The cross-border e-commerce model refers to the domestic merchants selling goods directly to overseas end consumers through third-party cross-border e-commerce platforms or independent stations.
The characteristics of the cross-border e-commerce industry are as follows.
1. Small batches and multiple batches of orders
Lujing e-commerce mainly operates in the form of third-party platforms and independent stations. Domestic enterprises directly connect with end-user consumers. The needs of individual consumers are characterized by instant, small batches, and multiple batches, especially the purchase frequency of daily necessities is very high. Although the cross-border e-commerce model cannot bring a lot of benefits with one order, the advantages of small quantities and multiple batches are also obvious. Whether it is a third-party platform or an independent station, the platform traffic is huge, especially for third-party platforms such as Amazon. As long as your product is recognized by the market and the operation idea is correct, you basically don’t have to worry about not being able to sell it.
2. Transaction facilitation
The cross-border e-commerce model does not have so many middlemen. Domestic merchants directly connect with consumers. Overseas consumers only need to place orders on third-party platforms (or independent stations), and the orders will be transmitted to domestic merchants. Domestic merchants prepare the goods, declare customs, and deliver the goods to overseas consumers through international logistics. If Amazon is responsible for delivery and after-sales, that is, the FBA logistics model (or has its own third-party overseas warehouse), then customers will receive the goods faster. After the customer platform places an order, the Amazon warehouse directly ships from the warehouse and arranges delivery. The cross-border e-commerce model is not only convenient for transactions and fast logistics, but also can reach global customers through third-party platforms.
3. Customs clearance facilitation
The export customs clearance of the cross-border e-commerce model can be carried out through customs clearance modes such as 9610, 9710, and 9810. Customs clearance is carried out through simplified declaration. The accompanying documents only require orders and logistics orders. The 9610 model requires collection information, and can be simplified according to 4-digit and 6-digit customs codes (i.e. HS codes). General trade is based on 10 digits.
4. No middlemen
The cross-border e-commerce model has no middlemen, which means that the profits of the middlemen are saved. Domestic merchants can increase the average customer price. Of course, this average customer price is usually lower than the price of the traditional foreign trade model. In this way, domestic merchants can make more profits, and end consumers can spend less money to buy high-quality goods, which is a win-win situation.
Before 2012, the Internet was not very developed, and people’s pace of life was relatively slow. The overall environment was favorable for the development of traditional foreign trade. At that time, traditional trade accounted for more than 90% of the market size of my country’s foreign trade, and cross-border e-commerce trade accounted for less than 10%. With the development of society and the acceleration of the pace of life, people’s consumption habits have become more immediate, and small batches and multiple batches are widely welcomed. The penetration rate of my country’s cross-border e-commerce industry from 2012 to 2022 has gradually increased to nearly 40%!
The rapid development of the cross-border e-commerce industry has further squeezed the living space of domestic factories. The pressure on domestic factories has increased dramatically. They have found that it is difficult to receive large orders, or even no orders at all. It is difficult to survive without transformation. Some factories with relatively strong strength have begun to transform into cross-border e-commerce. In the past, most of the people engaged in cross-border e-commerce were individual entrepreneurs or traders. The entry of factories has further intensified the difficulty of competition in the cross-border e-commerce industry and made this market larger.