The European and American cross-border e-commerce market has become a “Red Ocean”, with many bottlenecks emerging
In 2018, the cross-border e-commerce industry experienced explosive growth. However, with the influx of capital and a large number of sellers, the European and American markets, the main battlefield for cross-border e-commerce, have changed from “blue ocean deep dive” to “blue ocean deep dive”. “Red Ocean Shopping”, sellers are getting less and less profit from it.
In 2019, Amazon’s global marketplace has more than 6 million sellers. According to research data from Marketplace Pulse, between 2017 and 2019, a total of 3.3 million new sellers around the world joined the Amazon platform, of which more than 1 million sellers joined the Amazon US site. This means that over the past 10,000 days, an average of 3,317 new sellers have joined every day. Despite so many new sellers joining, the number of sellers with sales of $100,000 or more increased by only 180,000 during the same time period.
Product “homogenization” and “price war” have become two urgent problems facing cross-border e-commerce sellers. Faced with declining sales and fierce peer competition, many sellers have to adopt low-price strategies in order to continue operating, making survival increasingly difficult. “Price war” is a kind of “war without gunpowder”. Behaviors such as lowering prices and ostracizing each other among peers frequently occur, and the final result is often a lose-lose situation.
In addition, the strict rules of the platform are also a major challenge faced by sellers. After attracting a large amount of investment in the early stage, many platforms began to introduce various policies to promote the development of the platform in the direction of quality and branding. For example, Wish has launched a policy of “$2,000 fine for inactive accounts” and a “Brand Traffic Support (Big Sales) Plan”. Although this is beneficial to the long-term development of the platform, for a large number of small and medium-sized sellers, the platform’s traffic tilt towards brands has accelerated their decline and may eventually lead to them being forced to withdraw from the market.
As a large number of Chinese sellers enter the European and American markets, online transaction volume surges, resulting in a decline in sales in the physical industry and attracting the attention of governments around the world. In order to protect local trade, most European and American countries have begun to impose taxes and fees on cross-border e-commerce. For example, in the United States, the Supreme Court has stipulated that out-of-state online retailers must pay tax to a state if their annual sales reach US$100,000 or conduct more than 200 transactions in that state; in Germany, sellers must register for German VAT , and declare it in accordance with regulations, which includes a standard tax rate of 19% and a low tax rate of 7%, and needs to be declared 13 times a year; in the UK, sellers need to register for British VAT and report to the British Revenue and Customs (HM) on a quarterly basis. RC) declaration, VAT is mainly divided into three types: standard tax rate 20%, low tax rate 5%, and zero tax rate 0%; Swedish Customs began to collect VAT on all non-EU e-commerce items (including mail) in March 2018, regardless of Depending on the value of the goods, VAT is generally 25% and is paid by the recipient; Switzerland has levied VAT on B2C sellers with cross-border turnover exceeding 100,000 Swiss francs (CHF) since January 2019.
To sum up, more and more countries are implementing tax policies. Low product prices were originally an advantage for Chinese sellers, but now they have to raise prices in order to offset the impact of high taxes. In order to seek better development, sellers may need to choose products with lower profit margins, or turn to emerging platforms with large current traffic.