Regarding the development trend of cross-border e-commerce in the future, the editor shares some collected insights and thoughts.
1. The development trend of cross-border e-commerce
Looking at the entire industry, the development of cross-border e-commerce has experienced decades of brutal growth. The next growth rate will change from rapid growth to sustained and stable growth. The average annual growth rate of global cross-border B2C is about 27%. The future development of cross-border e-commerce will transform from the initial dividend of the global online shopping population growth to product-driven development, embarking on a healthier development path.
In the future, emerging markets will rise rapidly and regional differences will shrink. Although developed countries such as Europe and the United States are still the main battlefield for cross-border e-commerce, rapid growth has occurred in Asia, Latin America and even Africa. Southeast Asia, the Middle East, India, and Russia are all regions and countries that have grown very rapidly in recent years.
Policies and regulations for cross-border e-commerce will be strengthened. After more than ten years of development, China’s cross-border e-commerce accounts for 19% of total import and export trade. Countries have begun to pay attention to cross-border e-commerce trade, and policies and regulations on cross-border e-commerce are being strengthened. Many countries continue to introduce laws and regulations on e-commerce, involving consumer protection, privacy protection, value-added tax collection and other aspects.
The Matthew effect will be more obvious. After decades of brutal growth, large cross-border e-commerce companies that have partially completed primitive accumulation will exert greater scale advantages in future competition. The strong will always be strong, and the living space of small and medium-sized sellers will be further compressed. Industry reshuffle will also be further accelerated.
2. The impact of exchange rate fluctuations on cross-border export e-commerce
The recent fluctuations in the U.S. dollar exchange rate have had an even worse impact on cross-border e-commerce this winter. Exchange rate has always been an important factor affecting international trade, whether it is traditional international trade or cross-border e-commerce. Severe or abnormal fluctuations in major international settlement currencies often greatly affect the costs of cross-border e-commerce, disrupt business, and affect profits.
During economic crises, some countries often resort to trade protectionism and abuse exchange rate policies to gain unfair competitive advantages. The recent abnormal fluctuations in the US dollar exchange rate are one such manifestation, which is very detrimental to China’s cross-border e-commerce exports. Cross-border e-commerce exporters need to work hard on product supply chain management and cost control to offset the adverse effects of exchange rate fluctuations.
3. The impact of various countries’ policies on cross-border e-commerce
Cross-border e-commerce is essentially a kind of international trade, but the method is different from traditional import and export. Therefore, policies of various countries, especially those of destination market countries, often have a greater impact on the operations of cross-border e-commerce.
At present, there are no unified rules for e-commerce including cross-border e-commerce internationally. In many aspects involving cross-border e-commerce, various trade arrangements and country-specific policies are often very different, resulting in cross-border e-commerce businesses facing challenges when operating. A very complex international policy environment and high adaptation costs.
The purpose of formulating policies is to regulate the market, which is very necessary for the sustainable and healthy development of cross-border e-commerce in the future. Therefore, with regard to the new cross-border e-commerce policies formulated by various countries, cross-border e-commerce companies should embrace changes and operate legally and compliantly in compliance with local policies and regulations.
4. Development status of cross-border e-commerce emerging markets
For now, developed countries are still the main markets for cross-border e-commerce. Take China as an example. Among China’s top ten global cross-border e-commerce trading partners in 2016, only Brazil and Chile are developing countries, while the others are developed countries.
However, competition in the European and American markets is becoming increasingly fierce and gross profit margins are declining. Cross-border e-commerce companies must find new blue ocean markets. Russia, Southeast Asia and the Middle East have shown strong growth in cross-border e-commerce in recent years. With the continuous growth of the economy and the promotion of IT technology, especially mobile Internet, in developing countries, the development potential of cross-border e-commerce in these countries is huge. It is estimated that the online retail market in ASEAN countries will grow by 25% annually. Malaysia’s growth in recent years has exceeded 100%. These countries have large and relatively young populations and are major partners of China’s “One Belt, One Road” initiative. The two parties are vigorously promoting cooperation in e-commerce under the “One Belt, One Road” framework and will be the first choice for export e-commerce companies in cross-border e-commerce. Focus on the key points.
5. Pain points of cross-border export e-commerce
The vitality of cross-border e-commerce lies in value for money, speed and convenience. Value for money refers to the fact that cross-border e-commerce cuts out most intermediate links and unnecessary costs in international trade, allowing the prices paid by online consumers to more accurately reflect the value of the product. Fast and convenient means that the transportation method of cross-border e-commerce is different from traditional international trade. Products can be delivered to consumers quickly and conveniently through postal services, express delivery, and overseas warehouses.
As far as the supervision of export cross-border e-commerce is concerned, the pain points are mainly two points: First, logistics and other costs are high, squeezing the profit margins of e-commerce; second, customs clearance takes long and complicated procedures, affecting the rapid delivery of products. Consumer, impacting customer retention and account metrics.
This makes the overseas warehouse model more and more popular. Sellers who use overseas warehouses can first prepare their products to the target market through general trade in advance. They can achieve local sales and local distribution, and quickly deliver their products to consumers. At the same time, they can reduce intermediate links and effectively reduce operating costs. Therefore, for Cross-border e-commerce’s own operations and China’s cross-border exports are very important.
However, it should be pointed out that using overseas warehouses to operate cross-border e-commerce will greatly test the financial strength, operational capabilities and market control capabilities of relevant companies. Once the grasp is inaccurate and the decision-making is wrong, product backlog and inventory will form, which will be difficult to digest through return shipping or transshipment, resulting in huge losses.
6. Advantages of self-built overseas warehouses compared to third-party overseas warehouses
Relatively speaking, the cost of building a self-built overseas warehouse is lower than that of a third-party overseas warehouse, and it is also relatively convenient in management. If a cross-border e-commerce enterprise has certain financial strength and a complete management and operation team, it can build its own overseas warehouse.
Although renting a third-party overseas warehouse requires paying a certain amount of rent and increasing the cost of cross-border e-commerce companies, it can avoid the large amount of funds required to build your own overseas warehouse as well as the challenges and expenses in management and operation. Therefore, it is more suitable to start. A cross-border e-commerce enterprise involved in overseas warehouse sales.
All in all, cross-border e-commerce companies should decide their strategies for overseas warehouses based on their own strength, development, and business structure. Because it involves company operations, local policies, regulations, and even labor relations, it is not advisable to act blindly.
It is said that cross-border e-commerce has begun to enter a stage of polarization, and the differentiation of the development paths of large sellers and small sellers may yet to be tested.