Amazon Instant Pot declared bankruptcy, cross-border enterprises to lay out the future in advance!

Time: 2023-06-21 09:36

Almost every kitchen in North America has an Instant Pot.
"Household name" is the best way to describe this brand.
But just two days ago, Instant Pot's parent company formally filed for bankruptcy protection in a U.S. court.
Why did Amazon's culinary giants fall? Evan explains them all.

I. About Instant Pot
Instant Pot was invented by a Chinese father. Robert Wang, a CS PhD graduate, was laid off during the financial crisis in 2008. During his unemployment period, he began to work around the pot at home. So the idea of a smart pot came up. Robert Wang launched Instant Pot Generation in 2010.
Just as he was in despair, Amazon came along. Amazon is the online shopping platform for many people to know the pressure cooker, slow cooker, rice cooker and steamer all in one kitchen gadget, super functional. Instant Pot addresses the needs of North American office workers seeking delicious and healthy meals during their busy workdays by providing a quick, convenient cooking solution. It can be said that Amazon has completely changed the fortunes of Instant Pot.
The kitchen magic pot set a staggering sales record back in 2017 on Amazon Prime Day, selling 250,000 units in just 24 hours. On Black Friday of the same year, Instant Pot again set a single-day record of 320,000 units and $38.4 million in sales.
At this rate, Instant Pot is poised to become a global hit. Why did a rising culinary star go bankrupt now?

Ii. Analysis of the four bankruptcy reasons
1. Borrowing costs are high and cash flows dry up
Instant Pot began borrowing money from banks, expanding production and adding inventory after the company quickly increased sales through massive publicity on social media with strong word of mouth. But, due to tightening credit conditions and ultra-high interest rates following the Fed's rate hikes, the company's cash flow has suffered. With its current capital structure, the company can no longer continue as a going concern.

2. The newly due loan cannot be repaid recently
The final straw for Instant Brands was a recently maturing loan. The company has been in talks with lender and private-equity owner Cornell Capital to meet coming interest payments and a term loan due in the second half of 2023, according to court documents. When bank loans come due, supply chains and capital flows will be more difficult.

3. Due to the twists and turns of the epidemic, demand has decreased sharply
After Instant Pot declared bankruptcy, many netizens joked that it was because the pot was so good that there was no need to buy it again. Jokes are only half right.
First, the surge in shipping costs as Chinese ports closed during the pandemic has just offset the pandemic's increased demand for cookware for cooking at home. Second, after the pandemic, stay-at-home crazies ate out more often, reducing demand for kitchenware. Then, the Federal Reserve raised interest rates, inflation, the value of the money in the hands of consumers, naturally on the consumption is also prudent.
Ultimately, in the first quarter of 2023, Instant Brands' sales were down about 22% from the year-ago period, according to S&P Global data. It was the seventh consecutive quarter of declining sales.

4. Low price hit from Temu
Instant Pot sells for about $100 on Amazon. Looking at the whole Amazon, it can be said that there is no more perfect choice with such complete functions, reasonable prices and credible brands.

However, Temu has a similar reduced-size version of the pressure cooker that costs about $30. Although the functions are not as comprehensive as instant, but the basic functions are indeed all there. For those who are cautious after the pandemic, being able to buy pinti at a third of the price is delicious.

At this stage of development, cross-border e-commerce has entered the early stage of contention among a hundred schools of thought, and the situation has become very severe. In order to seize future market share, we should adapt to changes in advance, seize future opportunities, and lay a solid foundation for development.

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