How To Save Amazon China Sellers

This is perhaps the most difficult moment for Amazon China sellers. The epidemic sweeping the globe changed everything, including e-commerce and foreign trade.

"After the outbreak of the epidemic in the United States last week, orders fell sharply, which is more obvious these days. Basically, it is a cliff shaped fall, and it is almost impossible to achieve a single goal." Sellers including clothing, outdoor products and jewelry are all suffering. Affected by the epidemic, people's income is reduced, their willingness to go out is reduced, and orders are sharply reduced. "Less than 50% of normal times, the worst is less than 30%."

Under the epidemic situation, Amazon Chinese sellers are facing many pressures, such as the collapse of orders, the soaring cost of logistics and warehousing, and so on. This industry is facing enormous challenges.

　　 Chinese sellers caught by the epidemic

There is a saying in the foreign trade industry that 50% of Amazon's sellers come from China, and 50% of China's sellers come from Shenzhen.

As one of the global electricity supplier platform giants, Amazon has attracted third party sellers including China. CEO Geoff Bezos said in a letter to shareholders in April 11th that the percentage of sales of third party sellers increased from 30% in 1999 and 30% in 2008 to 58% in 2018. "The third party sales increased from US $100 million to US $160 billion, with a compound growth rate of 52%." Most of them come from Shenzhen, China.

Shenzhen customs data show that, according to the "2018 Shenzhen e-commerce development white paper" data, Shenzhen's cross-border e-commerce transactions in 2018 amounted to about 400 billion yuan, ranking the highest in the country. Exports accounted for about 59%, and the growth rate continued. In the first 5 months of 2019, a total of 7 million 860 thousand cross-border e-commerce retail outlets exported to Shenzhen customs were issued, with a total value of 2 billion 50 million yuan.

The smooth business of Chinese sellers suffered a double blow from China's epidemic and global epidemic.

In 1-2, due to the spread of domestic epidemics, there was some panic. Some American buyers even rejected Chinese goods. Zhang Lin, who runs personal care products at Amazon, said that a small number of customers asked whether the product came from China before ordering. After receiving the affirmative reply, the customer chose to cancel the order. "This happened before the outbreak of domestic epidemic, and now very few, only occasionally one or two."

The key is that the domestic supply chain has been completely disrupted.

During the Spring Festival, buyers in Europe and the United States are still placing orders. According to the usual practice, the general store will store some goods or produce materials ahead of time. After 2-3 months of the Spring Festival, many Amazon sellers will start developing new products, and the cooperative factories will fully start production.

After the outbreak of the domestic epidemic, all the plans were disrupted: the factory started to postpone, workers were unable to return to work normally, suppliers were unable to supply production materials, and factories could not start. "The present preparation can only be reached by the end of March, and it will be very difficult in April." This has led to the majority of Amazon sellers, originally planned to become unknown variables.

If there is no epidemic, we will go to work in February 2nd. The epidemic was delayed many times later. The factory has not been started yet. At present, the progress of new products is slow for about two or three months. Wang Wei sighed. He has worked for 6 years in the Amazon cross-border e-commerce business, and lives in the Amazon family and 3C products. Because of the epidemic, the original 2020 business plan has been completely wasted.

Li Ming, a seller of clothing and 3C products, said: "our supply chain is in Guangdong. Now, after the rework, the work is slow, and the workers in the factory are unable to get in place because of the epidemic. Even if the workers are coming back now, it will take a cycle to get the raw materials to be purchased and to resume production.

Even sellers who have enough stock before the year are not optimistic. "Our company will have more supplies. But it can only be maintained until April, because domestic factories are running poorly. Most of our suppliers now only recover 3-4 of their capacity. " Zhang Linye was at a loss.

By the middle of March, when the domestic production capacity basically recovered, the epidemic in Italy, France and the United States began to break out. This directly affects the sales and business of Chinese sellers.

Clothing on Amazon is one of the hardest hit categories, and sales of Li Ming's company are declining significantly. "Our 3C category is good, but the order volume is 50% of usual time, but the clothing category glides very obviously. The company's clothing is mainly based on summer holiday costumes. Recently, people have no plans to go on holiday, or cancel them. "In the first place, Japan, orders fell by 50%-60%. At that time, the European and American markets were normal. But then, after the spread of the epidemic, the European and American market orders basically fell off. At this time, we made 100 orders a day, and now it is 30 orders per day. 70% less. " And textiles and clothing are the key to Chinese sellers.

