Big news! The seller revealed that a cross-border internet celebrity cut leeks and lost 1.3 million in one year

Many bloody lessons from the past tell us that the cross-border agency operation service is unpredictable, and there are often a large number of deliberate "leek cutters" mixed in. Some Amazon novices, due to their lack of experience, are often confused by the exaggerated "boasting" of such people, which leads to the loss of both the store and the money.

Just recently, another seller exposed a scam of cheating people by operating a proxy service , and tearfully accused a cross-border internet celebrity of cheating people, which resulted in a huge loss of millions.

In January 2022, the seller signed an agency operation agreement with the cross-border internet celebrity Xi and paid a deposit of 200,000 yuan. According to the contract, the annual investment must reach 2 million yuan. If there is a profit, the seller will take 70% of the profit and Xi will get 30%; if there is a loss, Xi will cover 70% and the seller will bear the remaining 30%.

The seller chose to enter the pet category, and he was responsible for paying the money, while Xi was responsible for the entire operation process including product development, logistics and distribution. It is reported that Xi has more than 300,000 fans on the short video platform, and the whistleblower, as an old fan who has been following for many years, paid a membership fee of 4,999 yuan based on trust, and invested 50,000 yuan to become one of the more than 40 original shareholders despite being reminded by a lawyer that there were many omissions in the contract.

After the contract was signed, the product design and development officially started in February, and the first product was put on the shelves at the end of June. Due to improper cooperation in the early stage, the product was rejected by A+ for more than half a month after it was put on the shelves. Soon, the seller found that things were becoming more and more complicated.

The following contents are all from the seller’s own account, and have been condensed and sorted by:

1. Fabricating store data for false advertising, exploding ACOS and burning advertising fees

In August 2022, Xi conducted a DingTalk live broadcast to share the brand incubation ideas of the seller's store, packaging pet chew toys worth more than a dozen US dollars into high-priced household products with a unit price of 60-80 US dollars, and fabricating store data to induce students to purchase 400,000 yuan of agency operation services.

Throughout August, the seller invested nearly 700,000 yuan, but did not receive the first payment until December, and the store and the products were far from profitable. Not only that, Xi's team only downloaded advertising data twice in the 83 days of operating the store, and the main operator was a novice born in 1999.

  ▲ The picture comes from the seller’s disclosure

From July 17 to September 17, 2022, the ACOS of the seller's store was as high as 100%-800%, and tens of thousands of advertising fees were burned, but the operation did not find the abnormality and make timely adjustments. If advertising expenses are not included, the gross profit margin of the product is only 0.16%-20.48%. If advertising expenses are included, the negative gross profit margin is directly off the charts.

2. Making false quotations to earn the difference and stealing the seller’s patents

In September, the dog platter project was launched. The ex-factory price of similar products on 1688 was basically more than ten yuan, and the price on Pinduoduo was even lower. However, Xi raised the price to 54 yuan on the grounds that the environmentally friendly materials were high in cost, and asked the seller to pay half of the mold fee in advance.

The seller spent 55,000 yuan on mold-making fees on September 9, but did not receive a detailed quotation until he paid the remaining half of the mold payment on November 22. The other party also did not mark the mold with a designated exclusive code as requested by the seller, and even unilaterally terminated the cooperation in January.

  ▲ The picture comes from the seller’s disclosure

In addition, since May last year, the seller had repeatedly asked the legal and supply chain managers of the Xi team to apply for a design patent, but to no avail. On October 21, he asked again about the patent handling matters, but was told that the other party had privately registered his patent under the name of a Xi company. Since it takes 6 months to apply for a patent and about 2 to 3 months to transfer, it took the seller nearly a year to get the patent.

