[ BDSN ] 🪦 End of FBA as we know it is near

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⚠️💀  URGENT SELLER ALERT: SEISMIC SHIFT in FBA AHEAD

Steven Selikoff, a former global business manager for Microsoft and someone with extension experience sourcing in China (he has lead seller sourcing trips there since 2018) has issued a dire warning to his clients.

Your world is about to change dramatically, and not for the better. Many are unaware of the impending shifts or how to respond, but he’s gathered insights through timely connections and direct conversations with industry leaders.

A lot of FBA businesses, especially those based on copycat and commodity products, are about to be crushed by low priced factory competition.

Key Information You Need to Know

Recent leaks about Amazon's direct discounts from Chinese factories are just the tip of the iceberg, and some details are incorrect.

Steve has known about these plans since February and has been strategizing since then. His insights come from various high-level meetings and discussions:

1. Amazon’s Discount Program: Contrary to rumors, some products in Amazon’s discount program will eventually be distributed from within the U.S., offering 2-day delivery options.

2. New Platforms Emerging: More competitors to Temu, Shein, and Amazon are on the horizon, with some already in beta. These platforms, like Temu, are testing U.S.-based shipping.

3. Walmart’s Strategy: Walmart is actively recruiting Chinese factories to sell directly to U.S. consumers, offering incentives and support, making it no longer a refuge from Chinese competition.

4. Chinese Government Involvement: The Chinese government is encouraging these moves as part of a broader economic strategy.

The launch of Amazon's Factory Direct Discount section is seen by some as the end for FBA, but the real threat is even more significant. An economic shift is happening, and it’s critical to adapt.

Want to be a little more scared? Steve has seen demonstrations of Chinese product research tools that identify products, and also use AI to recommend differentiation, and provide mock images and listings.

These tools however, do not understand what drives western appeal in products. They can suggest modifications based on review data and other analysis, but they cannot be creative and they cannot draw upon western cultural experiences to make decisions. You can, and you should.

The Chinese Government and Cross-Border E-commerce

The Chinese government views cross-border e-commerce as a vital part of economic recovery. This initiative is driving factories to sell directly to Western consumers, particularly Americans.

The goal is to boost the economy by leveraging the success of platforms like Temu and Shein, encouraging factories to lower prices and increase direct sales.

Beyond Amazon: Expanding Platforms

Chinese factories will have multiple channels to sell directly to U.S. consumers, including:

• Amazon

• Amazon Factory Direct Discount section

• Walmart

• Temu

• Shein

• Ali Express

• TikTok Shop

• Another invasion is coming of new e-com platforms from China

Over 60% of third-party sellers on Amazon are already Chinese, and more platforms are about to launch. This expansion will lead to intense competition within the e-commerce market share, which is currently about 15% of U.S. retail.

Most of this share is expected to come from Amazon, which is highly vulnerable.

• Amazon: 40-50% of $490 billion third-party sales in 2022 came from Chinese sellers

• Meta (Facebook): Chinese advertisers grew from 6.5% to 10% of revenue in one year

• Walmart Marketplace: Over 90% of international sellers are from China

What This Means for You

• Price is King: Price will be the main driver of e-commerce purchase behavior. Right now, online consumers spend 27% more time seeking a lower price than pre-covid.

• Marketing Excellence: Ensure your marketing is impeccable to capture customers on their first search.

• IP Protection: Focus on intellectual property strategies beyond patents, as many products are not novel enough to be patented.

• Physical Store Sales: Explore selling in physical stores, as they still account for nearly 90% of purchases.

• Product Differentiation: Think different. Make your products unique and appealing. Leverage Western cultural insights that AI tools cannot replicate.

• Customer Insights: Listen to your customers to make necessary modifications and improvements.

Many so-called experts might downplay these changes, but being prepared is essential. The landscape is shifting, and those who adapt will find new opportunities for success.

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💰 REIMBURSEMENT PROCEDURES CHANGED by AMZ

Significant changes that directly impact your FBA business are coming: the window for filing reimbursement claims with Amazon is about to shrink dramatically.

Amazon announced last week several updates that will take effect starting October 23. These changes will reduce the timeframe for filing certain reimbursement claims from 18 months to just 60 days.

Here’s a quick breakdown:

Current Status: Sellers currently have 18 months to audit and file reimbursement claims for lost, damaged, and customer-returned items.

New Status: Starting October 23, the window for filing these claims will be reduced to 60 days.

In addition, Amazon is improving its auto-reimbursement process for certain claim types, meaning they will now proactively reimburse sellers for items lost in fulfillment centers without requiring manual claims.

This doesn’t eliminate the need for auditing and filing claims for other discrepancies, especially with the reduced filing window.

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✌🏼 Holler at you again on Thursday …

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