(Report produced by Shen Wan Hongyuan Research, Zhao Lingyi, Cao Dunxin, Li Xiulin).
China's e-commerce development overseas: long-term and far-reaching, thousands of sails competing
After more than 20 years of development, China's e-commerce industry has gradually developed and enriched its business model from B2B to B2C and self-operated models, and the ecosystem has shown a trend of diversification. Nowadays, China's e-commerce has completed the development process from primitive to mature, and has established a new pattern of commerce and trade from a global perspective. In the context of the increasing penetration rate of global e-commerce, cross-border e-commerce has increasingly become a new driving force for China's foreign trade growth and economic development.
China's cross-border e-commerce industry has gone through four major stages of development, and the industry ecology has been iterated many times. With the continuous improvement of China's supply-side product power and brand power and the weakening of constraints from all parties, China's cross-border e-commerce industry has entered a mature and diversified stage of development, and three-dimensional and high-quality are the new themes of current development.
The cross-border e-commerce market is booming, and the volume is expected to usher in new breakthroughs in the future
In 23 years, the high growth of cross-border e-commerce will continue, and the industry will be booming, and the industry scale is expected to exceed 10 trillion yuan in 25 years. Entering 2023, China's cross-border e-commerce will benefit from the rise of cost-effective demand in the global market and the support of China's high-quality ** chain to achieve rapid growth against the trend. According to iResearch consulting data, the CAGR of the cross-border e-commerce market from 2017 to 2022 will reach 251%, with a projected CAGR of 164%, and the market size will exceed 10 trillion yuan in 2025. According to the data of the General Administration of Customs, in the first three quarters of 23, China's cross-border e-commerce exports were 13 trillion yuan, a year-on-year increase of 177%。Looking forward to 2024, the global e-commerce industry will face new opportunities and challenges, and the growth potential of more channels and models needs to be tapped urgently.
The resurgence of overseas fever: price demand is pulled, and international environmental differences create opportunities for China
In 2023, the popularity of China's cross-border e-commerce will surge, the process of major e-commerce going overseas will accelerate, and the markets in Europe, America and Southeast Asia will blossom in many places. In 2023, China's e-commerce platforms will increase their overseas business, continue to advance in Europe, America and Southeast Asia, and continue to expand their business scale in overseas markets. SHEIN, Temu, TikTok Shop, Ali International Digital Commerce and 1688 and other parties have taken frequent initiatives, and the differences in the domestic and foreign environment have created a new stage of window period for Chinese e-commerce to go overseas, and Chinese Internet e-commerce companies are gradually building a new growth curve.
Industrial advantages + policy support, China's commodities have obvious advantages in going overseas
Specifically, the advantages of China's e-commerce chain are mainly reflected in the following links:
1) Backed by a mature domestic industrial chain, product cost advantage is the basis of the first-class strategy. According to the Ministry of Industry and Information Technology, according to the statistical classification of the national economy, China's manufacturing industry has 31 categories, 179 medium categories and 609 sub-categories, which is the world's most productive industrial category and the most complete industrial system. Although in recent years, the low-end production capacity of China's manufacturing industry has gradually shifted to Southeast Asian countries, but relying on the highly developed first-class chain system and advanced technical level, superimposed on the flexible mobilization and response ability of China's manufacturing industry, China's advantages in the international export market are still irreplaceable, and China's e-commerce will be the first to get the opportunity to rely on the domestic first-class chain and the first-class advantage to output high-quality operation and service capabilities.
2) Domestic and foreign policy assistance + overseas platform take the initiative to open up the logistics chain, and the reduction of the service cost of the whole chain is the key to the best strategy. A series of tariff reductions and exemptions, export tax rebates and other policies of China's leading countries, as well as the strong tariff reciprocity policies of some overseas countries, are important supports for Chinese brands to enter the overseas e-commerce market. In terms of platform, all parties are actively deploying, upgrading overseas full-chain services, and promoting overseas warehouse construction plans, and the full-chain service cost is expected to continue to be compressed. J&T, Cainiao, and JD Logistics have strengthened their overseas layout and continued to improve their cross-border supply chains. Temu has deeply cultivated the "full custody model", reduced the product circulation links, and further enhanced the platform's strength.
