For sellers, the most important thing for cross-border e-commerce is not products or operations, but stable cash flow. Inventory, manpower, venues and other links are all costs. Once a healthy cash flow cannot be maintained, small and medium-sized enterprises will directly face the risk of staff loss and plummeting sales. The logistics cycle plus the collection cycle means that cross-border sellers often need 1 month or even 4 months to complete a capital turnover. During this 1-4 month period, sellers also have to prepare goods and pay logistics costs for a steady stream of orders. Some listed companies and industries are selling well, and through their own high performance, they can obtain external financial support to reduce risks, but it is quite difficult for small and medium-sized cross-border e-commerce sellers. At the same time, the receivables collection cycle of traditional factory-based foreign trade is longer, and many are prone to become bad debts. Therefore, the last link of the collection is particularly important. Only when the refund is received can a round of sales be completed and a profit be obtained.
For example, if the principal is 100,000 yuan, the profit rate is 10%, and the capital turnover days are 45 days, 8 rounds of turnover can be carried out each year. If calculated by compound interest, the principal plus profit at this time is: 100,000x(1+10%)8=214,358 yuan. If the cycle can be shortened to 30 days, 12 rounds of turnover can be carried out each year, and 100,000x(1+10%)12=313,843 yuan can be obtained, and the final profit is twice the former. From the perspective of numerical calculation alone, the profit is very considerable, but in the actual operation scenario, once the payment is not received, the compound interest will be interrupted, and even the previous profit will be reduced.
In this context, Amazon’s 14-day payment cycle is particularly attractive. In addition to the provisions that stores with a record of violations will withhold reserved funds, and that after modifying the collection account, a security audit will be conducted and withdrawals cannot be made, Amazon’s payment collection is very stable. Many cross-border sellers seem to have a profit from selling products, but the actual profit is not much. In addition to the reason of inventory pressure, the platform’s refund cycle is also a very important factor.
Perfect platform rules
Since the rise of cross-border e-commerce, there has never been a shortage of e-commerce trading platforms. Some platform rules are rigid and difficult to adapt to the changing market environment; some management rules change frequently, and sellers who violate the rules are punished on this basis; while others are laissez-faire, with very weak constraints on buyers and sellers. Compared with other cross-border platforms, Amazon’s management rules are more complicated, but also more complete, and there are almost no platform rule updates that change overnight. At present, Amazon has opened multiple sites in North America, Europe, Japan, India, Australia, etc., but the rules of each platform have not changed much. For inexperienced sellers, there are not only video tutorials of the seller university in the store background, but also detailed rules introduction and help pages. In addition, Amazon will also broadcast live at a fixed time every week. Sellers can log in to Amazon’s online live training platform to view various free courses, which greatly reduce the difficulty of seller operations.