In 2012 E-commerce was like a gold mine. It was so early on it was like the wild, wild west.
The market was out there for the taking because ecommerce was growing as demand rose around at a healthy 17% year on year in 2012.
But in comparison, year to year e-commerce growth in 2020 was a whopping 44.45% in Q2!
In 2012, there was not much competition.
Amazon FBA was starting to take off and people were just starting to realize the potential of tapping into Amazon’s growing marketplace and using their fulfillment services so you wouldn’t have to worry about picking and packing your own orders.
There were so many open markets with little to no competition.
If you sold on Amazon then you were like a pioneer venturing out in the wilderness looking for new territories to explore.
If you were able to plant a stake in a few niches, rank as a bestseller, and hold that position with a high quality product and solid reviews, you could have built 7 Figure businesses over the years.
I have interviewed a number of Amazon sellers on the 7 Figure Seller Summit who started around that time and did exactly that.
At that time incentivized reviews and allowed! Ranking on Amazon was not hard so long as you were willing to give away products for reviews.
Gradually it became harder as more and more sellers got word of the Amazon FBA opportunity… and competition increased.
There are now over 5 million of 3rd party Amazon sellers across all of its marketplaces as of 2020.Instead of just a few competitors, certain product niches became saturated with pages and pages of sellers selling seemingly the exact same item.
This led to price wars with a race to the bottom.
The worst thing that can happen in a price war is if you win one. Margins are next to nothing and you put all that work and time to get next to no results.
Then Amazon tightened up their rules and no longer allowed incentivized reviews. This made it harder for sellers to generate reviews and get social proof for products they launched.
Add to that, not everyone likes to play by the rules.
There are sellers that fake and manipulate reviews…
They hijack your listing to take your customers away from you...
They steal your product images…
They may falsely report your product as an adult product to Amazon to restrict your listing.
They might even falsely report YOU for infringing on their copyright to try to get you banned from Amazon, just so they can get a bigger piece of the pie.
“Black hat” tactics are becoming more common.
These shady sellers include the “infamous” Chinese sellers who seem to play by a different set of rules to succeed.
In fact I know of sellers who have armies of employees who register for dozens of Amazon seller accounts so they are not afraid of getting their account shutdown.
They have a lot more where that came from. This emboldens them to bend the rules.
They may buy confidential reports on their competitors off the black market.
And your Chinese factory may go direct to sell on Amazon to circumvent you!
Not only that, they are willing to take tiny margins leading to price wars.
The local Chinese online marketplaces Taobao and Tmall are fiercely competitive and most sellers are fortunate to earn 10RMB on a sale. Translate that to US Dollars that’s about $1.50 in profit!
No wonder Amazon is more lucrative when sellers can make $10 or more on a listing. That’s about 6X what they are earning on the local market and they are certainly willing to take less in profit when they are only making $1 in the local marketplace.
That’s why they are willing to price products so low.
But then 2020 happened.
COVID-19 was like injecting a growth serum into Amazon in 2020!
The pandemic led to lockdowns and social distancing.
Most people didn’t feel safe shopping in-store.
More and more people who had not made it a habit of shopping online became online shoppers for the first time.
In 2020, the number of digital buyers is expected to be 2.05 billion.
In fact even baby boomers (aka the elderly), gradually warmed up to shopping online as they feared that making a trip to the local mall or Walmart could pose health risks.
Previously grandma was worried about putting her credit card number online but now during the pandemic, even she is buying on Amazon!
She's even getting her groceries delivered to her home to save her a trip to the grocery store.
Even when we were to return to life as “normal” and we don’t know when that will be… I doubt grandma will go back to her old ways when she discovered the convenience of ecommerce.
That's a perfect example of how the consumer habits are changing. And they are here to stay in my opinion.
“We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back,” Nike CEO John Donahoe
Looking forward, we don't know even with a vaccine, assuming you can get it, if it's going to help get us back to life as normal.
There will be the DOUBTERS who think that the vaccine is going to end the pandemic and the growth spurt in ecommerce but they are the ones who will miss the boat..
2020 has shattered all sales records.
Now, in 2021 the scales continue to tip in the seller's favor.
Even though there are millions of ecommerce sellers, there's so much more demand for online shopping.
There’s a huge gap between the monstrous demand from online shoppers to the supply available online. In fact many of the traditional bricks and mortar retailers are STRUGGLING to adapt.
Case in point - J.Crew, Brooks Brothers, JCPenney, and many famous offline retailers have declared bankruptcy and are shutting down their stores.
Shopping malls are struggling to stay in business as the quarantine is really hurting their foot traffic.
What does this all mean?
Right now is the best time to get in on this e-commerce opportunity because regardless of how many sellers there are right now - they cannot keep up with the disproportionate spike in demand.
The PIE HAS GOTTEN A LOT BIGGER.
As you can see, there’s a bigger opportunity in ecommerce that you can seize right now.
Because there's more shopping online as consumer behavior is evolving from offline to online.
Also we don’t know WHEN things will go back to “normal”.
We don’t know how effective the vaccines will be in stopping and controlling the effects of the pandemic.
Uncertainties continue but that means that it’s certain that the trend to ecommerce shopping will continue.
Offline sales are drying up - you see all these stores going through bankruptcy, liquidation, and shutting down entirely.
Black Friday 2020 foot traffic declined by 52% year-over-year, while Thanksgiving declined 95% according to Bloomberg.
Even though nobody can predict the future, you can see by the offline retail bankruptcies, the change in consumer behavior to favor online shopping, and uncertainties when things will return to normal.
CONCLUSION: E-commerce growth is extremely likely to grow tremendously in 2021.
And the most dominant player in e-commerce is Amazon.
Amazon accounts for 47% of all US Ecommerce sales as of 2020 according to Statistica.
Just like in 2012, There will be BELIEVERS who are going to jump at this opportunity.
Others will be DOUBTERS. They will continue to sit and watch from the sidelines and regret it later on.
If you’re one of those that are taking action let me know...
What will you do to crush it in Ecommerce in 2021?
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