China's cross-border e-commerce is expected to drive the online rate of the global market
In terms of categories, according to Euromonitor, we screen categories such as clothing, shoes and hats, beauty and personal care, consumer electronics and daily necessities that are suitable for cross-border e-commerce. Apparel, footwear and consumer electronics are highly online in major markets in North America and some Europe, and consumers are highly receptive to cross-border e-commerce. As for daily necessities represented by home care products, there is a certain gap between the global online level and that of China. We believe that the essence of China's e-commerce going overseas is not to participate in the competition in the stock market, but to promote the increase of the online rate of overseas markets and the expansion of the global e-commerce market through the advantages of Chinese goods in the corresponding fields and the advantages of platform efficiency.
North America: Offline confrontation discount retail, there are policy risks in the future
Offline retail competition: According to Euromonitor data, the discount retail industry (warehouse supermarket + hard discount store + grocery store) in the United States has grown steadily, reaching $303.1 billion (+8% yoy) in 2022, with Costco, SAM, Dollar General, ALDI and Dollar Tree accounting for 36%, 19%, 12%, 7% and 5% of the market share, respectively. According to Earnest Analytics, Temu's market share in the U.S. discount retail category continued to increase from January to November, while the share of Dollar General and Dollar Tree continued.
Relevant policies: According to the Ali Research Institute, in February 2016, the United States amended Article 321(a)(2)(c) of the Tariff Act of 1930 to raise the maximum value of duty-free imported goods per person (per company) per day from $200 to $800, which greatly promoted the development of cross-border e-commerce. However, in the context of Sino-US competition, the "$800 line" is facing adjustment pressure, and at the same time, the United States attaches great importance to intellectual property rights and personal information security protection, and there are certain policy risks in the subsequent development of China's cross-border export e-commerce.
Latin America: Discount retail is booming, and the cost of compliance is rising
Offline retail competition: According to Euromonitor data, the scale of offline discount retail in Latin America reached 90.3 billion US dollars in 22 years, about the scale of e-commerce (145.8 billion US dollars)2 3, Walmart's local hard discount brand Bodega Aurrera and Carrefour's warehouse member supermarket brand Atacad O accounted for 14% and 12% of the market share. Consumption in major categories is largely dependent on offline, and the share of discount retail channels under categories such as daily necessities is even higher than that of e-commerce, and Chinese platforms are expected to compete with various discount retail channels in Latin America.
Related policies: The overall tariff environment in Latin America is relatively loose, but policy obstacles are currently strengthening. Brazil, the most important e-commerce market, on August 1, 23, Brazil's tax compliance program officially came into effect, and cross-border packages with a value of less than $50 on participating platforms are exempt from customs duties, but are subject to a 17% ICMS tax;Cross-border parcels valued at $50 and above are subject to 60% customs duty, plus 17% ICMS tax. There is a possibility of abolishing tariff preferences in the future, and the cost of cross-border e-commerce is expected to rise further.
Significantly reduce operational barriers, and fully managed to promote the operation of the flywheel to go to sea
Reducing the barriers to overseas operation + fast starting volume is the main attraction of the model, which is good for factory-type businesses. According to the Ministry of Commerce and *** data, the number of online retail platform stores in March 23 was 239220,000, and 59 foreign trade enterprises with import and export performance in 202280,000. Under the full custody mode, the platform opens up a "full-link" cross-border channel for businessmen to operate, warehousing and logistics, and merchants only need to focus on the product and the chain itself, which greatly reduces the threshold for going to sea. At the same time, with the advantage of the fast speed of platform traffic orders, it helps to revitalize the remaining production capacity. The dual advantages are expected to attract domestic businesses to settle in, especially for factory-based foreign trade merchants whose production advantages are stronger than brand advantages, and the advantages of the platform chain are further consolidated.
The fully managed model drives the flywheel to go to sea. A large number of suppliers who lack the ability to operate overseas have entered, and the platform has the right to control the price of products of the same specification to continuously implement cost performance, improve consumer experience, and attract new traffic, so as to drive the platform's "traffic-seller-lower-cost-effective" flywheel in the domestic market to operate successfully.
