for the absolute majority – 93%. Most of these orders are generated on the AliExpress platform! Ukraine has the second largest e-commerce growth rate in Europe and the first in Eastern Europe, and its population of 44 million should not be underestimated. On January 18, the first cross-border e-commerce China-Europe "New Year's train" in the Guangdong-Hong Kong-Macao Greater Bay Area was from Dalang, Guangzhou to Odessa, Ukraine. Airspace restrictions, contractor uncertainty and security concerns are complicating all trade routes through Russia and Ukraine. Russia and Ukraine are an important part of the Eurasian Land Bridge. In 2021, 1.5 million containerized goods will be shipped from western China to Europe by rail. If the number of containers currently transported by rail is transferred to Asia-Europe shipping, that would mean adding another 5 to 8 percent to the already congested seaborne trade routes. According to the report: "Due to rising fuel costs, changes in trade routes and restrictions on shipping logistics capacity, it is expected that the conflict between Russia and Ukraine will lead to higher freight rates." From the market situation, senior seller Allan told the author that after the Russian-Ukrainian war, sellers in the European market began to be cautious. Cope. The most affected is Ukraine, because the number of Ukrainian users on AliExpress is high, while Russia is not as affected as Ukraine, and domestic shipments are still in a normal state. From the perspective of exchange rate analysis, Hai Cloud Exchange co-founder Zhang Yanbai believes that after the outbreak of the Russian-Ukrainian war, a problem that some Russian cross-border e-commerce companies will face immediately is the substantial change in the ruble exchange rate and the resulting asset risks. Opportunity in crisis. Sun Hanshan, CEO of Price Chain, pointed out: "The Russian- Ukrainian war has led to a rise in oil prices and a significant increase in global manufacturing costs. At the same time, logistics and freight transport in the Russian and Eastern European markets have been affected. In the long run, Russia's domestic light industry is underdeveloped and the consumer market is huge. It is also an opportunity. ” Zhang Sihua, chairman of Baotongda, an international freight forwarding company, said that the European market was affected by the Russian-Ukrainian war, and local prices rose sharply. Consumers’ confidence in future consumption declined, and the number of sellers’ orders dropped a lot.
North American market, lay out offline channels or new tracks
After subtracting the CPI, the total retail sales in the United States will increase by 10%, 10%, and 5% in 2021Q3, 2021Q4, and 2022Q1, respectively. Inflation directly causes consumers to increase their spending on necessities such as housing and food, thus making them unwilling to consume. As the market leader, Amazon's North American business still has an 8% growth, still outperforming the total retail sales in the United States. In the 2022 first quarter earnings conference call, Amazon executives attributed the slowdown in performance growth to inflation around the world, especially in North America and Europe: "Externally driven costs, mainly inflation. Air and ocean shipping rates continue to be at or above Higher rates than in the second half of last year, in part due to the outbreak in China and labor shortages in the country of origin. The war in Ukraine has also led to high oil prices. Compared with pre-pandemic, the cost of shipping overseas containers has more than doubled and the cost of fuel is 10% higher than before the outbreak. It was about 1.5 times higher than a year ago, and these inflationary pressures resulted in an incremental cost increase of about US$2 billion compared with last year.” In fact, with the loosening of epidemic prevention and control policies, offline purchasing activities of European and American citizens began to return to pre-epidemic levels. Some online e-commerce retail share will inevitably be transferred to offline. At present, various online platforms such as Amazon are constantly rising, operating costs are getting higher and higher, and sellers’ profit margins are constantly narrowing. Therefore , large offline supermarkets in the United States are deployed ahead of schedule. , Entering supermarket brands such as Walmart, Target, Best Buy, etc., may be a new track for cross-border sellers to earn more profits.
Many players are betting, emerging markets are favored
1. Brazil market Brazil is the largest and most populous regional power in Latin America, and the local e-commerce market has great growth potential. Therefore, Brazil is still the best springboard for Chinese companies and sellers to seize the Latin American market. In early March 2022, according to a report by BTG Pactual, Chinese fast fashion brand SHEIN has earned about 400 million US dollars in Brazil and is actively looking for suppliers in Brazil to meet its supply chain needs in Brazil. Combined with the construction of Cainiao's logistics facilities in Latin America, the opening of the China-Brazil charter flight route has shortened the delivery time for Chinese cross-border merchants from 40 to 50 days to the fastest 12 days. In Latin America, cross-border e-commerce business is growing rapidly. According to the Blacksip report by the Chamber of Commerce of E-commerce, e-commerce sales in Latin America will reach nearly $115 billion in 2021, a year-on-year increase of 37%. According to the latest survey report released by Neotrust, e-commerce in Brazil will achieve record revenue in 2021, with a 17% increase in e-commerce order volume and a total of 353 million deliveries. Senior seller Allan believes that the emerging market Brazil has a large population, and the market demand for products is actually very large, and the profit is also very high, which is higher than the US market. In Brazil, the difficulty of launching Facebook is lower than that in the United States and Europe, so the cost of competition is lower. In addition, Google optimization is Portuguese for Brazil, and the competitiveness is not so great. Among Brazilian markets, China is the most popular online shopping market. Since Shopee entered the Brazilian market, the sales of Chinese cross-border e-commerce have been increasing. However, there are three issues in the Brazilian market that need to be paid attention to, one is tariffs, the other is payment risks, and the third is logistics. At present, the biggest problem facing independent sellers in the Brazilian market is logistics. At the same time, Brazil is one of the key markets of AliExpress. The local retail volume is large, but the penetration rate of e-commerce is low, and it is very dependent on Chinese products. 2. Southeast Asian market, Japan and South Korea market According to the "2021 Southeast Asia Internet Economy Report" jointly released by Google, Temasek and Bain, the scale of Southeast Asian e-commerce will reach 120 billion US dollars in 2021, and it is expected to exceed 230 billion US dollars by 2025. What is the status of emerging markets in the minds of Chinese sellers? Sun Hanshan, CEO of Price Chain, believes: " North American and European markets are already very mature, emerging markets have greater opportunities, and their profits are much higher than those of European and American markets . Southeast Asian markets, Indian markets, and Japanese and Korean markets have higher profits than European and American markets. Because Europe and the United States are too busy, all Chinese sellers are competing.” Future opportunities lie in emerging markets, and the booming Vietnamese e-commerce market has also attracted many sellers to enter. According to the research report, the biggest market challenge facing Vietnamese e-commerce sellers is the homogenization of products. More and more competitors are selling the same products. This situation also leads to sellers constantly sacrificing profits to seize the market. For sellers who want to enter the Vietnamese e-commerce market or intensively cultivate this market, differentiation in product selection is a key direction in the future. Senior seller Allan research found that Indonesia, the Philippines, and Vietnam in Southeast Asia are in great demand. In terms of promotion, the difficulty of promotion in Indonesia is very low compared to Europe and the United States. Layout is a technical job. After entering 2022, more and more sellers who originally focused on the European and American markets began to speed up their deployment in the Asian market, focusing on Japan, South Korea and Southeast Asia. The reasons are as follows: First, the market size is large enough, Japan and South Korea are the fourth and fifth largest e-commerce markets in the world; second, it is very close to China, and the risk of stocking is much smaller than that of the European and American markets; The penetration rate of merchants is very high, and the market consumption capacity is relatively strong, which is easy to generate profits for sellers. In the face of crises and opportunities, offense is the best defense. In 2022, the Chinese brand army will continue to expand.