In today's article, we will use three particularly interesting news from the entire market last week to analyze for you where you need to be cautious and where there are opportunities for cross-border e-commerce and foreign trade this year.

Part 1: Large technology companies CES encircle and suppress the low-end market

The International Consumer Electronics Show (International Consumer Electronics Show), also known as the CES Electronics Show that everyone is familiar with, was grandly held in Las Vegas from last Thursday to today. CES Electronics Show has always been known as the world's first exhibition, the main reason is that:

What's different about this year's CES Electronics Show?

1. The time of the exhibition is the first week after New Year's Day every year, and it is the first large-scale exhibition in the world in the whole year;

2. Its organizer, the Consumer Electronics Manufacturers Association (CTA), is one of the most influential industry associations in the world, and its members are all world-renowned electronics companies and technology giants;

3. The exhibition will focus on displaying the latest technological products developed, and unlike the so-called industry forums, these new technologies and products are often already formed, and will quickly increase their popularity with the help of the influence of the CES Electronics Show, and through the exhibition. Distributors under the line are quickly pushed to the market

However, this year's CES Electronics Show also has many differences compared with previous years:

1. The scale is larger than previous ones, with participation from 173 countries, more than 3,200 exhibitors, and more than 4,700 news media. It can be seen that after the epidemic has swept the world for 3 years, all enterprises, no matter how big or small, have refocused on development;

2. The number of Chinese exhibitors decreased significantly, which should be mainly caused by the strict ban before December last year and the stop of visa applications by the US consulate before Christmas. However, there are still many Chinese companies participating in this exhibition, and we are here to applaud and cheer for them!

3. International technology giants began to encircle and suppress the middle and low-end electronic product market collectively.

We give you a few examples:

GE launched a $999 food mixer. The price of such products on Amazon Chinese sellers is $22-129, and the price of western brands (such as: Kitchenaid) is $99-200.

OtterBox launched the iPhone 14 high-end mobile phone case series SYMMETRY SERIES, the price is $49.99, and similar Chinese products are priced at about $10 on Amazon

bHaptics launched TactGlove, a tactile gaming glove that matches Facebook VR game console Meta Quest 2, at a price of $300. Previously, the market for Meta Quest and other game console accessories has been dominated by low-end accessories, with prices generally between $2-30 ;

Fluent Pet launched a pet conversation button, depending on the number of buttons, the price of the product set is between $16.99-229.99, and the price of similar products on Amazon is between $6.99-90

Among all these products, the really refreshing ones are the 3 new products launched by Amazon. They are:

Ring car driving recorder, and this product is the star product among all products and at the CES Electronics Show, the price is $250. The price of such products on Amazon’s Chinese sellers has been at $29-50, and Korean products are about $99-149.

Reasons why big brands are besieging consumer goods

From the above products, we can see that when Chinese sellers or low-end markets are getting more and more involved, these technology giants begin to use their sufficient capital, R&D and market advantages to target "must-use consumer goods" in everyone's life. Launch mid-to-high-end products.

As we introduced to you in the article after Black Friday and Cyber ​​Monday last year, in a period of uncertain inflation and economic growth, consumers' purchasing power for low-end products is decreasing, while purchasing power for mid-to-high-end products is increasing. rise . Whether it is the luxury goods whose prices will rise against the trend in 2022, or the technological products introduced above, they all reflect the current consumption characteristics of Western consumers: Buy less, but buy better (buy less, buy better), and the reason behind it is : Value preservation.

Therefore, everyone needs to pay special attention to grasp the current trend, and start to put a small number of high-end and high-value products on the shelves this year.

Part 2: Amazon cuts 18,000 jobs as online retail slows

As of December 31, 2022, Amazon's stock price has fallen by more than 50%. On Wednesday, Amazon announced that it will lay off another 8,000 employees in the first quarter of this year. Together with the 10,000 layoffs announced in November, Amazon will now lay off 18,000 employees overall. people.

If Amazon’s layoffs in November 2022 are mainly based on the holiday season FBA warehouse and delivery staff (many of whom are part-time), then this time the layoffs are mainly aimed at Amazon Go, Amazon’s offline physical store, and Amazon’s administrative and management staff. personnel department.

