The US dollar exchange rate fell back to the 6 era, and the seller said: I regret not withdrawing cash

In the cross-border e-commerce industry, the exchange rate of the RMB against foreign currencies such as the U.S. dollar and the euro is a key focus of industry players. Short-term exchange rate changes may result in exchange gains or losses of tens of thousands of yuan or even more.

Yesterday, the US dollar exchange rate officially fell out of the 7 range and returned to the 6 era. Some sellers did not expect 7.5, but missed the high point of 7.3, which made them feel upset. At the same time, the order volume declined after Black Friday, especially in the past two days. The successive blows made the US site sellers somewhat frustrated.

In order to increase platform traffic, Amazon has recently increased its external advertising efforts, which may improve sellers' sales, which is exciting.

The US dollar exchange rate returns to the 6 era

Yesterday morning, the offshore RMB exchange rate against the US dollar broke through 7.01, 7.00, and 6.99 successively, up more than 700 basis points from the previous trading day's close; followed closely by the onshore RMB opening higher. As of 18:00 on December 5, the offshore RMB exchange rate against the US dollar was 6.9468, and the onshore RMB exchange rate against the US dollar was 6.9530.

As of the time of publication, both onshore and offshore RMB exchange rates against the U.S. dollar remained around 6.96. After more than two months of the U.S. dollar exchange rate being above 7, it has come to a temporary end.

The "rapid slide" of the US dollar exchange rate caught many sellers off guard. " I wanted to buy it back to 7.3, but it dropped to 6.9." "Last week, when it was 7.2, I was thinking about 7.3, but now it's different." "I didn't care about 7.29 before, but now I can't afford 6.9." People are full of regrets for not being able to buy at a higher price.

Exchange rate fluctuations directly affect the amount of exchange funds and retained profits. Sellers who cashed out last week can be said to have made a profit. Regarding the sharp drop in exchange rates in recent days, some sellers suggest that those who need money urgently should withdraw money as soon as possible, regardless of the exchange rate; those who are not in a hurry to use the money are still advised to withdraw money in batches to buffer exchange losses.

In fact, cross-border sellers do not have very high expectations for the exchange rate. Some of them believe that it is acceptable if the exchange rate can stabilize at around 7. What they fear most is that it will drop to 6.3 like at the beginning of this year. This is almost an unbearable pain, and profits are constantly squeezed out like water in a sponge.

Foreign trade has also been impacted. A foreign trader said that the exchange rate broke 7, and the orders he received last month had no profit. Another foreign trader was in a similar situation. He received two orders at an exchange rate of 6.9, which were shipped in mid-December and early February respectively. The profit was not high to begin with, and he hoped that the exchange rate could remain stable at 6.9. However, foreign trade can still negotiate prices, but cross-border e-commerce does not have such much room for maneuver.

In fact, against the backdrop of flat sales and falling profits this year, the continued rise in the US dollar exchange rate in the second half of the year has helped many companies maintain their bottom line. However, if the US dollar exchange rate stabilizes below 7, sellers in the industry will face a significant exchange rate difference next year, and this cost will immediately affect cross-border e-commerce pricing and profits. Judging from the current situation, raising prices for sales is like sailing against the current, which is quite difficult.

According to analysis by professionals, the strengthening of the RMB exchange rate is due to the combined influence of internal and external factors. Internally, the domestic policy measures to stabilize growth continue to take effect, boosting the market's confidence in the stabilization and recovery of the domestic economy; externally, the US inflation index continues to decline, and the Fed's expectations of slowing down the path of interest rate hikes have weakened the support for the US dollar, and the RMB exchange rate has begun to rebound strongly.

Chang Ran, a senior researcher at Zhixin Investment Research Institute, believes that the RMB exchange rate may return to a normal two-way fluctuation trend in the future, and the RMB exchange rate may stabilize and appreciate in 2023. Sellers can refer to the exchange rate changes and combine them with the subsequent industry situation forecast to formulate development plans for next year.

As the exchange rate fluctuates, the profits of Amazon sellers will be further reduced. The display results on the Amazon advertising homepage also give sellers more opportunities to advertise. With large advertising investment, the sellers' operating costs will also increase, which will in turn affect profits.

Are Amazon search results reducing shoppers' confidence?

Amazon has long been the go-to place for online product searches. But a new report from Bloomberg News says that Amazon no longer seems to be giving customers what they want because ads are changing the real search results.

Some customers found that the product displayed when searching for "cat bed" was not the product they wanted, but a related ad product with a dog in the picture instead of a cat. In the first five pages of search results, more than half of the products were either ads or Amazon's own products.

A study by Profitero found that Amazon shows sponsored product ads on its first page of search results at twice the rate of Walmart and four times the rate of Target.

A report from Recode mentioned that Amazon's advertising business grew 58% in 2021, making it the third largest online advertising seller. A major seller on the platform said that to be successful on Amazon today, 10% to 20% of sales must be spent on advertising.

Stacey Mitchell, co-executive director of the Institute for the Advancement of Science, said Amazon can "change and direct purchasing behavior" by prioritizing its own brands in search results while relegating non-Amazon products to lower positions in the results.

Foreign media also launched a survey asking consumers: Do you think Amazon's practice of displaying ads in search results has reduced shoppers' confidence in the site?

The survey has not yet concluded, but Amazon’s advertising revenue growth is indeed very rapid. Many sellers have seen a significant increase in advertising costs, which in turn has increased operating costs. Some sellers have even said that they would not be able to place orders without advertising.

Sellers need to advertise on the platform. With the entry of low-priced players such as TEMU, Amazon may have also felt the pressure of "traffic being snatched away" and began to spend huge sums of money on advertising on social platforms.

Amazon reportedly plans to resume advertising on Twitter for about $100 million a year while it waits for Twitter to make some security changes to its ad platform.

Since Musk took over Twitter, advertisers have stopped placing ads due to factors such as uncertainty, and advertising revenue is the mainstay of Twitter's revenue. Recently, Twitter sent an email to advertisers, saying that the company will launch the "largest advertiser incentive program ever" in December, and will reward additional exposure if advertisers invest a certain amount of money.

Advertisers returning to Twitter may include Amazon, but people familiar with the matter said Amazon has never stopped advertising on Twitter.

As Amazon invests in advertising on social media, the overall traffic on the platform is expected to recover further. With Christmas just around the corner, some sellers may also see a rebound in sales during this peak season.

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