Profit is less than 5%?! The real data of Amazon's top sellers revealed

I remember that Teacher Alice mentioned in the article "Winter is coming, how to make profits in the post-Amazon era" (click the blue words to view) that because the scale is too large to adapt to the environment after the platform changes in time, some big sellers will have a hard time this year.

Just recently, there was another case of abandoning acquisition, and the protagonist was indeed one of the well-known "Sakata Five Tigers" - Zehui Technology. What was the reason for the investor to abandon the acquisition this time?

The investor who wants to acquire Zehui Technology this time is Qibuli Shares. The name may be unfamiliar, but everyone should have heard of its main brand ABC kids. This brand has overwhelming title and sponsorship, and is one of the giants in the domestic children's clothing field.

As a well-known domestic children's clothing listed company, Qibuli shares' purpose of acquiring Zehui is very obvious, which is to use Zehui's successful cross-border e-commerce business to open up the overseas children's clothing market for itself.

How determined is Qibuli? After announcing the acquisition plan in December last year, it has already spent 200 million yuan to acquire 11.43% of Zehui Technology's equity. In this way, Zehui's overall valuation will be around 1.8 billion yuan.

It was this advance acquisition last year that laid the groundwork for the failure of this merger and acquisition.

During this initial acquisition of RMB 200 million, Zehui Technology promised Qibuli Shares that it would achieve profits of RMB 150 million and RMB 200 million in 2019 and 2020 respectively.

In fact, although Zehui Technology's operating income in 2018 was as high as 1.755 billion yuan, its actual profit was only 74.39 million yuan, with a profit margin of only about 4%.

In the first quarter of this year, the revenue and profit did not change much compared with previous years. The first quarter revenue was 530 million yuan and the profit was 17.55 million yuan, and the profit margin in Q1 was only 3.2%.

*The above data comes from Sina Finance

Therefore, although the termination letter published by Qibuli Shares stated that the reason for the termination was that "some important terms could not be agreed upon."

But to be clear, Zehui's profitability is definitely far from what Qibuli shares imagined. So in order to stop the loss in time, the acquisition and restructuring case was urgently terminated.

Because of its profitability, cross-border e-commerce once again missed out on the capital market. Many failed acquisitions that occurred last year were due to similar reasons.

Although we small and medium-sized sellers certainly would not consider being acquired, profitability is directly related to income. No seller is willing to do charity, but it often backfires.

Take the upcoming Prime Day as an example. This year, Amazon has put in a lot of great efforts, with various activities targeting sellers emerging one after another. Not only are there the usual LD ​​and BD activities, but also new Prime Day Coupons and Prime exclusive discounts.

The latter two new events are good news for small and medium-sized sellers, with low entry barriers and no registration fees. Small sellers who could only watch others’ orders explode on Prime Day in previous years can also get a taste of the action this year.

(If you want to know how this new activity works, we will have a live broadcast on the 27th to explain it to you. Scan the QR code at the end of the article to find me to sign up)

But here comes the problem. This activity requires sellers to offer a minimum discount of 20%, which is 20% off. If the sellers do not control costs strictly or have been selling at low prices, participating in these activities is simply doing charity, and they will lose as much as they sell.

However, sellers who take the high-profit route can still make a small profit after offering a discount of more than 20%, and can even make no loss when various discounts are combined , so I always strongly recommend that you leave enough profit margin.

Let’s get back to the topic of Prime Day. Amazon’s actions this year have been very frequent and aggressive, so this year’s Prime Day is likely to have a very impressive result. All sellers should seize this opportunity.

Those who can participate in the event should participate in the event, and those who do not have profit margins should use various methods to take advantage of the holiday traffic. We have also prepared a very practical live broadcast of preparation routines for different sellers to help everyone prepare for Prime Day and strive to catch the peak sales of the year with the best product status!

PS. If you want to join the seller discussion group, you can also private message me to let me add you to the group

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