1. Policy support
Daigou already existed many years ago, but it was smaller in scale and less professional at that time. Nowadays, it is very popular for small and medium-sized businesses to arrange professionals to buy goods through overseas shopping malls and then ship them back in their personal names. Due to certain defects in policies, it is currently impossible to effectively regulate this behavior. Of course, there are certain risks in the quality, after-sales and taxation of goods purchased through this channel. Consumers are often deceived and have no way to complain.
Since 2012, my country’s regulatory authorities have successively introduced a number of policies to support the sustained and stable development of the cross-border e-commerce industry. As of May 2016, my country has opened a number of cross-border e-commerce pilot cities including Shanghai, Guangzhou, Shenzhen, Hangzhou, Ningbo, Fuzhou, Chongqing, Tianjin, and Zhengzhou. These pilot cities have effectively simplified the customs clearance process and saved a lot of tax costs for enterprises. With the continuous growth of the scale of the cross-border e-commerce industry, it is believed that the scope of pilot cities will be further expanded.
2. Business model
There are two main import channels for domestic cross-border e-commerce platforms: overseas warehouse import and bonded area import.
(1) Overseas warehouse import model
This model refers to the cooperation between e-commerce platforms and customs. After domestic overseas shopping users place an order on the e-commerce platform, the order, payment voucher, waybill and other related data will be sent to the customs department by the e-commerce platform in real time. This can effectively improve transaction efficiency. Compared with users purchasing directly or looking for purchasing agents, the product quality is more reliable and they can also enjoy the after-sales service provided by the platform.
(2) Bonded area import model
This model refers to the platform operator shipping goods purchased from all over the world to the bonded warehouse in the pilot city in advance based on the backend system’s prediction of market demand. When receiving the user’s order, it will then be shipped from the bonded warehouse. my country’s previous cross-border e-commerce tax policy led to the rise of this model. After the new tax reform policy was implemented on April 8, 2016, the advantage of this model in reducing tax costs disappeared. However, since it is shipped directly in the domestic pilot cities, it is still in an absolute leading position in terms of logistics experience and after-sales service.
The overseas warehouse direct mail import model caters to the development of platform-based e-commerce with richer categories, and can fully meet the diversified and personalized needs of users; while the bonded area import model is more conducive to self-operated e-commerce platforms, and the after-sales service is relatively more complete, which effectively solves the industry pain point of poor cross-border logistics timeliness.
3. Capital influx
Before 2007, my country’s overseas shopping industry was still in the exploratory stage, with relatively few players entering the market and no certain scale. The establishment of Taobao Global Shopping in 2007, although it has increased the exposure of the overseas shopping concept to a certain extent, due to the lack of effective supervision of the entire industry, most investment and financing institutions are very cautious.
Data released by Analysys International show that from 2008 to date, the average annual compound growth rate of my country’s cross-border e-commerce transaction volume has exceeded 50%. In 2015, my country’s cross-border e-commerce transaction volume was 5.4 trillion yuan. With the continuous growth of domestic cross-border e-commerce and the continuous introduction of relevant policies by regulatory authorities, various investment and financing institutions began to rush in.
4. Emerging Blue Ocean
Some overseas brands have a strong influence in China. Driven by huge user demand, cross-border e-commerce has entered a period of rapid development. Moreover, overseas travel continues to be accompanied by huge overseas shopping consumption. Data released by the World Travel and Tourism Council (WTTC) show that in 2015, Chinese tourists’ overseas travel consumption reached 215 billion US dollars, of which shopping accounted for more than 50%. Today’s cross-border e-commerce industry is far from meeting the consumption needs of this group.
In the domestic cross-border e-commerce industry, there are no giants with obvious leading advantages. The entire industry is still a blue ocean market, and many entrepreneurs and small and medium-sized businesses can still find development opportunities from it.