3. The mold opening fee of RMB 280,000 was falsely reported as RMB 680,000, resulting in a price difference of RMB 70-80

For the same mold, other mold factories all quoted 280,000 yuan, but Xi Mou falsely quoted 680,000 yuan, and lied that the factory was willing to bear 280,000 yuan, and the seller only needed to pay the remaining 400,000 yuan for mold making. In terms of unit price, the average per capita estimated factory price was 70 to 110 yuan, but Xi Mou quoted 175 yuan, swallowing up a huge price difference of nearly 80 yuan, and refused to disclose the specific product quotation sheet.

At the same time, another project, a pet feeder, also made a major mistake because Xi chose an unreliable manufacturer. After the seller's repeated insistence, the other party first released the manufacturer's information. After the seller inspected the factory, he found that the factory's main products were not pet feeders, but Xi handed over a project worth hundreds of thousands of yuan to a factory with no production experience.

  ▲ The picture comes from the seller’s disclosure

4. The product has a high defect rate and has received many complaints. It is 100% a copy of the patented standard product.

In addition to the incubation project, the seller also asked Xi to make a pet drinking fountain. In October 2021, he met with Xi to put forward the requirements, and the design draft was produced in December. It was not until the end of August last year that 2,000 drinking fountains were delivered. Generally, drinking fountain factories promise to deliver within 3 months, otherwise they will pay a high penalty.

While the product delivery cycle is too long, the price of accessories has doubled . The market price of filter elements is generally 1 yuan, with a minimum order of 1 piece, and Xi's company started to quote 4 yuan, with a minimum order of 3,000 sets (15,000 pcs); the market price of standard water pumps is generally 10-16 yuan, with a minimum order of 1 piece, and Xi's company quoted 32 yuan for a minimum order of 1,000 pieces.

Due to Xi's wrong choice of manufacturer, the seller invested more than 300,000 yuan and spent more than a year but missed the best entry opportunity. He also got a defective product that could never be sold normally. Due to multiple complaints about water accumulation caused by filter defects, he had to give up after pushing tens of thousands of links.

While the water dispenser manufacturer was adjusting the filter element, the seller was also testing it simultaneously. Although the seller repeatedly reminded that the standard product filter element had a patent and that the production process must not infringe on the patent, the manufacturer still copied the product that was exactly the same as the standard product and was 100% infringing on the patent.

  ▲ The picture comes from the seller’s disclosure

On November 2, 2022, Xi agreed to the seller's request to end the cooperation early, but later went back on his word and asked the seller to continue to invest 2 million. On December 7, Xi asked the seller to replenish 13,000 pieces of goods (worth more than 200,000), an order quantity that was more than five times the monthly sales in the off-peak season, and there was no operation plan.

Due to the unfair terms signed by both parties, the seller had no choice but to continue cooperating with him. As of December 2022, he had invested more than 1 million yuan, but only received 100,000 yuan in return. On January 6, Xi announced that the seller had breached the contract and unilaterally terminated the cooperation. Not only did he not provide a guarantee or pay compensation, he also swallowed up the 200,000 yuan deposit, withheld the 5,220 yuan pre-charged by AGL, and withheld more than 40,000 yuan in compensation for the drinking fountain, totaling 250,000 yuan.

After the seller took over the store, he understood why Xi had unilaterally breached the contract: nearly 20,000 items in stock, with a rating of 3.5, most of which were rotten goods, and no one from outside the site would accept them. Clearance dealers did not want them, and it was impossible to clear them out through normal sales. Five of the seven SKUs had to be removed in bulk by Amazon, and the products cost tens of dollars, but the payment was only a few tenths of a dollar. However, such products burned more than 600,000 in advertising fees in half a year, and the payment in January was only 20,000 dollars.

