Image source: Figureworm Creative
The last three months of 2021 seem like a life-or-death affair for most cross-border sellers. At a time when it should be the peak season carnival, the cross-border circle has set off a plunge in orders, a cliff collapse, and even rumors that sellers are forced to sell houses to survive in response to the crisis, and even the Shenzhen sale has been involved in this "storm".
And this storm also affected the VAT industry. A few days ago, according to the seller's revelations, it was rumored that a VAT tax representative in the circle ran away, and thousands of sellers were unfortunately recruited. What is the cause of the incident?
Costs soar! Profit slash! Who moved the net profit of cross-border sellers during the peak season?
It is the peak season of cross-border e-commerce sales, but on closer inspection, the entire cross-border circle this year is unusually quiet. Compared with previous years of crazy "involvement", most sellers this year seem to have chosen the "lying flat" state.
With the rapid development of the global Internet industry and the gradual improvement of the cross-border e-commerce system, the logistics, payment and customs clearance problems that restrict the development of cross-border e-commerce have been properly solved, and it seems that China's export cross-border e-commerce industry has entered a golden period and shown a rapid growth trend. But at the other end, the downgrading of overseas consumption, exchange rate fluctuations, accelerated market competition, coupled with the sharp rise in international logistics costs, are also real problems that cross-border sellers have to face. In the long cycle from production to sales, the links are interlocked, and the seller is about to face huge losses if he is not careful.
According to Hugo's cross-border observation, the financial reports of cross-border e-commerce listed companies in the first half of 2021 show that although the sales of some companies show a certain growth trend, the net profit is not ideal, and even declines. For example, the well-known cross-border sale of a tree was seriously affected by Amazon's suspension, and its parent company Tianze Information reported in the third quarter that the company lost 1.156 billion yuan in the first three quarters. Huading Shares, the parent company of another brand, Tongtuo Technology, lost 22.35 million yuan in non-net profit in the third quarter, down 146.02% year-on-year, and the company said that the main reason was due to the loss of the cross-border e-commerce sector due to the Amazon incident and the impact of Vat tax in Europe. For another example, the results of the first three quarters released by Anker Innovation show that the revenue in the third quarter was 3.055 billion yuan, an increase of 22.63% year-on-year; the net profit was 237 million yuan, down 7.4% year-on-year. The quarter's profit increased negatively year-on-year, and the high cost of shipping and the increase in raw material prices were important reasons. In addition, there are other listed companies that show signs of slowing down the growth rate of net profit despite maintaining a growth trend in operating income.
With the continuous influx of competitors and new competitors in traditional industries, large enterprises in cross-border e-commerce are also facing double suppression. In order to survive better, some large sellers have also begun to promote business transformation, reducing the sales scale of channels with a long accounts receivable period, resulting in a decrease in accounts receivable; on the other hand, the sales platform with low gross profit, low inventory turnover rate and long payment collection cycle has taken the initiative to adjust the sales channels, and clean up the sluggish inventory of the original channels, while increasing the advantages of the channel new products, these new measures together lead to a decrease in profits.
According to industry analysts, since the second half of this year, overseas purchasing power has declined, and the continuous influx of trade-oriented sellers has led to intensified product price competition; the comprehensive impact of factors such as the strengthening of overseas supervision and The European VAT tax; the comprehensive cost of product procurement, logistics, customs declaration and so on; the increase in advertising costs of cross-border sellers... These can all affect seller profits.
The data also further supports the real situation of the disappearance of the net profit of cross-border sellers. According to the "2021 China Cross-border E-commerce Development Report" released by Ebang Think Tank, the operating conditions of about 300 cross-border enterprises were collected and analyzed, of which 59% of them settled on Amazon. In terms of profits, 54% of enterprises have a profit margin of more than 10%, of which 10% have a profit margin of more than 20%. In the past year, cross-border e-commerce companies with profit margins of less than 5% accounted for 16%. The decline in profits is what many sellers have reflected this year.
Amazon has another new rule! In the peak season, sellers are anxious, and the cost is rising...
Large sellers are still "tightening the front line", while small and medium-sized sellers are in a critical moment in the peak season, how will net profits be affected?
A few days ago, some European sellers received Amazon emails and then responded to the attack. The email asked for the collection of an EPR registration number to verify the seller and stressed that in any case, the packaging registration number needed to be registered in Germany. As soon as the email came out, it immediately triggered the anxiety of many sellers.
Image source: Courtesy of the seller
"When is it better to apply for an EPR? What EPR do I need to apply for? How does not apply affect? In addition to many questions, there are also sellers who admit that the policy has invisibly added a peak season operating costs, which is undoubtedly worse for small and medium-sized sellers with meager profits.
According to Eurostat, EPR (Extended Producer Responsibility) is an environmental policy. Producers are held accountable for the entire life cycle of the goods launched on the market, from the design of the goods to the end of the life cycle of the goods (including waste collection and disposal). This policy clarifies the responsible subjects in the process of waste recycling, recycling and final disposal of products from production to consumption. It mainly involves two countries, Germany and France.
It is reported that the current packaging law, battery law, WEEE, etc. are all part of the legislative practice of EPR policy in Europe. It can be seen that whether it is packaging or batteries, etc., they are part of the product life cycle process. Whether producing goods that meet the extended producer responsibility requirements in the corresponding country, importing goods that meet the extended producer responsibility requirements in the corresponding country/ or selling goods that meet the extended producer responsibility requirements in the corresponding country and not having a company in that country. Compliance with any of the above three conditions requires compliance with the EPR.
So, what should sellers who receive emails do at this stage?
1. Check whether the products produced or sold by yourself meet the EPR commodity classification;
2. Confirm that the products you produce or sell involve several categories;
3. Calculate the number of relevant stores that need to be declared;
4. Register the laws and regulations involved, and mark the relevant marks on the products and packaging, and declare them regularly;
5. Fill in the registration certificate on the platform (usually there is a registration certificate and registration number).
If the EPR registration is not completed as scheduled, Amazon will be obliged to suspend the seller's non-compliant products listed under the EPR product category. Although the mandatory effective date is 2022 and 2023, everyone across the border knows that Amazon has been strictly investigating compliance. Therefore, to eliminate the risk of removal, registration is urgent. Recently, the European Tax Pass is also carrying out the EPR explosion activities, the price of the German packaging law and the French packaging law is very beautiful, and those who need it can search the official website of the European Tax Pass for more details.