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Time flies and leaves people behind easily. Cherries turn red and banana leaves turn green. As May begins, cross-border e-commerce sellers are still making money by selling goods on overseas platforms. What is different from the past is that there seems to be a wave of nostalgia in the industry recently. With the one-year anniversary of Amazon's account ban, the atmosphere in the circle is somewhat depressing and depressed. When the nest is overturned, all the eggs will be broken. Looking back at the wave of Amazon account bans that began in early May last year, this unprecedented industry shock not only had a lasting and far-reaching impact on cross-border sellers, but also rewrote the structure and environment of the entire industry. At the end of April 2021, the brand of Patonson, a big seller on Amazon, was blocked and a huge amount of funds were frozen. The Amazon account blocking storm kicked off, and then more and more sellers of all sizes were blocked one after another, involving countless companies and employees. This storm lasted for a long time, with a large scope and heavy losses, causing unimaginable losses and damage to many sellers. Amazon officially stated that from the end of April to the beginning of September 2021, Amazon closed about 600 Chinese brands, involving 3,000 seller accounts. These sellers repeatedly and seriously abused reviews and were warned many times. In the blink of an eye, the cross-border wheel has arrived in 2022, but the aftermath of this huge shock is still there. A year has passed, how have those sellers whose accounts were blocked become? In what direction is the Amazon industry developing? After the account blocking wave, how should sellers think about and plan their business on cross-border platforms? This article will report on the latest status and trends of the cross-border industry one year after the account blocking wave from the above perspectives, hoping to be helpful to sellers. Aftershocks of account suspension: adverse effects are still ongoing Undoubtedly, the power of Amazon's account suspension is enormous. It is understood that the impact of Amazon's account suspension on cross-border sellers is mainly reflected in the following three aspects: 1. Account suspension directly leads to huge losses for sellers April to May is the financial reporting season, and many cross-border sellers have recently announced their financial reports for the whole year of 2021 and the first quarter of 2022. Looking at the financial reports of the sellers, the phenomenon of increased revenue but not increased profits is common, and for the sellers who have been hit hard by the ban, the losses are even more severe. It is learned that in 2021, Zebao's parent company Xinghui Co., Ltd. achieved revenue of 3.66 billion yuan, a year-on-year decrease of 33.74%; the net profit attributable to shareholders of the listed company was -1.524 billion yuan. Among them, the cross-border e-commerce business achieved revenue of 577 million yuan, a year-on-year decrease of 46.02%. ▲ The picture comes from the announcement of Xinghui Shares Compared with 2020, Xinghui Co., Ltd.'s revenue and net profit both declined, and even suffered large losses. The reason behind this is closely related to the fact that its subsidiary Zebao was deeply troubled by account blocking. It is understood that in 2021, Amazon closed 367 sites of Zebao in total, and the balance of frozen funds was about 32.2301 million yuan by the end of 2021. Although Zebao actively appealed and adjusted its business strategy, it was still unable to get rid of the negative impact in the short term, resulting in a decline in both revenue and profit in the second half of 2021. It is learned that in 2021, Tianze Information achieved operating income of 1.764 billion yuan, a decrease of 64.91% compared with the same period last year; the net profit attributable to the parent company's owners was -2.676 billion yuan, a year-on-year decrease of 207.30%. ▲ The picture comes from Tianze Information Announcement Among them, the subsidiary Shenzhen Youkeshu achieved operating income of approximately 1.57 billion yuan and a net profit attributable to the parent of approximately -1.67 billion yuan in 2021. During the reporting period, Shenzhen Youkeshu was affected by the tightening of policies of the main sales platforms and intensified market competition. Some sales accounts were blocked and sales funds were frozen, and its operating performance declined significantly year-on-year. In addition, in the first quarter of 2022, Tianze Information's operating income decreased by approximately 570 million yuan compared with the same period last year, a decrease of 71.13%. ▲ The picture comes from Tianze Information Announcement Tianze Information stated that due to adverse changes in Amazon platform policies, the cross-border e-commerce export industry suffered a brief smog, the company's operating performance declined and suffered losses, and its cross-border e-commerce business revenue in 2021 fell 66.55% year-on-year. In 2021, Tongtuo's parent company Huading Holdings achieved revenue of 8.654 billion yuan, a year-on-year decrease of 11.36%; the net profit attributable to shareholders of the listed company was -607 million yuan, a year-on-year plunge of 208.78%. ▲ The picture comes from Huading Shares’ announcement During the reporting period, Amazon suspended sales of stores involving multiple brands of Tongtuo Technology, a subsidiary of Huading Holdings, and frozen RMB 41.43 million in funds. As of March 30, 2022, the balance of frozen funds was RMB 21.36 million. On a quarterly basis, Huading Holdings' revenue and net profit both began to decline sharply and suffer losses in the third quarter, and August was the time when Tongtuo was hit by the account suspension . This shows that the account suspension storm had a significant impact on the company's operating performance. ▲ The picture comes from Huading Shares’ announcement 2. The seller starts the indefinite inventory clearance mode In early summer of 2021, Amazon's account blocking sickle was sharpening towards sellers. The sellers who suffered this blow not only had large amounts of funds in their accounts frozen, but the excess inventory stranded overseas also became a major problem. Once the inventory becomes redundant, not only will the company have to bear high Amazon excess storage fees, but it will also face multiple pressures such as broken capital chain and inability to pay suppliers. Therefore, many sellers whose accounts were blocked started to clear inventory indefinitely. In the summer of 2021, clearing inventory became an indelible shadow for sellers. It was learned that several well-known cross-border sellers in the industry had used various channels to clear their inventory after their accounts were blocked, such as using other Amazon accounts to sell at low prices or selling on domestic e-commerce platforms. This is the case with Amazon's big sellers Ao* and Fairywill, which were previously caught up in the account blocking storm. It is also rumored that Fairywill's products are being cleared out at super low prices. Electric toothbrushes and whitening strips that originally cost hundreds of yuan are now being cleared out for only thirty or forty yuan. In addition, many small and medium-sized sellers who were swept by Amazon were also forced to participate in the inventory clearance. For a time, cross-border sellers' demand for inventory clearance services increased greatly, and advertisements about inventory clearance were also very popular in the circle . Many logistics companies and service providers posted words such as "professional Amazon inventory clearance" and "professional inventory clearance platform" in their WeChat Moments. ▲ The picture comes from the seller communication group It is understood that although there are many channels to clear inventory, it is not easy for some large-scale sellers to completely deal with redundant inventory. Until now, many sellers have not completed the task of clearing the remaining inventory. In addition, a series of chain reactions caused by the account closure wave, such as many sellers clearing their inventory at low prices, other sellers being forced into price wars, and a large influx of novice sellers, have also had an adverse impact on the platform's sellers. 3. Cross-border companies lay off employees, reorganize, and downsize Data shows that there are 33,900 cross-border e-commerce related companies in my country. In the past three years, the number of registered cross-border e-commerce related companies in my country has increased year by year. In 2019, my country added 3,985 new cross-border e-commerce related companies, a year-on-year increase of 24.38%. In 2020, 6,313 new companies were added, a year-on-year increase of 58.42%. In 2021, 10,900 new companies were added, a year-on-year increase of 72.20%. However, times have changed, and with the wave of account bans in 2021, the craze for entering Amazon is no longer what it used to be. It is understood that since the second half of 2021, the growth rate of the number of sellers registered on Amazon has slightly declined, and in the past three years, the share of top Chinese sellers on Amazon has been gradually declining. On the one hand, under the huge force of the account blocking wave, a large number of new and old sellers have been hit hard, some have declared bankruptcy, some have reduced the size of their companies, and some have even chosen to change their careers directly;
On the other hand, as the cross-border e-commerce industry enters a period of conservative growth, the number of people who are on the sidelines increases, and novice sellers are no longer blindly following the trend and are more cautious in entering the market. In addition, a few months after the account blocking wave broke out, the cross-border circle set off the first wave of layoffs. Companies of all sizes announced bankruptcy or reorganization one after another. There were many reports of cross-border companies going bankrupt, and negative emotions in the circle were high. At that time, a large number of Amazon operators were forced to enter the market and look for jobs again. As a result, the originally "promising" operations positions gradually became unpopular. Not only did the recruitment demand decline, but its salary level was also much lower than that at the beginning of 2021. It is understood that this situation has continued until the first quarter of this year. Obviously, the current Amazon job market is not optimistic. According to previous reports, a high proportion