Factories rush to Amazon to offer 10% off for "charity", sellers denounce the "scam king"!

It is learned that McKinsey's consumer research team recently released an update on the US consumer situation in May. Overall, US consumer confidence has improved, but they remain cautious in consumption, and the trend of consumption downgrade has spread to high-income and young people. The study pointed out that US consumer real spending continued to decline, with real spending in March this year down 0.7% year-on-year, and real spending of various consumer groups also fell in May.

Although consumers' optimism is on the rise, the overall consumer market still has a long way to go before it can fully recover amid the sluggish economy. In terms of cross-border sales, sellers have also seen low sales in recent days due to shrinking consumer demand and multiple challenges.

It seems that it has become a universal law for Amazon that every peak season brings sudden changes. Recently, there have been constant disturbances in logistics policy changes and address verification, which clearly send out the signal that Amazon intends to strengthen review and maintain the platform business environment on the eve of the big promotion. In addition to tightening risk control, Amazon is also testing and adjusting the platform rules.

1. The Broad matching logic of SP ads has been changed to include not only words expanded from keywords, but also replacements of synonyms and antonyms.

2. The drop-down search box was adjusted to produce many small long-tail words with low relevance, increasing the advertising budget.

3. The ranking algorithm of the platform search page has been changed. Products with closer storage locations will be displayed at the top of the buyer's search results.

Both advertising logic and search ranking are closely linked to the listing traffic of sellers. Therefore, after Amazon made the above-mentioned rule changes, many sellers have recently fallen into "aftermath".

A common phenomenon is the simultaneous decline in sales and traffic. Since the end of March and the beginning of April, many sellers have been spending more and more on advertising, but their listing traffic has been declining:

"We have actually felt a significant drop in traffic since April. What on earth has happened to Amazon?"

"Order volume started to decline on April 9th, Easter, and has never recovered since then. For some products, the drop was as much as 40 to 50 percent."

"Since April, the number of orders has dropped significantly, and traffic has been falling. But advertising spending has continued to rise. Several brand ads that performed well have also failed recently."

An Italian seller found some anomalies when downloading the ABA report: first, the keyword exposure rate showed a continuous downward trend, but the purchase volume increased; second, the purchase volume under the keyword increased, but the actual sales volume was halved compared with March; third, the bidding for long-tail keywords was extremely high recently, but the overall conversion rate was poor.

▲ The picture comes from Zhiwubuyan

In this regard, some sellers bluntly stated that with the adjustment of advertising logic, advertising exposure has shrunk by nearly half compared with the same period last year, while bidding has risen sharply. This has also led to a decrease in the overall conversion rate, and it takes more than twice the price before to sell the same number of products.

On the other hand, the impact of the ranking algorithm change is gradually showing. One seller said, "When the inventory of a product drops below 300, the advertising can no longer be used, and the order volume is directly cut in half. After that, the traffic fluctuates. For the same ad and the same price, the budget is used up today, but there is no exposure tomorrow, and it starts to run wild again the day after tomorrow."

Under the combined effect of multiple new regulations, many sellers' product sales have been unsatisfactory in recent times. Some sellers have no choice but to focus on low-price and high-traffic channels, while some sellers have even directly reduced their prices by $30 due to storage fee pressure, using profits to exchange for an increase in conversion rate and sales.

For many Amazon sellers, the most profound feeling at this stage is the sluggish market traffic. Looking back at the wild growth years a few years ago, the industry was still a blue ocean of "gold digging everywhere", but now it is different from the past. The CPC bidding for the same product has doubled, but the sales volume has declined. Under this circumstance, price wars in categories are becoming more and more rampant, and even face internal battles from factories.

A seller reported on the forum that the highest market price of an auto parts product in the peak season under normal circumstances can reach 200-300 US dollars, but some factory sellers directly turned on the acceleration mode after entering the market, and it has been greatly discounted to 49 US dollars in the off-season. Excluding the first-leg freight, platform commission and 5 US dollars per CPC and other costs, the final profit is almost squeezed out.

▲ The picture comes from Zhiwubuyan

It is understood that the industrial chain of this type of product is mainly located in Rui'an, Zhejiang. The production cost is low, but the purchase price is not cheap, as it is a large item. Ordinary sellers can still make a profit by pricing it at more than 100 US dollars, but factory sellers have basically no profit when the average price is 50 or 60 US dollars.

However, this product is not an exception. Nowadays, many categories are caught in a fierce competition:

"I have a product like that, where I sell a pack of six for the price of a pack of two, plus a bunch of accessories."

"There is competition everywhere. My product is normally sold at 99 yuan, but in the past few months, many traffic kings have directly grabbed traffic at half price, and even specifically compared my configuration and specifications."

"It's the same with our category. We enter the market at prices lower than the market price and offer an 80% discount. In the early stages of new products, we release them outside the site every day."

As the cross-border export industry enters a new stage of development, many foreign trade factories are also exploring ways to transform. The most common phenomenon is to enter the e-commerce platform and transform from a supplier to a peddler. However, compared with ordinary sellers, factories have sufficient supply chain and product advantages, and their costs and profits are relatively controllable. For example, if a product is reduced from $239 to $119, the factory still has a 15% profit margin, but ordinary sellers are already in a loss dilemma at $150.

The previous trend was that the pricing of low-priced products was getting lower and lower, and now high-end products are beginning to show the same signs. What is even more frustrating for sellers is that many unethical manufacturers not only enter the market in a big way, but also completely ignore the operation and after-sales service, and focus on taking shortcuts to exchange orders, forcing the entire category ecosystem to be muddied and passively fall into price wars.

In fact, in the current environment of Amazon, price competition is no longer enough to establish sufficient sales advantage. For example, even if the above-mentioned products are cleared out at such a low price, the sales volume is still extremely bleak.

"The future of Amazon will be a competition of supply chain and product strength." For sellers, blindly setting low prices is not a wise move. Amazon is a long-term investment, and only by establishing a solid product moat can it achieve long-term development.