The 2023 Christmas sales season brought both successes and challenges for cross-border sellers. For example, in the category of Christmas lights, some products sold exceptionally well, but many others failed to meet expectations.
Unfortunately, one Amazon seller from Shenzhen, born in the 1980s, belonged to the latter category — the performance during the 2023 Christmas peak season was dismal. Over 20 million yuan was spent on advertising throughout the year to boost sales, pushing profits to the limit.
With low single-sale volumes, most sellers will review their experiences and prepare to fight again next year. But for some sellers, this path seems impassable. They are forced to confront the reality of consecutive years of losses and begin to contemplate the future.
The Fortune of the Boom Period
Before Amazon officially recruited Chinese sellers, a group of sellers in Shenzhen seized the opportunity to understand this platform. While working in China, some identified business opportunities and established offshore companies in the U.S. to engage in cross-border business, earning significant profits.
Shortly after Amazon opened its doors to Chinese sellers in 2012, these sellers registered seller accounts on the U.S. site and began their cross-border journey. Initially, they only dabbled in small-scale operations, but as more success stories emerged among their friends, they decided to go all in.
Especially in the LED Christmas lights category, they discovered enormous potential.
Initially, there were few related products on the platform and no competition. Orders can naturally come in without advertising if products are newly listed with FBA. Due to its strong seasonality, sales could be concentrated just over a month before Christmas. The profits in the Christmas lights category were unbelievably high, with some sellers claiming to make a gross profit of 10 million yuan from selling 10 million yuan worth of goods.
From 2013 to 2019, the Amazon stores operated by sellers in the Christmas lights category showed high-speed growth in performance. Their profits grew by more than 50% annually.
“It’s a period of making money easily.” a seller stated. When Amazon entered the market, it sparked a boom in cross-border e-commerce, providing many ordinary people with an excellent opportunity for upward mobility. Without fluent English or extensive industry experience, individuals could start by moving goods, leading to numerous success stories. The high-speed growth in performance was primarily due to the lucky timing of the dividend period.
Regular losses
As time passes, the competition in the Christmas lights category has become increasingly fierce, and costs continue to rise.
Taizhou, Zhejiang, is known as the hub for Christmas light products. During Amazon’s peak growth phase, factory-based sellers from Taizhou entered the market, previously dominated by traders, to tap into the enormous profits. Later, factory sellers from Ningbo also joined. This shift shows that manufacturers have production advantages over traders.
However, the rapid development of cross-border e-commerce during the pandemic has attracted more and more factory-type sellers from Zhejiang to join the Amazon platform. Factories no longer have a competitive advantage in both production and operation.
The changes in the Christmas lights market are permanent, and sellers who adapt successfully will become the trendsetters of the new era. Meanwhile, those who lack competitiveness might be forced out of the market.
In 2021, many companies did not recover their growth momentum but fell into losses again.
“The operating costs are increasing year by year, and hard costs such as advertising and logistics are increasing yearly, while overall profits are getting thinner and thinner.” One seller shared that according to calculations, the company’s gross profit in 2023 was only about 10%. Over 20 million yuan was spent on advertising, accounting for 15% of the total sales. In 2023, profits were pushed to the limit to boost sales, but the results were still disappointing.
Some sellers have already lost millions of yuan and even mortgaged their properties to save their companies.
Amazon can quickly accumulate wealth for people but also make them lose everything overnight. In short, the speed of business collapse is often much faster than the speed of entrepreneurial success.
Navigating Exits and Returns
Unlike the mindset of remaining optimistic when initially losing money, many cross-border sellers have realized they are struggling to continue this year.
“After over 10 years of e-commerce career, I think it’s time to say goodbye to this industry. I have struggled for the past two years but can’t continue anymore; it’s all over.” After falling into defeat on Black Friday, a Christmas light seller bid this industry farewell.
However, saying goodbye does not mean much to them in this industry.
“I have altogether considered giving up, but it’s hard to get out once you enter this industry. Even if I say goodbye this time, it’s not a complete withdrawal, but I want to leave this industry for reflection and adjustment temporarily.” Some sellers also said they could not withdraw entirely because the company’s fate is related to themselves, their employees, and the upstream factories that have always supported them.
In recent years, many sellers have purchased factories, forming close relationships with them. As a result, many sellers hesitate to exit the business even when facing challenges because they do not want to see their hard-built companies fail or their factories suffer losses.
Currently, many sellers are discussing the acquisition of companies with factory merchants. The factory will directly take over the company’s operation, while the seller will provide guidance and support until the factory can operate independently.
Although some sellers have decided to leave this industry temporarily, they still have the opportunity to return to the cross-border e-commerce industry after adjusting their status and exploring new areas and business models.
Adapting to Change in Cross-Border E-Commerce
The evolution of the Christmas lights sector mirrors the journey of cross-border sellers—from initial success to intense competition—highlighting the overall growth pattern of the cross-border e-commerce industry. The entry of factory-based sellers has sharpened this competition, and the end of the initial growth phase has left many sellers struggling. Despite these challenges, opportunities exist for those who can adapt and transform.
Over the last decade, the cross-border e-commerce industry has undergone significant changes, and the initial growth phase has ended. Competition will intensify, and a new industry structure will emerge. Sellers who can adapt to these changes and adjust their strategies will likely succeed, while those unable to keep up may be pushed out of the market. The industry’s future holds both challenges and opportunities, with success depending on how businesses respond and capitalize on these dynamics.