Once upon a time, cross-border e-commerce was the outlet that everyone yearned for to create wealth.
Catalyzed by the epidemic, global online consumption has exploded, and cross-border e-commerce platforms have been booming. Countless entrepreneurs, factory owners, and office workers have flocked to the track, as if “you can place orders by opening a store and make money by selling goods.”
In just a few years, the industry has completely changed: the crazy explosion turned into a tragic involution, about half of the merchants struggled to exit, and the once blue ocean turned into a red sea of hand-to-hand combat.
This is not alarmist, but a true portrayal based on industry data and market status.
Looking back from 2020 to 2022, cross-border e-commerce ushered in a golden period of explosion.
Global consumer demand is shifting online, logistics and payment systems are gradually improving, platform policies are loose, and low thresholds and high returns have attracted a large number of players.
At that time, the gross profit margin of popular categories was generally between 30% and 50%. Even without refined operations, you could still get a share of the pie by simply distributing goods. The story of “cross-border wealth creation” spread throughout the Internet and became a hotly discussed entrepreneurial track among the people.
When the tide goes out, we find out who is swimming naked.
Starting from 2023, the industry will take a sharp turn, and the involution will become more and more intense. By 2025-2026, the wave of elimination will break out in full force.
According to institutional survey data, only 25% of sellers achieved positive revenue growth, 50% of sellers experienced a decline in revenue, 37% experienced a sharp decline, and 64% of sellers experienced shrinking profits.
This cruel reshuffle results from four layers of pressure.
The first is a homogeneous price war. A large number of sellers are concentrated in the 3C, home furnishing, clothing and other standard product tracks. After a product becomes popular, it is quickly imitated, and profits are reduced to less than 5%, falling into the vicious circle of “the more you sell, the more you lose”.
Second, costs have risen across the board. Advertising CPC costs have doubled, logistics costs remain high, and overseas warehouse rental and labor costs continue to rise, eating into the already meager profits.
The third is that the compliance threshold has been raised, and tax and intellectual property supervision in Europe and the United States have become stricter. It is completely unfeasible to exploit loopholes, and it is difficult for small and medium-sized sellers to bear the compliance costs.
The fourth is that the platform rules are tightened, and the platform is tilted towards brands and high-quality merchants. Accounts that sell goods and low-quality accounts are frequently restricted and closed, and their living space is continuously squeezed.
Many people mistakenly believe that the cross-border e-commerce industry is shrinking, but the fact is exactly the opposite: the overall scale of the industry is still growing, and it has just entered the “high-quality development” stage from “barbaric growth”.
Most of those who have been eliminated are businesses that lack supply chains, have no operational capabilities, and rely on speculation and arbitrage; while those who have persisted are players who have deeply cultivated the supply chain, focused on brand building, and achieved compliance and refined operations.
Leading sellers rely on their scale advantages and professional capabilities to stabilize the market, while small and medium-sized sellers are looking for vitality in differentiated and niche categories. The industry is completing a healthy clearing.
In the face of involution and reshuffle, there is no need to be overly pessimistic, nor should one enter the market blindly.
Cross-border e-commerce is still a high-quality track for domestic companies to go overseas, but the logic has completely changed: the era of relying on dividends to make money is over, and the era of winning by relying on professionalism, compliance, and differentiation has arrived.
For sellers who are still holding on, they need to focus on segmenting the track, strengthening product strength, and doing compliance and cost control to get through the cycle; for novices who want to enter the market, abandon the fantasy of getting rich overnight, first accumulate supply chain and operational experience, and then steadily deploy.
No industry can escape the law of “rise – explosion – involution – reshuffle – maturity”, and cross-border e-commerce is no exception.
The elimination of half of the businesses is not the end of the industry, but the starting point of upgrading.
Eliminate backward production capacity and retain high-quality players, and the market will be more standardized, healthier and more sustainable.
