Cross-border headlines of the week | Amazon’s low-price mall sells goods at a loss, but still can’t beat Temu?

Amazon's latest financial report is out.

Net profit of nearly $60 billion a year

Recently, Amazon announced its fourth-quarter financial results ending December 31, 2024. The financial report shows that Amazon's revenue this quarter increased by 10% year-on-year to US$187.8 billion, compared with US$170 billion in the same period last year; operating profit increased from US$13.2 billion in the same period last year to US$21.2 billion; net profit increased to US$20 billion, compared with US$10.6 billion in the same period last year.

Many key performance indicators have seen significant increases, which is enough to prove that Amazon had a good development momentum in the last quarter of last year. As Amazon CEO Andy Jassy said, "The 2024 holiday shopping season was Amazon's most successful quarter to date."

Amazon's performance in the first three quarters is also quite good. According to official data, in the first three quarters of 2024, Amazon's net profit increased by 229%, 101%, and 54.5% year-on-year, reaching US$10.4 billion, US$13.5 billion, and US$15.3 billion, respectively. The fourth quarter continued this growth trend, with profitability rising steadily.

Specifically for Amazon's full-year financial performance, revenue in 2024 increased by 11% year-on-year to US$638 billion; operating profit increased from US$36.9 billion in 2023 to US$68.6 billion; net profit increased to US$59.2 billion, far higher than US$30.4 billion in the same period last year, equivalent to a net profit of nearly US$60 billion a year.

TikTok Shop Mexico will be launched on February 13

TikTok recently announced that it will officially start trading in Mexico on February 13, 2025, and has invited local sellers to register and open stores in January in advance. Qualified merchants can enjoy a preferential policy of no commission for the first 90 days, which further encourages local sellers to settle in. Mexico is also the first country in Latin America to launch TikTok Shop.

However, the expansion of TikTok Shop in Mexico will be subject to certain restrictions, and some product categories such as jewelry, health products, maternity and baby products, etc. will be regulated on the platform.

Currently, TikTok Shop has been launched in 11 countries and regions, including Indonesia, Thailand, the Philippines, Malaysia, Vietnam, Singapore, the United Kingdom, Ireland, Spain, and the United States, and plans to continue expanding into the international market to achieve a global e-commerce layout.

Amazon's low-price mall sells goods at a loss.

Still can't beat Temu

At the end of last year, Amazon quietly launched Amazon Haul, a low-price shopping mall, in an attempt to regain more market share. But now it seems that this progress is not as smooth as expected.

In the operation of Amazon Haul, Amazon has been subsidizing its sales by selling at a loss, taking its low-price strategy to the extreme. It is understood that Amazon Haul currently offers discounts of up to 90% on some products through tiered promotions, including 60% off the entire store, 20% off clearance items, and 10% shopping cart discounts on orders over $75.

Take the Apple Watch strap that costs less than $1 in the mall as an example. After the discounts are stacked up, consumers only need to pay 10% of the price. For another example, if the total value of a dozen items in the consumer's shopping cart is $79, it only costs $8 after stacking, and shipping is free, which is a very attractive price.

Subsidies mean Amazon has to pay more costs, but in terms of sales, Haul is still only a fraction of Temu. According to Marketplace Pulse data, the number of Amazon Haul products on Amazon's top 100 best-selling list increased from 2,700 during the peak of Black Friday last year to 4,200 in January, but the cost behind this growth is also increasing.

On one hand, there are 90% "extraordinary" discounts, and on the other hand, the sales volume is far from enough to break even. If Amazon's low-price mall wants to continue to "burn money for growth", the difficulty can be imagined.

Yiwu boss lady uses AI to do business,

Orders keep coming

In 2023, Yiwu Small Commodity Market launched the world's first large language model in the field of commodity trade and launched the Chinagoods AI innovation service platform. Sun Lijuan became one of the first adopters. She used the Chinagoods AI innovation service platform to quickly generate videos and product detail pages in multiple languages, greatly broadening sales channels. At the end of March last year, even Mexican merchants flew to Sun Lijuan to purchase goods after seeing her Spanish videos, bringing in a considerable order.

"I think AI is so useful, and I'm lucky that my turnover has been increasing." Sun Lijuan said, which shows that the emergence of AI technology has given Sun Lijuan's business a boost. In fact, with the continuous development of AI, more and more people, like Sun Lijuan, have actively embraced new technologies and used the power of AI to expand their business to more overseas markets.

Shenzhen's old cross-border sales team fell behind,

Expected annual loss of 480 million

The former cross-border leader and Shenzhen cross-border e-commerce veteran, Cross-border Tongbao E-commerce Co., Ltd. (hereinafter referred to as "Cross-border Tong"), has entered a situation of declining performance. According to the recent performance forecast released by the company, Cross-border Tong's operating income in 2024 is expected to be 5.4 billion yuan to 5.8 billion yuan, a significant decline compared with the operating income of 6.616 billion yuan in the previous year; the net profit attributable to shareholders of the listed company in that year is expected to be a loss of 380 million yuan to 480 million yuan. In comparison, Cross-border Tong lost 9.6882 million yuan in the same period of 2023.

At the same time, the net profit loss of Cross-Border Link after deducting non-recurring gains and losses in 2024 is expected to be consistent with the net profit loss attributable to the parent , which is also between 380 million yuan and 480 million yuan. The loss in the same period of 2023 was 85.2775 million yuan; the basic earnings per share loss was 0.2445 yuan/share-0.3089 yuan/share, and the loss in the same period last year was 0.0062 yuan/share.

Regarding the reasons for the performance changes, Cross-Border Link stated that on the one hand, "it is expected that some subsidiaries will face goodwill impairment risks"; on the other hand, "after preliminary calculations, some of the company's inventories and accounts receivable showed signs of impairment. Based on the principle of prudence, the company has made provisions for impairment of the above-mentioned assets that may show signs of asset impairment." Overall, this performance is only a preliminary forecast, and the specific data still needs to wait for the final audit results.