Once a high-flying sector, the cross-border e-commerce industry now finds itself shrouded in the shadow of layoffs. Following massive workforce reductions by industry giants like Amazon and Sea, industry insiders predict that more sellers will exit the market before year-end. This isn't alarmism but rather an inevitable consequence of shifting market conditions.
The Layoff Wave Signals an Industry Winter
The cross-border e-commerce sector has experienced rollercoaster development in recent years. During the early pandemic in 2020, lockdown policies triggered explosive growth in online shopping, presenting unprecedented opportunities for cross-border sellers who saw multiple-fold increases in performance. However, the boom was short-lived.
By 2021, as pandemic controls eased, online traffic dividends began fading. Coupled with supply chain disruptions and rising shipping costs, the industry faced mounting challenges. Many sellers found themselves struggling with excess inventory that proved difficult to liquidate.
The downturn became more pronounced in 2022. Major cross-border e-commerce companies implemented layoffs to reduce operational costs and ensure survival. From workforce reductions at Guangzhou-based mass sellers to Amazon's potential record-breaking layoffs, from Silicon Valley's tech job cuts to Sea's significant downsizing (the "Southeast Asian Tencent"), these developments all point to profound transformation within the industry.
Seller Exodus: A Reluctant Choice in Hard Times
Industry analysts identify two primary reasons why more sellers may exit before year-end:
- Failed holiday season expectations: Some sellers pinned their hopes on year-end peak sales to offset annual losses. If holiday performance falls short, these businesses may face capital chain ruptures forcing them out of the market.
- Cutting losses: Other sellers plan to assess next year's market conditions before deciding. If they determine the true winter hasn't arrived and they're ill-equipped to face future challenges, they may choose to exit early to prevent greater losses.
Survival Strategies for the Winter
How can cross-border e-commerce sellers navigate this industry winter and survive intense market competition? Consider these approaches:
1. Prioritize profitability with cautious operations: During market downturns, maintaining profitability or at least avoiding losses becomes essential. For products with growth potential, sellers might accept short-term losses to preserve market share. However, for highly commoditized new products that can't achieve profitability within reasonable timeframes, sellers should abandon them promptly. Even well-ranked products with slim margins may create inventory pressures and capital occupation risks requiring careful evaluation.
2. Avoid cutthroat competition through differentiation: In fiercely competitive markets, sellers should resist blindly following trends into price wars. Small and medium sellers should focus on niche markets, developing unique products or services to avoid direct competition with deep-pocketed major sellers who can sustain loss-leading strategies to dominate market share.
3. Maintain rankings while reducing promotion costs: During downturns, sellers should increase advertising to preserve product rankings while minimizing or pausing new product development and promotion due to high costs. The optimal strategy may be maintaining position until market conditions normalize when promotion costs decrease significantly.
4. Actively transform and diversify channels: Rather than passively waiting out the slump, sellers should proactively seek transformation and channel diversification. Many domestic traditional businesses are considering cross-border e-commerce transitions or online channel expansion, creating new opportunities worth exploring despite potential challenges.
Hope Remains for Recovery
Despite current challenges, the cross-border e-commerce industry retains promising prospects. Global economic recovery will eventually return, and market demand will gradually rebound. Sellers should actively address challenges, adjust strategies, and enhance competitiveness to prepare for industry revival. Entrepreneurs and professionals needn't succumb to excessive anxiety but should maintain positive outlooks while seeking new opportunities to collectively welcome the industry's next spring.