Cross-border e-commerce Amazon startup: Stay away from junk tracks

In the entrepreneurial wave of Amazon, a cross-border e-commerce company, many people entered this field with the dream of getting rich overnight. However, reality often poured cold water on them. In the early years, some so-called "mentors" promoted Amazon's "profitable track" on short video platforms, claiming that it was easy to earn hundreds of thousands of yuan a month, which attracted many entrepreneurs eager to succeed. But as a practitioner who has been deeply involved in the cross-border e-commerce industry for many years, I am well aware of the many risks and truths hidden behind these "profitable tracks".

This model claims to achieve automated operations through the ERP collection system, and sellers can earn US dollars just by lying down. But the reality is that it has many fatal flaws.

The collected listings are highly homogeneous and can easily trigger infringement warnings from Amazon, putting the account at risk.

At the same time, the high delay rate of drop shipping has led to a high rate of negative reviews, which seriously affects the store's reputation. Furthermore, the fierce price war has squeezed the profit margin to an extremely low level, making it difficult to maintain long-term operations.

According to relevant data, in the fourth quarter of 2023, the closure rate of new stores adopting this model within 3 months was as high as 78%.

This operation includes simply following the hot-selling listings and using OA (order arbitrage) to purchase from other platforms at low prices to complete Amazon's high-priced orders. On the surface, it seems to be a huge profit, but in fact it is full of dangers.

Take Lao Wang in a cross-border community as an example. He uses a combination of mindless follow-selling and OA to follow-sell a large number of hot-selling products, regardless of whether he has obtained brand authorization. After receiving the order, he purchases and ships at low prices from other platforms, attempting to seize a place in the shopping cart through price wars.

However, this approach soon brought him a series of fatal problems: brands filed infringement lawsuits, resulting in the permanent ban of his account; suppliers suddenly raised prices or ran out of stock, triggering a large number of negative reviews; competitors filed malicious complaints, causing the account to be subject to risk control review; logistics delays were frequent, and AZ claims surged.

Industry data shows that in the first quarter of 2024, account bans/restrictions due to mindless follow-selling and OA increased by 65% ​​year-on-year. This business model that overdraws platform rules and account reputation is doomed to fail in the long run.

The domestic direct delivery model for large items seems to save storage costs, but it faces many challenges in actual operation. My friend Xiao Zhang is engaged in the direct delivery business of fitness equipment. In the early stage, the gross profit of a single treadmill could reach 100 US dollars, but he soon encountered three major problems: soaring logistics costs, serious returns and frequent customer complaints.

According to statistics from a logistics company, the cost of cross-border large-scale transportation increased by 30% year-on-year in 2024, while the average price of products was falling. The logistics cost of a single commodity usually accounts for 30%-40% of the selling price, plus the return rate of 8%-15%. The loss of a single return often requires 3-4 normal orders to make up.

In the current market environment, without strong supply chain advantages and logistics control capabilities, the road to direct delivery of large items will only become narrower and narrower.

Black Friday products have high profit margins, attracting many novice sellers. However, in actual operation, there are constant problems and high risks.

A friend of mine has been involved in this field. Although his monthly income exceeded 100,000 US dollars in the early stage, he finally chose to change his career. This is because the special attributes of this type of product have multiplied its operating risks, such as poor account stability, limited logistics, increasingly strict platform supervision, and difficulties in capital turnover. According to statistics, in the first quarter of 2024, the mortality rate of new stores in this category was as high as 85%, and the number of cases where collections were frozen increased by 120% year-on-year. Under the general trend of Amazon's continuous tightening of entry barriers, this track has become difficult.

Instead of blindly gambling in these high-risk junk tracks, entrepreneurs should calm down and think about long-term development. Based on years of experience in the industry, I suggest starting from the following aspects:

Look for rigid demand categories, avoid fierce competition, and focus on in-depth exploration in specific areas. For example, there are sellers who focus on the pet health care products track. Although the scale is not large, with precise positioning, the monthly profit is stable at more than 30,000 US dollars.

In the early stage, you can choose the ODM route and gradually build your own brand. Through in-depth cooperation with the factory, you can ensure product quality while responding to market demand quickly. For example, a seller of outdoor equipment has successfully created a brand with annual sales of over one million US dollars by closely binding with the factory.

Invest your energy in refined operations such as improving advertising efficiency and optimizing listing quality, rather than seeking opportunistic "arbitrage" techniques. Data shows that refined operations focusing on segmented categories can bring more stable and sustainable growth.

Cross-border e-commerce Amazon entrepreneurship is not an easy road, and there is no so-called opportunity to make money easily. However, as long as entrepreneurs can recognize the situation, stay away from high-risk junk tracks, choose the right direction and operate steadily, they can still succeed in this field full of opportunities. Let us look forward to more sellers being able to move forward steadily on the road of compliant operation and realize their entrepreneurial dreams. At the same time, you are also welcome to share your entrepreneurial stories and experiences in the comment area to grow and progress together.