November 24th this year is the fourth Friday in November, known as "Black Friday"
Black Friday is an important source of year-end performance for China’s cross-border e-commerce. Practitioners place photos of Amazon founder Bezos on their desks, three cigars and multiple fruit plates in front of them, praying for a "big deal", or they stay in the office all night checking sales data and adjusting advertising strategies in real time. Many sellers said that during Black Friday, Amazon's sales will reach 2 to 3 times the usual level.
Temu from China
Many sellers said that during the warm-up period, Amazon's sales were lower than expected and were the same as usual, or even lower. They joked, "Amazon only notified sellers, not buyers." The good news that two practitioners occasionally see comes from Temu sellers.
But on Black Friday, Amazon’s performance was still strong. Some merchants' sales have doubled or even tripled compared to usual. A seller whose order volume was mediocre during the warm-up period said he "got some relief."
At present, Amazon is still the largest e-commerce platform in the world and has an absolute advantage. According to the financial report, in the first three quarters of 2023, Amazon's online store net sales were US$161.3 billion; British media quoted Shein's "management introduction" presented to investors in February this year as saying that Shein's revenue target for 2025 is US$58.5 billion; according to "LatePost", Temu expects GMV this year
Affected by the decline in global consumption, Amazon's share is being leveraged. As an e-commerce giant with operations in more than 100 countries, Amazon has never lacked competitors, but this time it faces a Chinese platform that has an efficient supply chain and is good at "low prices." This Black Friday is also a microcosm of the changes in the global e-commerce landscape. The United States, one of Amazon's most important markets and the world's second largest e-commerce market, has become the focus of competition.
In previous years, the Black Friday event period of e-commerce platforms in the United States was usually Thanksgiving Day.
Compared with its Chinese rivals, Amazon’s big sale came later, with the warm-up only starting on November 17, and the total cycle lengthened to 11 days. This is the first time Amazon has extended its Black Friday sale.
"Low price" is the advantage of China's e-commerce platform, and it has been implemented in this promotion.
Temu, which was launched in the United States in September last year and specializes in extremely low prices, has a banner saying "price reductions up to 90%". Relying on the "full custody" model, merchants only need to send the goods to Temu's domestic warehouse and declare the supply price. Temu is responsible for subsequent operations, placement, and pricing. Temu buyers review the supply price and the requirements are no higher than that of domestic wholesale websites; at the same time, a "bidding mode" is launched so that low-priced products can receive traffic support. Therefore, this model is considered more suitable for factory-type, industry- and trade-integrated merchants, because they can control costs and give the lowest price; while traders who connect factories and buyers to earn the price difference have almost no room for survival. At the same time, "full custody" also gives the platform great autonomy, allowing it to make unified planning and offer low prices during the major promotion period.
On the homepage of Temu's Black Friday website, recommended products are priced below $3, and a $100 coupon is issued (lower left corner).
This Black Friday, Temu is giving out large coupons worth $100 and $200. An Amazon seller lamented that Temu’s discounts are like “charity.”
Amazon also focuses on "low prices." The platform has a price comparison system to ensure that the seller’s product price is the lowest on the entire network. But in June this year, according to US media reports, Amazon had removed Temu from the price comparison system.
An apparel factory owner who participated in Temu's Black Friday for the second time said that last year, Temu only opened sites in a few countries, and he sold 100,000 orders during Black Friday; this year, Temu's sites expanded to nearly 50, and he stocked up at 5 times the sales volume in the same period last year, with 25 styles and 50,000 pieces each.
Shein is also sprinting at full speed. An employee at Shein who has participated in Black Friday three times told "Financial Eleven" that Black Friday is Shein's most heavily invested promotional activity throughout the year. Since September, the company has entered sprint mode. Compared with previous years, this year’s discounts are the longest and most intense.
"It has never been like this. The cost input has not increased much, but the output target may be 2-3 times that of the past." The above-mentioned employee said, "The assessment indicators of various data are more precise. Not only do we have to compete with Temu in price wars and investment promotions, but we may even have to work overtime to be in line with Pinduoduo."
The original frequency of one major promotion and one regular promotion per month has also been changed. The number of Shein's regular promotions has more than doubled, and prices are also constantly updated targeting Temu.
