Amazon's Black Friday has consecutively fizzled out. What's next for the 2023 major promotions?

Source | Hydrogen Consumption (ID: HQingXiaoFei)

"Did Amazon only notify sellers this Black Friday and forget to notify buyers?"

On November 16th, Amazon Overseas Purchase held a themed event called the "Black Friday Tour" for the global shopping season of Black Friday (hereinafter referred to as Black Friday). During this event, Amazon Overseas Purchase announced the official start of the 2023 Black Friday global shopping season from November 17th to November 26th. This Black Friday shopping season features nearly 20,000 brands from overseas, with almost 5 million new products joining the year-end celebration. Over 2 million popular items are participating in discounts, with prices starting at 30% off globally.

This year's Black Friday campaign has extended extensively, giving off vibes similar to China's Double Eleven (Singles' Day) festival.

However, cross-border seller Chen Yong (pseudonym) commented, "Extending the campaign like this often yields unsatisfactory results. Looking at the performance of China's Double Eleven in recent years makes it clear, but other cross-border platforms like Temu started discount activities much earlier, forcing Amazon to join. As for how dismal it is, many sellers in our cross-border community suspect whether Amazon only informed sellers this Black Friday, forgetting to notify buyers."

Before the explosive sales, the Amazon system crashed, leaving sellers like Chen Yong anxiously refreshing the Black Friday page, waiting for exclusive discounts to upload. The system failure at this time would result in significant losses for sellers. Contacting customer service only yielded responses advising patience for system updates, offering no other solutions. Sellers joked in helplessness that outsiders might think the abundance of orders this year was due to system bugs.

In fact, even in the previous two years before Black Friday, Amazon's official operations led to consecutive declines in Black Friday sales. For experienced veteran sellers, system crashes were considered the least of their worries.

On Black Friday in 2021, due to suspected review manipulation, one seller's brand was directly banned, resulting in the outright suspension of all trading channels on the platform. Starting as early as April, Amazon initiated a massive wave of account suspensions affecting over 50,000 Chinese merchants. This sudden crackdown left many cross-border e-commerce brands in a crisis of broken financial chains, with numerous individuals under pressure from the pandemic rushing to Amazon's U.S. headquarters seeking clarification.

On September 17th of the same year, Cindy Tai, Amazon's Vice President and Executive President of Global Store Asia Pacific, publicly stated that over the previous five months, due to repeated abuse of the review system by many Chinese sellers despite multiple warnings, Amazon decided to terminate cooperation with these sellers. Amazon collectively revoked selling privileges for approximately 600 Chinese brands, including some major Chinese sellers.

The account suspensions in 2021 were just the beginning of Black Friday's downturn. Before Black Friday in 2022, Amazon announced increased logistics and warehousing costs on its platform. The rise in costs meant a risk of losses during the promotional period if the order volume didn't meet expectations. Faced with significant financial pressure, a large number of small and medium-sized sellers chose not to participate in this year's Black Friday event.

Perhaps aiming to attract consumers and boost seller confidence, Amazon unprecedentedly launched a "dual promotion," combining the Black Friday period with a member-exclusive promotion—Prime Member Early Access Day. This promotion's scale was said to be on par with Amazon Prime Member Day.

However, at least based on the data at that time, the effectiveness of this Prime Member Early Access Day appeared less than satisfactory.

Official data indicated a 40% decrease in total revenue from this Amazon event compared to Prime Member Day in July of the same year.

While the discount-driven promotional effects were apparent, consumers voting with their feet on the mobile shopping options saw Amazon's software ranking drop from first in 2021 to fourth in 2022, following Walmart, Target, and Kohl's.

According to Adobe's research data for this year's Black Friday, sales in the holiday shopping season (from November 1st to December 31st) in the U.S. were expected to reach $221.8 billion, a 4.8% increase year-on-year. However, industry professionals also pointed out that while this holiday shopping season might achieve decent sales figures overall, it was mainly due to substantial discounts during the peak season, squeezing seller profit margins.

TikTok, Temu, SHEIN

Assaulting Amazon

"Amazon has made us suffer so much that it's better to just abandon it."

Wan Bin, Chairman of the cross-border e-commerce platform Meifan, expressed strong emotions. Over the past few years, many Chinese brands have faced issues with Amazon multiple times, leaving cross-border sellers resentful. Many sellers began seeking other e-commerce platforms besides Amazon.

Meanwhile, during Amazon's massive account suspension in 2021, other platforms accelerated their own e-commerce business.

In the summer of 2021, TikTok experimented with live streaming for e-commerce in the UK and Indonesia, subsequently entering the second-largest U.S. e-commerce platform Shopify, opening up video shopping features. In February 2022, TikTok Shops lowered the application threshold in the UK region again and launched live streaming for e-commerce in Thailand and Vietnam. This year, TikTok Shop has grown stronger in the U.S., gradually establishing its presence in the American market through live streaming/short video shopping. According to official data from Kalodata, TikTok Shop's growth peaked in July-August, with the number of shops surpassing 250,000 by September 12th.

