All businesses need to be built around profits. A fundamental starting point for domestic enterprises to engage in cross-border e-commerce is that cross-border e-commerce has a higher profit margin than domestic e-commerce. However, as more and more domestic enterprises enter cross-border platforms such as Amazon, eBay and AliExpress, the profit margin is gradually compressed. The reason for this, as mentioned earlier, is that the competition on the platform is more based on the competition of goods (there are relatively few services that can provide local services in foreign markets, and in terms of marketing, due to the constraints of platform marketing methods, it is difficult for merchants to differentiate their marketing). For similar goods, when the quality is similar, the competition is more manifested as price competition. In cross-border independent self-operated websites, because of the rich means of traffic diversion and marketing, the space for enterprises to create differentiation is enlarged, which brings room for profit improvement. The reasons for the higher profit level on foreign trade independent self-operated websites are as follows.
1. No platform commission, small variable cost
Domestic enterprises have to pay high transaction commissions when they sell on major cross-border e-commerce platforms. Amazon and Wish charge 15%, eBay charges 12% plus product listing fees, and the lowest AliExpress charges 5% to 8%, but AliExpress also needs to pay technical service fees and annual fees. On independent self-operated websites, in addition to the initial website construction costs (the cost of using the Shopify website construction system is not high), the commission that needs to be paid in the later stage is only the collection fee of the payment tool (1% to 3%). The saved platform commission fees can be passed on to consumers through flexible marketing methods, and as profits.
2. More free pricing power, premium space improvement
As mentioned above, competition on the platform is mainly in the form of price competition, and the cost for users to change sellers is extremely low. On independent self-operated websites, because price comparison is relatively troublesome, and merchants have richer means of presenting products (pictures, copywriting, videos, etc.), merchants can completely obtain premium space through brand image building. Even if the prices on the platform and the independent self-operated website are the same in order to maintain the uniformity of online channel prices, flexible gift strategies, package matching and other means, combined with differentiated services (such as customization, extended warranty, etc.) can be used to increase the customer sales on the independent self-operated website and earn more transaction profits.
3. Make full use of search and social free traffic to reduce marketing costs
Search traffic and social platform traffic are the main components of e-commerce off-site traffic. On search engine websites such as Google and Bing, companies can obtain considerable search traffic through excellent SEO (Search Engine Optimization) work. When the brand influence of an enterprise accumulates to a certain extent, potential customers often use search engines to further understand the company’s products or services. At this time, if there is an independent self-operated website to undertake these search traffic, there is a great chance to create sales opportunities. In addition, through the search of keywords such as product words and long-tail words, there will also be an opportunity to undertake this part of the search traffic through independent self-operated websites, thereby obtaining transaction opportunities.
4. Higher ROI
When we discuss the entire marketing ROI, we should not only analyze it from the perspective of traffic quality, but also from the perspective of each conversion link, such as click conversion and order conversion.