Sales of many categories have plummeted! Is "charity" no longer effective?

It is learned that the Southeast Asian giant Shopee recently issued an internal message announcing that the Spanish market will cease operations from 23:59 local time on June 17, 2022.

After closing the French market, Shopee hit a wall in Spain. Not only that, there are recent reports that Shopee is planning to lay off employees, and it is expected to start with marginal businesses such as Shopeepay, food, and Spanish market operations.

It can be seen that affected by factors such as inflation and the Russia-Ukraine war, the European and American markets have not been prosperous in recent times, and the performance of many e-commerce giants has shown a certain decline.

As for sellers, due to the combined effects of the off-season in the first half of the year and the decline in consumer power in Europe and the United States, the performance trend is not optimistic, and some categories have even experienced a cliff-like plunge.

Recently, a seller complained on a forum: After a quick look at a few categories, sales have dropped to 10% of their peak. The seller shared the recent sales trend changes of some categories:

Category 1: charcuterie boards

At its peak, monthly sales reached 300,000, but plummeted to 26,000 in May this year, and search volume also showed a downward trend.

  ▲ The picture comes from Zhiwubuyan

Category 2: key holder

At its peak, monthly sales were 100,000, but fell to 18,000 in May.

  ▲ The picture comes from Zhiwubuyan

Category 3: wall decor

Monthly sales were 17 at the peak, but plummeted to 29,000 in May.

  ▲ The picture comes from Zhiwubuyan

Looking at the data in the figure, the sales and various indexes of these categories have been relatively stable in recent months, but have shown a significant downward trend since May. Although the comparison with the peak season is not very objective, a horizontal comparison with the same period last year shows that the sales of these categories in the same period were mostly on the rise in May last year.

In addition, a closer look at the sales of various categories shows that many listings have launched limited-time promotions, and the discounts are very impressive, with the highest discount reaching nearly 50%. This also sends another signal: in the context of declining sales, sellers are trying to seize market space by reducing profits.

Some sellers believe that this situation is mainly due to category differences. Some categories are still in full swing, while others are booming during the peak season. Short-term fluctuations are normal. The sales volume is basically decreasing two to three months before the membership day, and sales volume starts to increase after the membership day.

However, more sellers are not optimistic about this:

“Sales volume has dropped, rankings have not changed, and advertising costs have increased.”

"The European site is even more depressed. The top ten in a small category have about 10 orders each, and the ones outside the top ten have more than 20 orders."

“Visits in March: 95,000; April: 75,000; May: 52,000. Traffic has been declining, advertising costs have not changed, but conversions have become much worse.”

"Only seasonal products, such as gardening and outdoor products, are doing well. However, once the off-season comes, the return rate increases, and coupled with the storage fees for uncleared inventory, it can be said that the situation is back to the pre-liberation era in a matter of minutes."

For sellers at this stage, while advertising expenses have skyrocketed, sales and profits have dropped significantly. Category rankings have risen, exposure and clicks have increased, but it is difficult to convert them into actual orders, which is not as bleak as the same period last year.

Not only that, the return rate has also continued to soar, with one seller reporting that the return rate for the same product has increased by 8% compared to last year. Many buyers even claim that the product is damaged and try to get it for free, or even secretly give bad reviews to "blackmail" the buyer.

However, what makes sellers even more panic is that even if they force low prices, the stimulating effect on sales is obviously weakened.

Looking at the top of the industry, many big sellers choose to clear out inventory by hoarding goods, reducing profits or even breaking even to stabilize sales in order to occupy the shrinking market.

Faced with the current sluggish market environment, some sellers bluntly said: Is it because Americans have no money?

The United States is currently facing extremely serious inflation. The latest data shows that the U.S. CPI rose by 1% month-on-month and 8.6% year-on-year in May, the largest year-on-year increase since December 1981. In view of this, the Federal Reserve will continue to raise interest rates and shrink its balance sheet to reduce inflation by reducing the circulation of dollars and curbing consumption.

Some sellers said that under such policy premise, coupled with the rise in global commodity prices caused by the Russian-Ukrainian war, the US consumer market tended to be weak. Based on the current trend analysis, the consumer market in the second half of the year is not optimistic, and it is expected that the peak season in the second half of the year may not be prosperous.

Therefore, sellers need to be more cautious in developing new products and preparing inventory, and control the development speed. On the other hand, instead of being pessimistic, sellers should carefully settle down, cultivate and polish links to prepare for the next peak season.

With the category sluggish and advertising bids skyrocketing, many sellers are faced with the embarrassing situation of inventory accumulation.

A seller revealed that he changed to a new company in February this year and immediately started to clear out the inventory. The department has 3 people, 8 stores, and about 40 listings. Now, after 3 months, not only the inventory has been cleared, but also the people have been cleared out. The department is left with only this seller to take over 8 stores, with monthly sales of 4,500 orders and a monthly loss of about 200,000 yuan.

Another seller said that his category was out of stock last year and there were not many new sellers, so the market prospects were bright. However, this year, there are more new sellers, and competitors are using fake orders and internal competition. At the same time, advertising bidding has also surged, and the cost of advertising orders is as high as $50 per order.

Now the seller has nearly 8,000 pieces in stock and can only lower the price to make a loss. Under this circumstance, he is deeply confused and doesn't know whether to fight back or clear out the stock.

Some sellers admitted that if they continue to lose money in such a fierce competition, it would be wise to recover funds, sell off old models and focus on new products.

Some sellers even pointed out that any category on Amazon will attract a large number of sellers as soon as it shows an upward trend. In about half a year, a category can be turned into Pinduoduo. Products are sold at low prices, profits are transferred, and categories are reshuffled. A large number of sellers leave the market, and when the situation eases, a new batch of sellers will pour in, forming a vicious cycle.

It can be seen that with the depression of the market, high traffic costs and the covetous eyes of peers, many sellers are stuck in the deadlock of clearing inventory. Even the top sellers have to lower prices to clear inventory and firmly control the limited market.

Some sellers believe that, in the final analysis, it is still necessary to follow the idea of ​​brand operation, create multiple product lines for one category, unify the style of each link, build brand identity, and try to let the traffic circulate within the brand.

In a fiercely competitive environment where the "Pinduoduo-style play" is rampant, segmenting the track and target group and avoiding product homogeneity are undoubtedly the key tools to seize the market. Therefore, brand transformation has become a general trend.

However, the current market slump is not long-term, and many European and American consumers are waiting and watching for the peak season promotions in the second half of the year. According to the latest forecast by eMarketer, although e-commerce giants such as Amazon have had a bad start this year, it is expected that the performance of Member Day will be relatively strong. The total sales of the US site will reach US$7.76 billion, an increase of 16.8%.

Not only that, many sellers have recently received notifications from Amazon that Prime Day autumn promotions may be held in October. It is foreseeable that the successive promotions will inject new vitality into the market.

  ▲ The picture comes from the seller communication group