And for Chinese sellers who have necessities for life, the impact is not obvious. Zhang Lin's company operates three categories of personal care, kitchen supplies and pet products. "The epidemic has no apparent effect on us because our products are just needed for life. Orders for kitchen products have risen somewhat, and other categories are almost the same as usual.

Cheap 3C product orders increased over the same period in previous years. "Like keyboard and mouse products, in the case of isolation and reinforcement, playing games and daily office will be used."

Worsening logistics and official policies

There are also skyrocketing logistics costs affecting cross-border e-commerce sellers. Chinese Amazon sellers usually transport goods to the Amazon warehouse around the world by air and sea transportation, after ordering, and then go to Amazon logistics. (referred to as FBA, similar to Jingdong logistics services)

Since January this year, many countries have already halted or reduced flights to China. Small package express will increase because of the decrease of flights. If the cost of shipping is reduced, the delivery time will be extended and the consumer experience will not be good. This is fatal to Chinese sellers of transnational transactions and transportation.

According to the usual practice, one kilogram of goods, air transportation (air freight plus short for delivery) logistics channels, the freight in the off-season is 28 yuan, and the peak season is 32 yuan. Now it costs 40 yuan a kilogram. But what worries the sellers is that many channels have been unable to deliver because of overseas epidemic. If they choose to express air freight, the price will rise to 45 yuan. "Up 60%."

The soaring logistics cost forced many Chinese sellers to choose relatively cheap shipping. The price of shipping changed little, and the price rose to 9 yuan per kilogram of 8.5 yuan. But timeliness is much worse, and consumers can't wait. The vacant channel usually takes 7-10 days, while shipping takes 25-30 days.

What makes Chinese sellers less effective is that due to the urgency of the epidemic, there is a shortage of necessities and medical supplies on the Amazon platform. Amazon has issued a targeted anti epidemic emergency policy.

　 Save Amazon China sellers

On the 5 th of March 17th -4, Amazon shut down unnecessary commodities: "we decided to give priority to family necessities, medical supplies and other products that we need to enter our warehouse." "For commodities other than the above category, we will temporarily suspend the creation of warehousing applications for operations centers." For most Chinese sellers, it is undoubtedly worse. "Short term impact can be controlled, and the longer the closing time will be, most Chinese sellers will be out of stock."

In order to ensure the maximum supply of goods, some Chinese sellers began to take measures. Chen Shu, a household outlet product, has been working overtime since March 17th to set up a shipping plan in the background of Amazon. A part of the goods will be sent to the third party's overseas warehouse. When it is lifted in April 5th, it will be able to reach Amazon's British warehouse faster. "The same goods will be sent two times, first sent to third party warehouses, and then transferred from warehouse to FBA warehouse." In addition to the cost of the FBA itself, the company also needs to pay for the warehousing, labor and warehousing costs of the third party warehouses. Chen Shu estimated that the freight cost of the household appliances she was responsible for would increase from 12 yuan to 17 yuan, up 41%.

Wait-and-see Amazon merchants

By March 28th, the number of confirmed Americans in the United States was over 100 thousand, far exceeding that in China. It is far from clear when the epidemic will turn global. But for the second half of the year, Chinese sellers are cautious. But life and business must go on.

Many Chinese sellers said they would shrink the size of the company this year, reduce their annual business expectations, and even a few of them began to close and transfer the company. "The pace of development was not bad before, and the plates were bigger. This year's business objectives will be appropriately lowered. It is mainly to slow down the expansion of the company's existing categories. Take advantage of this time to grasp the quality of the company's internal management. Similar to Zhang Lin, Li Ming believes that after this outbreak, the company's risk awareness can be enhanced, and the development of new products will be more cautious. "For the long-term development of the company, this is a very valuable experience."

Some Chinese sellers have considered developing anti epidemic products, such as masks, but eventually they abandoned them because of the differences between the national standards and the uncertain future. Most sellers still decide to maintain the current category of business and do their job well. But the development of new products will slow down. "Originally a lot of new products will start in the first year, and now decide to try the one or two item first and try the customer response."