TikTokShop opened its US site in September this year, and the discount for this big promotion is as high as 50%; for participating merchants, the platform provides 20-50% discount subsidies. An Amazon seller said that since October, many TikTok sellers around him have seen their shipments increase three or four times. People from cross-border logistics companies also told him that TikTok’s logistics orders are increasing. According to the e-commerce data service platform EchoTik, in the week of Black Friday, the total GMV of TikTok Shop in North America reached US$61.2 million, a month-on-month increase of 131%; the average daily orders were US$8.7 million, 2.3 times that of last week.
Among several large e-commerce markets in the world, the European market is not unified, e-commerce in Southeast Asia is growing rapidly but the policies are unclear, and the Middle East and Latin America are emerging markets that are growing but still immature. The United States has a large enough market size and complete infrastructure. In addition, it is generally believed that succeeding in the U.S. market and then promoting it to other relatively underdeveloped regions around the world is a "dimensionality reduction strike." Various factors have made the United States become the main battlefield for overseas e-commerce.
The above-mentioned Shein employee said that the United States and Latin America are Shein’s focus for Black Friday this year. The United States is the country with the largest number of TikTok users; Temu was launched in the United States as its first stop. According to data from the Nihon Keizai Shimbun and the American research company data.ai, 41% of its users are from the United States.
Amazon is the dominant player in the U.S. market. It relies on its complete logistics system, Prime membership system, and years of accumulated brand recognition to firmly grasp its market share. Data from eMarketer, a third-party organization, shows that in 2022, Amazon will account for 37.8% of the U.S. online retail market, which is six times that of the second-place Walmart. Today, Amazon’s share is being leveraged. Many sellers said that during the warm-up period, Amazon sales were lower than expected.
One seller said that Amazon's peak season storage fees are three times the usual, and advertising fees are twice the usual. However, during the warm-up period of this year's big promotion, the order volume did not increase; and in the previous two years, the overall sales volume in November was three times the usual.
Another Amazon seller said that during the warm-up period, the sales of most products in his store were the same as usual, or only increased by a few tenths of a time. The discounts during this period are the same as those on Black Friday, and the profits of single products have been compressed, but the sales volume has not changed much, which means that sales are lower than usual.
"The single volume has not exploded, but the advertising has." She feels that this year's click conversion rate is even lower. Amazon’s on-site advertising system charges per click. The same advertising budget is also spent in a single day, which means that the number of single clicks is almost the same, but the number of orders brought is less than in the previous two years.
On Black Friday, Amazon returned to strength. The order volume of many Amazon US market sellers has doubled or even tripled compared with usual times. One seller’s sales increased by 40% compared to last year.
As of press time, Black Friday has ended, but Amazon’s sales are still going on and will last until Cyber Monday next week. After Cyber 1
A report from consulting firm McKinsey in February this year showed that American consumers are reducing consumption. 80% of respondents said they are changing their shopping behavior, such as giving up expensive brands, changing purchase quantities and packaging sizes; 81% of consumers will research and browse multiple channels before purchasing, including physical stores, browsers and apps. China’s overseas platforms, which focus on low prices, just meet this trend.
Some people believe that Amazon is better at branded products with high customer unit prices, while Temu is good at low customer unit price products, and the two sides are misaligned in competition. But one person who sells home furnishings at low customer prices on Amazon disagrees. She believes that the emergence of Temu will be a big blow to Amazon, because Amazon needs stable traffic, and only daily necessities and household products with high repurchase rates are what consumers often search for and buy frequently, and the traffic they bring is stable.
Shein, which started out as a women’s clothing brand, is also expanding its categories and increasing its competition for this type of “stable traffic”. The above-mentioned Shein person said that at present, in addition to clothing, Shein gives more exposure and greater discounts to home furnishings and daily necessities.
The peak season for cross-border e-commerce in the second half of the year begins in October, with strong shopping demands from overseas users starting from Thanksgiving, going through Halloween, Black Friday, Cyber Monday, and continuing until after Christmas. Overseas transportation takes time, and sellers usually start measuring sales two or three months in advance, prepare large quantities of goods, and ship them to overseas warehouses to ensure that there is no shortage of goods during the holidays. If Black Friday sales are poor, sellers will have to bear huge warehousing costs. Therefore, after a major sale, unsold goods often have to be destroyed or sold at low prices. One of the sellers said that some time ago, many Amazon sellers successfully cleared goods through TikTokShop.
The wrestling strategy between platforms may seem grand and distant, but when it falls to sellers, it is a real problem. During big sales, sellers stay up late in the office. "They stayed up all night guarding the store and guarding the New Year's money," said a factory owner who supplies cross-border sellers on multiple platforms.
("Caijing" researcher Liu Ding also contributed to this article)