As the situation continued to develop, the internet celebrity involved, Xi, also released a video on his personal social media platform to respond to the recent dispute. According to Xi, the seller who broke the news tampered with the facts and deliberately slandered the seller, causing many people who did not know the truth to be misled by him, and clarified the following points:

1. Key Terms

According to the contract details, the seller is responsible for the capital contribution, and the brand, store and payment account belong to him, while Xi's team bears all the manpower expenses. There are two key clauses: one is to share the profits with the actual profits, that is, the accumulated profits can be shared only after the store has achieved cumulative profits; the other is the bottom-line clause, which needs to be calculated after the first product is put on the shelves. If the store suffers losses as a whole after one year, the losses borne by both parties are 70% and 30%.

As this mode of cooperation involves huge risks, the two parties negotiated on the third clause, which requires the seller to pay a deposit of 200,000 yuan, calculated for one year from the time the product goes online for sale. After one year, the two parties will settle the accounts and the deposit will be fully refunded, provided that the cooperation is not terminated early.

2. Fabricating store data

Due to the outstanding performance of the new product, Xi planned to share the seller's store data in the community. Due to the seller's concerns about product information leakage, some of the data was changed to ensure information security.

3. Abnormal advertising data

On October 25, 2022, the seller pointed out that there were problems with the advertising promotion method of the Xi team. In response, the Xi team said that many well-performing keywords would be matched with more advertising activities, and a reasonable ACOS would be set for each product. All the key points were directed towards this goal, and then the bidding was optimized regularly. This explanation was also recognized by the seller.

4. Termination of the Contract

On November 1, 2022, the seller suddenly proposed to terminate the contract and asked Xi to buy back the products in advance, but Xi's team did not agree. On November 8, 2022, the two parties calculated the profits. According to Xi, the store had achieved profitability within 4 months. The store was basically formed by cutting off the products that failed the test and leaving the profitable products.

5. Patent registration

On December 6, the seller again pointed out that the Xi team had not coded the mold and had registered the product patent. Xi explained as follows: First, the mold had just been developed and the other party had proposed to terminate the cooperation and had not paid the mold fee, so the manufacturer could not code it; second, the seller required that each product must be registered for a domestic patent after production, but it did not have an account to register patents, so the two parties negotiated and Xi's company registered in advance and then transferred it later.

Some melon sellers pointed out that Xi's clarification video seemed logical, but in fact it was based entirely on chat records and did not provide any valid evidence. It completely avoided the sensitive operation part and focused on questioning the customer's character. The reason why Xi was able to confidently demand legal proceedings was mainly because there was a huge loophole in the contract signed by both parties at the beginning.

One of the clauses stipulates that if the funds have not been received within 14 days from the date when the western company made the funding request, the partner shall pay 0.05% compensation for each day of delay. If the funds have not been received within 28 days from the date when the western company made the funding request, the partner shall have the right to terminate the contract unilaterally and demand compensation from the partner for the loss, while not returning the partner's deposit.

  ▲ The picture comes from the seller’s disclosure

"I happen to be in the pet supplies business as well. The store brand of this seller is YO**E. After checking their listings, I was shocked. This is not a question of whether the agent's operation skills are poor or not, it is simply a scam. The mold fees and the product price difference are a bit exaggerated, so even if the operating costs and dividends are very low, Xi Moufang can still make other money." A seller said.

Another informed seller revealed that he had known the cross-border internet celebrity Xi as early as the beginning of 2020. At the beginning, he mainly learned some basic cross-border operation knowledge, which was helpful for newbies. Later, he started a long road of cutting leeks, from customized membership to brand incubation, agency operation, Sass software, etc. Perhaps Xi provided product customization services on the surface, but in fact it was to earn high membership fees, and agency operation was to make a living from the sky-high mold opening fees and the amazing purchase price difference.

So far, both parties involved have their own opinions, but it is still unclear who is right and who is wrong.

This incident once again sounded the alarm. Many inexperienced sellers, after tasting the sweetness at the beginning, fell deeper and deeper into the trap and continued to invest money, and finally realized that they had been scammed and lost all their money and regretted it. In any case, all sellers should open their eyes and carefully identify various types of agency operation scams, and never become others' "leeks" for the sake of greed for profit.