1. Distribution-type cross-border e-commerce
For distribution-type cross-border e-commerce enterprises, the cost of products generally includes two aspects: one is the product procurement cost, and the other is the sales cost of the cross-border e-commerce platform.
1. Product procurement cost
Product procurement cost refers to the logistics costs related to the procurement of raw materials and components, including purchase order costs, management costs of personnel who formulate procurement plans, and management costs of procurement personnel. The procurement cost of inventory includes the purchase price, relevant taxes, transportation costs, fees, insurance premiums, and other costs that can be attributed to the inventory procurement cost.
Procurement costs can be divided into direct procurement costs and common procurement costs. Direct procurement costs refer to the costs that can directly confirm a certain material. After such costs occur, they are directly included in the procurement costs of various materials; common procurement costs refer to procurement costs that should be borne by multiple materials. After such costs occur, they should be included in the procurement costs of various materials according to certain allocation standards. The allocation standards mainly include procurement quantity, price, etc.
2. Sales costs of cross-border e-commerce platforms
Generally speaking, sales costs include packaging costs, international logistics costs, platform fees, collection costs, promotion costs, international taxes, etc. The policies of cross-border e-commerce platforms are different, the platforms are located in different countries, and the logistics methods adopted by cross-border e-commerce companies are different, resulting in different compositions of product sales costs.
Taking Fulfillment by Amazon (FBA) as an example, product sales costs usually include:
(1) Packaging costs. After purchasing products from the supply chain, distribution companies often need to further package and prepare the products. Amazon FBA has very strict requirements for product packaging. Companies must strictly follow its requirements for packaging, otherwise there will be a risk of FBA rejection, and there may also be increased warehousing costs and fees.
(2) First-leg freight. First-leg freight refers to the transportation costs that cross-border e-commerce companies need to pay to transport goods from domestic to Amazon FBA warehouses by air or sea.
(3) FBA fees. FBA is a logistics service introduced by Amazon in 2007. Amazon’s official explanation is that Amazon opens its platform to sellers, incorporates sellers’ inventory into Amazon’s global logistics network, provides picking, packaging and terminal delivery services, and charges service fees. Since FBA has many types of services, there are also many types of fees related to FBA, mainly including: FBA sales commission, FBA delivery fee, FBA inventory and inbound service fee, etc.
(4) Promotion fee. Common promotion fees include advertising fees, promotion fees, and evaluation fees.
(5) VAT. VAT is the abbreviation of the European Union’s consumption value-added tax (Value Added Tax), which is a tax levied by customs on goods, freight, insurance and other expenses.
(6) Collection fee. When buyers purchase products on the platform, the payment is paid to the cross-border e-commerce platform, and the platform will remit the money to the seller according to its own payment cycle. The fee that the seller needs to pay when receiving the payment is the collection fee. Some cross-border e-commerce platforms require sellers to use third-party platforms to collect payments, so sellers also need to pay collection fees to these third-party platforms.
The above 6 items, namely packaging costs, first-mile costs, FBA costs, promotion costs, VAT, and collection fees, are the more important product sales costs in Amazon FBA.
2. Production-oriented cross-border e-commerce enterprises
For production-oriented cross-border e-commerce enterprises, the composition of product costs mainly includes the production cost of the product and the sales costs of the cross-border e-commerce platform. Since the sales costs of cross-border e-commerce platforms are the same for both production-oriented and circulation-oriented cross-border e-commerce enterprises, the focus here is on the production cost of the product.
Production-oriented cross-border e-commerce enterprises have their own factories, so the product costs include direct costs and indirect costs. Direct costs include direct material costs (the main material costs of the product, the auxiliary material costs, the electricity costs, etc.), direct labor costs (the wages and welfare costs of employees directly involved in product design and production); indirect costs mainly include various expenses incurred by the production units of the enterprise to organize and manage production, such as the wages and welfare costs of managers, office expenses, water and electricity costs consumed in management work, and depreciation costs of equipment and houses.