Amazon stated that its layoffs accounted for only 1% of Amazon's overall workforce, and gave several reasons for the layoffs:

The Reason Behind Amazon's Layoffs

The expansion of e-commerce demand during the epidemic has caused Amazon to over-recruit many employees . After the epidemic, consumers’ enthusiasm for online shopping has "sharply declined" (Sharp slowdown) . After August this year, we will expand the staff size according to the market situation, and prepare for the second half of the year;

From the above Amazon adjustments, we can see a few points:

1. The online e-commerce market demand is likely to slow down further this year

2. Amazon’s layout of the offline market through self-operated supermarkets has basically ended in failure. What is behind the abolition of offline department personnel is the greater rent of offline stores

3. The offline market is expected to further recover and develop this year

Part 3: Amazon's performance throughout the year, sellers are in a dilemma

Overall, Amazon's financial data for 2022 is very split, with sales of $364.8 billion in the first three quarters, an annual increase of 10%. The main sources of income (from large to small) are: AWS cloud servers, advertising, offline stores, and third-party sellers . However, its profit fell from a net profit of US$19 billion to a loss of US$3 billion, mainly due to high operating costs (mainly from personnel, FBA warehouses) .

In the fourth quarter, Amazon's holiday season still leads all other e-commerce platforms, accounting for 38% of the online sales in the United States. Although Wal-Mart ranks second, its sales only account for 6% of the online sales in the United States, only Amazon. 1/6 of less than.

Meanwhile, despite inflationary pressures, overall U.S. consumer sales during the holiday season were 3.5% higher than expected, reaching $211.7 billion, a U.S. record.

While e-commerce has grown, it has had the lowest growth rate ever recorded at 7% .

As a seller, the above data is indeed confusing. The US consumer market is still developing at a high speed, and the online retail market continues to grow, but the growth rate has slowed down significantly. At the same time, Amazon is still the king of traffic, but the profit of selling on Amazon as a seller is likely to decline further this year. So what should Amazon, cross-border e-commerce, or foreign trade do in 2023?

New Year's Outlook: Operational Strategies for 2023

In fact, from the perspective of Huiwang, now everyone is mainly concerned about three aspects:

1. Can you make money as easily as before?

2. Can you continue to use the previous business ideas to make money

3. What is the new method to quickly increase sales and profits

Maybe we can only use two words to answer the above question at "this moment", that is, "no", but for questions #1 and #3, it is very likely that everyone will "at some point" in 2023 will find the answer. Because, it is not a certain seller who is thinking about the above problems, but all sellers, including Amazon and other platforms, and every overseas company are thinking and trying to solve this problem.

Although we can't give you a specific answer in today's article, from the perspective of Huiwang, the root of all problems now lies in "the sales process is too single", which is mainly manifested in:

Disadvantages of relying solely on Amazon

1. Amazon’s dominance of the online marketplace

2. Cause Chinese sellers to rely excessively on the Amazon platform

3. Amazon's cost control has caused the FBA warehousing threshold to continue to increase

4. Amazon’s model of shipping first and then testing the market often results in the contradiction that the products in stock cannot be sold, and the new products cannot enter the FBA warehouse

5. At the same time, since customers cannot see the actual products on Amazon, the product quality cannot win, and everyone has to compete in a vicious circle of product reviews and prices

6. In the end, 6 million sellers and 300 million products can only gain exposure by competing for advertising fees

However, let's look at Amazon's performance in the overall market represented by the United States:

The combination of Amazon and the offline market is imperative

1. Online market sales are only 20% of overall market sales

2. Even if Amazon can capture 37% of the online market, there are still more than 90% of the retail market in the United States that we have not developed, most of which are offline channels

3. But everyone is anxious to dispose of the remaining inventory at a low price after the holiday season, and even when Amazon charges sellers to dispose of the remaining inventory, offline dealers are running around the exhibition to find good suppliers and products

Therefore, the imbalance between the concentration of sellers in the online market and the lack of sellers and goods in the offline market has become very obvious . If we want to overcome the current passive situation in the new year, we need to find and open up overseas offline channels. And Huiwang believes that we will not be far away from opening up Amazon's online market and offline channels.

I believe that after the extremely difficult year of 2022, with the opening up and recovery of the Chinese and global economies after the epidemic, everyone will see that 2023 will be a year of recovery and spring blossoms.