In the past three years, the entire environment faced by the cross-border industry has undergone drastic and rapid changes:Industry dividends are less and less, and the market development prospects are not as good as before;
In the normalized epidemic situation, after new policy changes, supply chain imbalances, high costs... The survival pressure of enterprises has increased exponentially;There is also a big problem at the moment. Global inflation is heating up, purchasing power is declining, and companies' profit margins are constantly being compressed in order to survive.This reminds me that a few days ago, Huawei CEO Ren Zhengfei's latest speech "Pass the cold to everyone" was on the Internet.
In 2022, the global retail market will basically open lower and move lower. Not only on the Internet, but "winter" is also a sense of community for cross-border people.
Enterprises' confidence in going overseas has been hit. Where are the future opportunities for cross-border e-commerce?
Europe and the United States are caught in high inflation, and fighting against inflation has become a protracted war.This year, Saiying distributes the most heard word in the circle: inflation.
The epidemic has repeated, and the global economic situation has appeared in Waterloo. The cost price of bulk commodities has increased, the energy crisis caused by the conflict between Russia and Ukraine, and the global inflation has intensified.According to data from global economic indicators, the inflation rate in the United States hit a 40-year high of 9.1% in June; the inflation rate in the United Kingdom was as high as 9.4%. U.S. inflation slipped to 8.5% in July, while the U.K. surged to 10.1%.Although Europe and the United States have taken corresponding interest rate hikes to curb inflation, there is still a long way to go before the Fed's stated goal of reducing inflation to 2%. According to the central bank's forecast, UK inflation will reach a new peak of 13.3% in October.In the long run, Saiying Distribution believes that the fall in inflation in the United States in July does not mean that inflation has peaked, and interest rate hikes cannot completely curb inflation. Across the world, fighting inflation will be a protracted uphill battle.
Continued inflation in Europe and the United States, the impact on cross-border e-commerce?The most direct impact of intensified global inflation is that prices generally rise, consumption is weak, the overall growth rate of the market economy slows down and penetrates into all walks of life, and Chinese cross-border export companies are also ushering in a "cold winter period".As European and American countries are the main battlefields for cross-border people to go overseas, the continued high inflation will have a greater impact on the industry. The research findings of Saiying distribution are mainly reflected in the following three points:
1. The consumption power of ordinary people has declined, and shopping habits have changed
Rising prices affect the purchasing power of residents, and household and individual spending will begin to decline when income decreases.
McKinsey, a global research firm, analyzed the consumption of 4,000 Americans: 74% are shopping less, 50% are seeing a marked decline in consumption, 60% are reducing the number of purchases, and 44% are delaying shopping.
In order to make ends meet, consumers are not only deliberately reducing their daily spending, but also changing their shopping habits. According to the survey data of NPD Group, the proportion of American consumers buying cheap alternatives and cost-effective products is increasing, and the consumption of some medium and large-scale products such as home furnishing and kitchen is decreasing, and most people turn to discount stores for shopping.
This year’s membership day also exemplifies the above two points: in the past, the peak holiday season was a time for sellers to show off their achievements, while this year’s Amazon membership day has contributed to a handful of sellers with explosive orders, and more than half of the orders on the platform are from companies with strong discounts. Low-priced items.
To sum up, consumers' spending budgets are tight under inflation, which not only reduces their purchasing power, but also becomes more sensitive to commodity prices.
2. E-commerce platform traffic declines and profit growth weakens
Under the influence of inflation, cross-border e-commerce platforms still face challenges in the growth of the overall retail business. In particular, Amazon and Walmart performed significantly:
a. Amazon is in a crisis of loss
As Amazon’s traffic is diluted by Walmart and the number of platform orders has declined, this year’s performance has been in a downturn: the official financial report shows that the 2022Q1 net profit compared with the same period last year, the net loss exceeded 3.8 billion US dollars, and the Q2 year-on-year net loss reached 2 billion US dollars. The consolation is that the net loss value is starting to narrow compared to Q1.
While growth has slowed, Amazon remains the leading consumer site for Americans. According to eMarketer's forecast, Amazon's e-commerce market share in the U.S. will reach 37.8% this year, still dominating the U.S. e-commerce market.
b. Walmart’s revenue is growing, but profits are falling
In addition to Amazon, Saiying Distribution saw from Walmart's data that the retail giant also encountered obstacles:
In the first and second quarter transcripts officially disclosed, revenue in the first quarter reached US$141.6 billion, slightly exceeding expectations, while operating profit fell by 23% year-on-year; revenue in the second quarter was US$152.9 billion, an increase of 8.4% year-on-year, but operating profit was year-on-year. Down 6.8%. Rising fuel and prices have put a lot of pressure on Wal-Mart's operating costs and profitability.
Remember last year when Walmart recruited heavily to make up for staff shortages brought on by the pandemic? Unexpectedly, the measures that benefited last year have become a stumbling block to profit growth this year. The official announced that the headquarters will lay off 200 people in response to the decline in Wal-Mart's profits and economic uncertainty.
3. Corporate layoffs and closures have become the norm, and commodity price involution has intensified.In the past two years, under the shroud of supply chain problems, the operating costs of enterprises have continued to increase, resulting in a serious shrinkage of operating profits. In order to downsize and reduce expenses, there are frequent news of corporate layoffs and closures: a top seller in Shenzhen has laid off 80% of its employees, leaving only 500 people.
In addition, the problem of price involution has also become more serious this year: under the impact of exchange rate, purchasing power is declining. Not only small and medium-sized sellers, but many leading companies have also started the "price involution" model, believing that only continuous price reductions will have the opportunity to facilitate commodity transactions Quantity, in order to seize the silver lining in the face of adversity.