Two other forces from China, Temu under Pinduoduo and the star unicorn enterprise SHEIN, have recently become increasingly active in the U.S. e-commerce arena.

In September 2022, Temu was officially launched in the United States, subsequently expanding to 37 countries. According to Coresight Research's survey of 400 American consumers aged 18 and above in August of this year, Temu's sales in the United States have continued to increase. The percentage of respondents familiar with the Temu app or website rose to 68.5%, a 20% increase from February this year. This was mainly due to Pinduoduo's increased investment in Temu's marketing, raising the software's profile among the American populace.

As a rising star unicorn company, SHEIN has always been low-key and mysterious, once referred to as the "most mysterious unicorn going abroad." Over the past few years, thanks to its styles more trendy than ZARA and prices cheaper than Taobao, SHEIN has grown rapidly, becoming a benchmark for the new generation of fast fashion in the United States. From January to September 2023, SHEIN's revenue surged by 40% compared to the same period last year, reaching $24 billion. In July of this year, internal sources from SHEIN revealed to investors that SHEIN had achieved its highest profit record in history in the first half of 2023.

In Piper Sandler's latest research in the fall of 2023, SHEIN's rankings continued to rise, currently ranking second as the "most popular shopping website" and fourth as the "most popular clothing brand among young people" in the United States, indicating its increasing influence among American youth.

According to third-party data statistics, Chinese sellers are the most active participants in Amazon's cross-border business, contributing 30%-40% of the platform's revenue. The mass

closure of Chinese cross-border seller accounts by Amazon for nearly a year in 2021 severely undermined the confidence of these sellers. Sellers are no longer solely focused on Amazon; instead, they are turning their attention to emerging platforms currently in development.

"Many of my Amazon seller friends are interested in setting up shops on TikTok Shop. Everyone is actively preparing for the new platform." Cross-border seller Chen Yong has already established a domestic store on TikTok Shop, signifying the exodus of Amazon sellers is an indisputable fact.

The rise of new logistics forces,

Entering the field of short videos as a veteran player

Apart from sellers leaving, Amazon is also facing the loss of platform users.

Research by the statistics agency GWS found that the mobile clients of Amazon's UK site have lost over a million users this year. Since April 2023, the number of active users on Amazon in the U.S. has sharply declined, dropping from 54 million daily active users to 46 million within a few months. In contrast, since the beginning of this year, Temu's daily active users in the U.S. have continued to rise, adding nearly 10 million new users in October. Combined, Temu and SHEIN's user base in October reached 110 million, approaching 90% of Amazon's user base.

With one increasing and the other decreasing, the trend of competition is intensifying, with both new and old players actively making up for their weaknesses and leveraging their strengths.

As consumers increasingly value the online shopping experience, social e-commerce emerges.

On December 9th, 2022, Amazon officially launched a new feature called "Inspire" on its mobile application, mirroring TikTok's short video product recommendation mode. Through short videos and visual content, tailored "product recommendation" schemes based on consumer-set preference tags have extended users' browsing time on the app. According to official Amazon data, since the launch of Inspire, the number of product posts viewed by users has exceeded 1 billion.

Meanwhile, TikTok is focusing on its e-commerce business, establishing overseas logistics, replacing third parties, and taking over the entire inventory, packaging, and shipping process.

Last year, TikTok made a move into the e-commerce business in the United States, allocating most of its resources to subsidize live streaming influencers, users, and more internet-famous brands. TikTok also tailored its management rules for merchants, offering distinct platform entry methods for different business models.

Initially, TikTok outsourced its logistics business, reaching agreements with logistics service providers like ShipBob and Newegg to handle inventory warehousing, sorting, packaging, and delivery of online orders. Since last year, TikTok has been trying to emulate Amazon's approach by establishing its own overseas logistics, managing the entire order process through its own channels.

This year, Temu has encountered inventory shortages multiple times. In March, due to significant warehouse capacity pressure, all goods were ordered to cease new launches, and all restocking was suspended, including JIT goods, which were all taken off the shelves. Due to warehouse issues at the time, Temu even delayed the launch of its UK site. In June, Temu faced inventory shortages again, strictly controlling the entry of goods into warehouses, causing many sellers to sell goods on the platform that couldn't be delivered or stocked.

Logistics and warehousing have always been Temu's weak points. Recently, apart from expanding warehouse space, Temu has collaborated with renowned shipping companies like COSCO, Maersk, and China Ocean Shipping Company to address the shortcomings in cross-border e-commerce logistics through sea freight.

Conclusion

Black Friday is still ongoing, and the varied states of cross-border e-commerce have already surfaced.

For sellers, this Black Friday's sales figures are the watershed moment determining whether they continue to bet on Amazon. However, it's clear that, under various internal and external factors, Amazon is no longer as glorious as it once was. "Not putting all the eggs in one basket" is currently the optimal choice for sellers. Amazon's desire to regain its "dominant" position has clearly placed sellers at a crossroads between prioritizing sellers or buyers.