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It is often said in the industry that Amazon has three lucky treasures: mobile phone cases, tempered glass, and data cables. They are so called because they are in high demand, low cost, and highly versatile. However, at the same time, they are also facing a serious market homogeneity and fierce competition in the red ocean.
However, as the high-growth period of the industry fades away, more and more categories are caught in the competition for stock. For example, large furniture, as one of the "old three" items for going overseas, is also facing increasingly fierce price involution, and the degree of "bloodiness" is even approaching that of the three auspicious treasures.
Recently, a seller discovered during market research that the overall price of a certain large furniture category on Amazon was extremely involuted. The average price of the best-selling listings on the BSR list was only US$130 to US$150, and even US$200 was considered an "ultra-high price" in the BSR.
▲ The picture comes from the seller’s disclosureThe seller estimated that even if the cheapest full container shipping method was used, it would still cost at least 15% of the shipping fee, minus 30% of the cost, and around 10% of the category refund and advertising budget, making it almost impossible to make a profit.
The seller couldn't help but ask a soul-searching question: Is it through the volume model that profits accumulate over time, or is it that everyone in the large home furnishing category is making the most money?
In this regard, some sellers bluntly stated that the severity of the large furniture category may have approached the three lucky series of the electronics category.
A bed frame for $59, a gaming chair for $69, and a height-adjustable table for $79, these prices sound like charity, but they are actually happening in the large furniture category. In order to snatch customers, these big sellers are frantically rolling in their products, risking a loss of more than 50% of the average customer price due to shipping costs.
One seller revealed: "Due to the surge in orders and blind expansion during the epidemic in the past two years, I heard that they generally have millions or even tens of millions of goods on hand. In the past two years, I have come into contact with many people who wanted to cash out and run away and asked me to distribute and clear their goods. I guess they are still clearing their inventory."
Large furniture is a high-value product with a certain threshold, which requires high financial strength from the seller. However, the corresponding category market is huge and there is ample room for gold mining . Therefore, it has always been an attractive cake that many overseas companies are scrambling for.
However, for small and medium-sized sellers who lack basic knowledge and capital, this track is full of pitfalls and they may be eliminated if they are not careful. Especially now that the market has become a bloody battle. "Even for old sellers, it is difficult to play in the context of economic depression, consumption downgrade, and market shrinkage. The overall market profit margin is only 3%-5%. " said a seller.
Many sellers who sell large furniture have a deep understanding of this:
"3% to 5% profit is only achievable by a very small number of top players. Without supply chain support, you can't even get in and lose money." "It is common to clear out new products as soon as they come out. Our peers are all powerful sellers or factories. They usually have a few VCs on hand and follow up quickly. This category focuses on one product and sees who dies first." "It's so shocking that I think my competitors are rich and they are doing this to get data for listing. A 3-5% profit is a fact, and it's common to lose money if you're not careful." "I have three and a half years of experience in large furniture, and I have made office desks. At the beginning, my boss did not even calculate the profit, and sold them directly at 29.99. He never thought that the final shipping fee would be 40%."
Many sellers are passively involved in price wars as soon as they enter the market, competing for low prices, supply chains, logistics, and capital chains, and are often forced to clear out their stock because they can no longer make money.
Due to fierce competition within the category and the continuous surge in shipping costs, many cross-border companies engaged in large furniture have been in a state of loss for a long time. In particular, large furniture has a long delivery time. Therefore, when consumption is sluggish and the market environment is sluggish, many sellers with too much inventory fall into a desperate situation. "The loss is very serious, and each order loses hundreds of yuan."
The global furniture market is huge and has strong demand, with exciting growth opportunities. my country, with its developed supply chain advantages and perfect industrial belt construction, is a major exporter in this field.
Data released by the General Administration of Customs showed that from January to July 2024, China's exports of furniture and parts reached 248.09 billion yuan, an increase of 14.8% over the same period last year.
Benefiting from the stay-at-home economy and the online consumption boom during the epidemic, my country's furniture exports have ushered in a period of explosive growth. Countless companies have taken advantage of the opportunity to go overseas and make a fortune.
But as the benefits of the epidemic recede, more severe challenges are emerging.
From the market perspective, in the current environment of consumption downgrade and macro-uncertainty, the market demand for large furniture is difficult to accurately predict, which also makes companies' stocking planning and inventory management difficult. If they are not careful, they may fall into the dilemma of inventory backlog and capital chain interruption.
Not only that, as more and more home furnishing companies enter overseas markets, market competition is increasing day by day, and the low-price involution of categories is becoming more and more intense, constantly squeezing the living space of many sellers.
From the logistics perspective, due to the large size and weight of large furniture, the transportation cost and difficulty are much higher than other categories. In the past two years, the shipping market has been affected by factors such as the international situation and the imbalance between supply and demand, and prices have continued to rise, greatly increasing the cost burden of enterprises.
Under this circumstance, companies are facing great challenges in terms of their financial strength, supply chain foundation, inventory management, logistics resources and cost control.
Of course, there are also many leading sellers in the industry who have been working hard for many years. In the face of increasingly fierce market competition, how do they build competitive barriers? Lege shares is a model student among them.
It is understood that Lejia Holdings achieved revenue of 2.427 billion yuan in the first half of 2024, an increase of 44.64% over the same period last year; the net profit attributable to shareholders of the listed company was 160 million yuan, a year-on-year decrease of 63.86% (mainly due to the sale of overseas warehouses in January 2023, which generated large non-operating income).
▲ The picture comes from the financial report of Lechuang Holdings The reason why Lechuang can maintain steady revenue growth is inseparable from its refined sales strategy.
During the reporting period, its smart home and healthy office product categories continued to expand. While maintaining the advantages of its core products, it continued to expand category boundaries and tap into emerging categories with great growth potential, thereby creating a diversified category matrix.
At the same time, Lechuang is well aware of the importance of brand cohesion. Through the dual-track model of third-party platform + independent station, it continuously enhances the influence of its own brand. At the same time, it is user-oriented and creates high-quality products that users need and trust, thus building a competitive moat.
On the other hand, it is inseparable from the strong overseas logistics capabilities of LEACHO. As of the disclosure date of the 2024 semi-annual report, LEACHO has 17 self-operated overseas warehouses around the world, covering an area of 482,100 square meters. It can be said that while being a cross-border e-commerce company, LEACHO is also an overseas warehouse service provider.
As for large furniture, it is a consensus in the industry to choose a more flexible overseas warehouse based on the characteristics of the product. By building its own overseas warehouse, Leckey not only reduces costs by independently solving logistics and distribution needs, but also increases revenue by providing logistics services to home furnishing companies, which can be said to kill two birds with one stone.
In general, large furniture exports are currently facing multiple challenges, including severe homogeneous competition, low brand awareness, and being surrounded by logistics money-eating beasts. Therefore, for sellers and companies, if they want to avoid being eliminated early, improvements in capital, logistics, supply chain, and warehouse management are all indispensable.
Large furniture exports face many challenges. Companies need to strengthen market research, improve logistics efficiency, optimize supply chain management, gain a deeper understanding of cultural differences in target markets, and pay attention to changes in trade policies in order to better cope with these challenges and achieve overseas market expansion.
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