of cross-border companies have begun to reduce the size of their companies and reduce recruitment, resulting in a longer job search period for many Amazon operations and fewer job opportunities. A seller has a deep understanding of the above situation: the temperature inside the company is like below zero. From the time the account was blocked last year to now, there has been no breakthrough in performance and profits. There are losses every month. The company has laid off employees two or three times and recently started to lay off employees again. The atmosphere in the whole company is rather depressing. The account blocking wave is like a sharp blade, tearing more wounds on sellers. Coupled with the downward market environment, cross-border sellers are increasingly anxious. All signs indicate that in this storm, sellers at the center of the industry are unable to remain unscathed. They are beginning to realize that Amazon is not the only way out and over-reliance on Amazon will only bring trouble. Gradually, a sentiment of "de-Amazon" has quietly spread among sellers. A new way out: Chinese sellers leave Amazon It is learned that according to foreign media reports, although Amazon is the main channel for Chinese brands and sellers to reach consumers in Western markets, Chinese sellers are seeking to reduce their dependence on Amazon, and the sentiment of "leaving Amazon" in cross-border e-commerce is growing. In an article titled “Resolving the Risk of Cross-border E-commerce Channels Being Stuck in the Neck,” the overseas edition of the People’s Daily wrote: “In the future, Chinese companies should reduce their reliance on the Amazon platform. Companies can optimize and improve their service capabilities by building their own independent websites.” In recent years, Chinese cross-border e-commerce companies are experiencing a "de-Amazon" trend. The report pointed out that there are three main reasons for this: First, the entry fee of Amazon platform remains high. Foreign trade enterprises have high operating costs on the Amazon platform. With the traffic dividend peaking, the price of traffic on Amazon continues to rise. However, Chinese foreign trade enterprises can obtain cheaper traffic on social platforms such as Facebook, YouTube, and TikTok. Second, Amazon closed a large number of foreign trade enterprise accounts. Closing stores will result in the inability to withdraw funds from accounts, which has dealt a serious blow to small and medium-sized enterprises. Third, Amazon does not provide core consumer data. Starting from April 2021, Amazon will no longer provide detailed information such as buyer names and addresses to FBA (Amazon Logistics Service) sellers. It is difficult for foreign trade companies to analyze consumer preferences based on consumer information and then carry out product design and precision marketing. These actions taken by Amazon have forced many Chinese sellers to close their businesses, and the sentiment of “leaving Amazon” has become more intense. According to reports, many Chinese sellers banned by Amazon have turned to the Walmart platform and started to focus on building their own independent websites, which are encouraged by the Chinese government. According to the South China Morning Post, the Shenzhen Commerce Bureau has provided a 2 million RMB (US$310,000) subsidy to local cross-border sellers to build their own independent websites; China's JD.com and independent website Shopify have also reached a cooperation to help Chinese brands establish their DTC sales channels through Shopify. However, it is worth noting that despite the growing sentiment of Chinese cross-border sellers to "leave Amazon", the number of "self-built independent websites" will not increase significantly in the short term. From a technical point of view, Chinese sellers are still relatively lacking in independent website building tools; from a market perspective, compared with independent websites or other platforms, Amazon is still the largest platform to reach global consumers. However, getting rid of dependence and leaving Amazon seems to have become a consensus among cross-border sellers. Nowadays, many big sellers have begun to diversify their layout. For example, Youkeshu said that while the company is seeking to unblock stores and unfreeze funds, it is also adjusting its business strategy in a timely manner, relying on other platforms such as Aliexpress, Shopee, and Lazada to focus on developing emerging market businesses in Latin America, Southeast Asia, etc. It has been one year since the account ban wave. What happened to those sellers who chose to leave Amazon? The pain of transformation: What happens when sellers flee Amazon? 