AliExpress took the lead in creating semi-custodial and retained the freedom of merchant operation
In August 23, AliExpress pioneered the semi-custody model, which is different from full custody mainly in that the merchant has the pricing power and is responsible for sales. Under the semi-custodial mode, merchants enjoy pricing power and operation rights, effectively sharing the load pressure and risks of platform operation. In September, Amazon officially announced the release of the Amazon **Chain Overall Solution (SCBA), which integrates FBA, AGL, AWD, MCF and other Amazon superior products to create an end-to-end and integrated **chain service. On the platform side, semi-custodial gives merchants the freedom to operate, activates the supply side, and attracts self-operators and brands. In the long run, the semi-custodial model will inject a large amount of supply from operators, small and medium-sized sellers and brand owners, promote ecological prosperity, and achieve comprehensive product richness. On the merchant side, it returns to the B2C model to directly reach consumers, and has high requirements for product differentiation. Under full custody, the relationship between merchants, platforms, and consumers is similar to B2B2C;With the return of semi-custodial to B2C, merchants can gain insight into consumer needs, and the importance of product differentiation has increased.
Fulfillment: The main cost comes from international shipping + last-mile delivery
International transportation and last-mile delivery are the core expenses of cross-border fulfillment costs. According to the statistics of iResearch, in the main links of cross-border logistics, the cost of first-leg pick-up, international transportation, and last-mile delivery accounts for %-60% respectively.
Overseas warehouses have advantages in logistics and distribution speed and cost. According to the data of the 4PNT quadripartite network, the logistics cost of 1kg of goods export, after considering the freight discount, the actual logistics cost of postal parcels, international special lines, commercial express delivery, and overseas warehouses are 73 99 264 22 yuan, from the perspective of delivery time and logistics costs, overseas warehouses occupy an advantage in speed and cost, and international special lines are in the middle of speed and cost. According to iResearch's statistics, in 2019, the direct mail model accounted for 60% of the cross-border e-commerce logistics market, and the overseas warehouse model accounted for 40%. In 2020, international lines accounted for 32% of the direct mail model.
Pinduoduo: Attacking temu, taking cost performance as the incision to go to sea
Temu has become a new growth engine for Pinduoduo. With the support of overseas business, Pinduoduo's 23Q3 revenue exceeded expectations. Temu is expected to become the second growth curve, further opening up the company's growth and profitability space. According to 36Kr and LatePost, the sales of Temu in 23Q3 exceeded $5 billion, and a turnover target of $30 billion was set in 2024. Temu expands strongly. According to the data of 36Kr, surging and latepost, after temu was launched in the Philippines and Chile in August 23 and Malaysia in September, Temu has opened sites in 48 countries around the world, including the United Kingdom, the United States, Germany, France, Japan and South Korea, Mexico, Israel, etc., including Asia, Europe, North America, Oceania, Latin America and many other regions.
Alibaba: Advance layout of international business, multi-platform collaborative coverage
The international business started early, and the multi-country platform was collaboratively deployed. Alibaba International Station (AlibabaCOM) was founded in 1999 and specializes in B2B cross-border **In March 2023, Alibaba International Digital Business Group (AIDC) was established to operate multiple retail and wholesale platforms to support brands, merchants and SMEs to serve global buyers and consumers through a wide range of product choices and differentiated customer experiences, including an international retail business composed of Lazada, AliExpress, Trendyol, Daraz, and Miri**ia;and Alibabacom as the representative of the international wholesale business, successfully achieved global multi-platform coverage. On December 4, Alibaba's 1688 platform announced that it plans to enter the South Korean B2B market in February next year, further expanding its international business.
SHEIN: The low-price strategy strengthens marketing and promotes the localization of the ** chain
Create an on-demand flexible ** chain to maximize resource utilization. SHEIN makes full use of AI big data technology to track fashion trends in real time and maintain a balance between products and market demand. According to the company's official website, under the self-operated mode, through the digital and highly automated global ** chain and warehousing system, 200 ** can be quickly completed per day, pattern making, production, production, and the delivery cycle is as fast as 7 days. The efficient operation of SHEIN's on-demand flexible ** chain can ensure that the products are organically unified in terms of fashion, cost-effectiveness, and delivery speed, and provide consumers with a flexible and sustainable shopping experience.
This article is for informational purposes only and does not represent any investment advice from us. To use the information, please refer to the original report. ）
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