In layman’s terms, most cross-border e-commerce operations consist of buying and selling goods. Sometimes the model is a little too academic. Sellers have different sizes and there are not many models to choose from. Small sellers make a lot of money. It is also common to point out logistics fees. If you have to summarize, there are probably several types such as wholesale and retail, self-produced and sold, TP (Third Partner), OEM/ODM, and DropShipping.
Wholesale is online distribution based on a certain sales volume, purchasing goods at low prices in the form of stocking up. B2B and most sellers will use this model. In order to buy goods at a more favorable price, you need to buy in large quantities as much as possible, but you need to have enough sales volume to make up for the sunk costs of initial investment in procurement, inventory, and logistics. When dealing with peak seasons, promotions, and multi-category traps, many sellers are unable to bear the burden of cash flow. After purchasing, if you resell to other sellers, the profit is usually lower, but this has become an important business for many large sellers, that is, dropshipping and secondary distribution.
Self-produced and self-sold is easy to understand, it is M2C, integrating design, production, sales, operations, etc., which is most suitable for brand owners. It seems that the circulation link has been greatly reduced, but from the perspective of social division of labor, this situation is not common. As mentioned earlier, upgrading and transformation are not all OEMs to do e-commerce. What factories need to do is to reduce costs and improve quality. Therefore, many manufacturers and brands directly outsource their online foreign trade retail channels, that is, find professional e-commerce companies to operate them on their behalf. E-commerce companies engaged in agent operations usually manage multiple upstream brands and are authorized to fully manage online stores and multi-platform management.
OEM manufacturing means paying an OEM factory to produce goods or ODM, and then affixing your own trademark. The consignor can get the goods at a very low price and then sell them at a high price. At this time, the seller is the brand owner and needs to control the entire supply chain, from design, finding factories, quality control, warehousing to transportation, but the profit is also high. The finished products can be sold by yourself or sold to wholesalers or dropshippers to bring in more sales. This model requires a large upfront capital investment, the development of relevant capital plans, and maintaining a stable contract with the manufacturer.
Dropshipping refers to someone else being responsible for delivering the seller’s orders. Usually the seller cooperates with manufacturers and wholesalers. The latter provides the seller with product pictures and quotations, and then the seller publishes this information on its own website. Online store. Sellers are mainly responsible for sales, while manufacturers or wholesalers are responsible for fulfilling orders and shipping goods to customers.
Many sellers like this method the most. It has no stocking, low investment and low risk. There is no need to worry about inventory and logistics. The supply chain integration service platform based on the source of goods greatly lowers the threshold of cross-border e-commerce and brings Small and medium-sized sellers have many conveniences and a large supply of goods for distribution. However, insufficient inventory or delayed shipments by suppliers often affect customer service quality and store reputation, and low threshold means competition, homogeneity and low prices.