1. Pour into other platforms such as Walmart and Shopify It is learned that since Amazon banned Chinese sellers on a large scale, Walmart has become the second choice for many sellers. According to Bloomberg Newsweek, Chinese sellers who were affected by Amazon’s ban last year are flocking to Walmart. At the same time, Walmart has been enhancing its platform capabilities and international influence, and has launched a number of new seller support policies to compete with Amazon and gain more market share. Data shows that since Walmart officially opened its doors to Chinese sellers in 2021, it has added 5,000 Chinese sellers in half a year, and more and more Amazon sellers are planning to join Walmart. As of December 2021, the number of Chinese sellers selling products on Walmart has increased by more than 6,000. It is reported that the first batch of sellers entering Walmart have already reaped the benefits of the platform, and many cross-border sellers are also far-sighted and have made early arrangements to explore Walmart channels, and have already made some progress. In addition, some sellers have also begun to deploy e-commerce platforms such as Shopee, Shopify, and Tik Tok, adopting a multi-channel strategy to diversify the operating risks of a single platform. 2. Sellers switch from mass merchandising to high-quality products Huachuang Securities Research Report pointed out that due to Amazon's account blocking in 2021, the proportion of Chinese brands in Amazon's top merchants fell from 42.3% to 36.9% at the end of 2021. Although "general product + third-party" sellers suffered serious damage, most of the top boutique sellers were not affected in this round of reshuffle, and the market share released will accelerate the concentration of boutique leaders with more brand recognition. The era of cross-border e-commerce is undergoing profound changes. From the early "wild growth" to the current "intensive cultivation", the industry is deriving new rules and gameplay. In this process, some old models are gradually being eliminated by the market, such as the distribution model that many sellers once relied on to make their fortunes. The account blocking wave in 2021 is undoubtedly a heavy blow to the big sellers of popular products. A large amount of inventory has been blocked, and the short product life cycle has posed a huge threat to the company's operations. For big sellers such as Youkeshu and Global Easy Shopping, there is a saying in the industry that "the success or failure is due to popular products". Therefore, many sellers began the road of transformation, paying more attention to brand building and construction, insisting on the boutique route, and reducing the proportion of distribution accounts. As Huachuang Securities’ report stated, after Amazon’s mid-term screening, only the survivors will be the winners, and long-term channel dividends and domestic brand advantages will return to value. 3. Branding will become the mainstream in the future As we enter the era of brand globalization, overseas consumers no longer pursue "Made in China" but instead prefer "Smart Manufacturing in China". This trend not only provides high-quality brands with the opportunity to go overseas, but also allows more cross-border sellers to transform into branding construction. (For more information on brands going global, please follow the official account: Brands Going Global Observation) It is learned that Amazon recently released the latest trends in brand building for Chinese sellers and found that Amazon Chinese sellers are paying more and more attention to brand building. Data shows that 93% of Chinese sellers say it is very important to build a brand on Amazon's global sites, and 75% of Chinese sellers are confident in creating and promoting their brands on Amazon. At the same time, relevant data from Amazon show that the number of Chinese sellers who have completed brand registration on Amazon has increased 40 times in the past four years . In 2021, the average time for Chinese sellers from entering Amazon to completing brand registration was shortened by 40%. Official data from Amazon shows that there are currently more than 440,000 brand sellers. In addition, Chinese sellers are increasingly paying attention to the multi-site layout of brands, and 14% of Chinese brands on Amazon already have registered trademarks in more than 5 countries or regions. Along with the pain of the account closure wave, cross-border sellers have entered a new stage after experiencing setbacks such as rising operating costs, soaring logistics freight rates, and international exchange rate fluctuations - stepping up brand building and increasing product premiums . Earlier this year, at the Amazon Global Selling 2022 Strategy Conference, Amazon once again mentioned the account suspension incident and stated that it would continue to manage sellers in compliance. In fact, Amazon has reiterated the relevant rules many times and is constantly increasing its crackdown on violations, which is enough to show its determination to rectify the platform environment. For many cross-border sellers, this wave of account suspension is not only a profound lesson, but also a big test for the platform and the market. Those who have survived this big screening are undoubtedly high-quality sellers worthy of recognition. On the first anniversary of the account ban, it may be time for cross-border sellers to re-examine this landmark event. It is believed that cross-border e-commerce is an industry worthy of in-depth development. Sellers should abandon the idea of "making quick money", refer to the overseas practices of top boutique sellers, rethink the future layout direction, and find new growth points in the market. In the future, cross-border sellers will surely experience more storms. How to withstand the various difficulties in the process of going to sea is a question that every seller should ponder.
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