What is cross-border e-commerce _ what is the cost of cross-border e-commerce _ how to do cross-border e-commerce

0 Basic Cross-border Beginners Must Read: What are the things you must know to do cross-border e-commerce?

I don't know how much it will cost to invest in cross-border e-commerce in the early stages?Want to start a cross-border business but can't get started, and don't know what preparations to make?A must-read collection for newbies to cross-border e-commerce with zero basics presented!

1.4 Build efficient operation capabilities

Looking at the world, the scale of cross-border e-commerce continues to rise, and online consumption has become the general trend!Global retail e-commerce sales are expected to exceed 600 billion US dollars in 2023. The large Red Sea and Blue Ocean are hot, and unlimited business opportunities are at your fingertips, just waiting for you to take advantage!

I don't know how much it will cost to invest in cross-border e-commerce in the early stages?Want to start a cross-border business but can't get started, and don't know what preparations to make?A must-read collection for newcomers to cross-border e-commerce 0 is presented to take you to understand the basic knowledge of cross-border e-commerce, shape the core competitiveness of cross-border e-commerce, use strong cross-border channels, and develop efficient cross-border operations. Everything is ready to ride the East Wind, immediately set sail on the starting line of the sea!

What is cross-border e-commerce? What is the difference from traditional foreign trade/domestic e-commerce?

Cross-border e-commerce refers to an international commercial activity between transaction entities in different border regions where online ordering, payment and settlement are carried out through e-commerce, and goods are delivered through cross-border logistics, customs clearance, final delivery, and completion of transactions. There are no importers or wholesalers in the traditional foreign trade model. Through cross-border export e-commerce websites, sellers can shorten the transaction chain, reduce intermediate links, and increase profit margins.

What is traditional foreign trade?

Traditional foreign trade generally refers to foreign trade, which refers to the exchange of goods, services, and technology between one country (region) and another country (region).

In the entire trade transaction chain, traditional factories are the most direct source of production, and can also be understood as the manufacturer in the image above. Specifically, it can also be divided into domestic trade factories that mainly focus on production, and foreign trade factories that integrate industry and trade and participate in production and export sales. If manufacturers want to sell products to consumers, they will go through many links such as exporters, importers, wholesalers, and retailers. Entities at a certain link in a chain can usually only deal with upstream or downstream of this link.

Here's a detailed introduction to the different roles in traditional foreign trade transactions:

Manufacturer

A manufacturer is what is commonly called a factory or “foundry”. It has manufacturing capabilities or even certain design capabilities, but it does not have its own brand. The main business of these factories is not only OEM production for domestic brands, but they also accept orders from foreign companies, thus becoming an important part of foreign trade.

Brand owners

Brands are companies that have their own brands. As the domestic market becomes more saturated, more and more Chinese brands are trying to sell their own branded products overseas. Compared to foundries, brands understand customer needs better. They will request products from foundries and require factories to continuously improve products based on consumer feedback.

Exporters/Traders

Exporters, also known as traders, are a key player in traditional foreign trade. They connect Chinese manufacturers and brands with overseas customers. Without exporters, when a Chinese manufacturer needs to export its products abroad, it faces many practical problems, including the choice of trade destination country, product compliance, language, and relevant trade destination country expertise.

Importer

Just like exporting, importing is also a very professional thing. Professional importers usually have long-term cooperation with Chinese exporters, or even familiar factories, which can quickly help overseas customers find suitable “goods”.

Wholesalers

Both wholesalers and the retailers described below are involved in the division of labor in “retail channels”. Wholesalers will purchase products in large quantities from brands and then supply them to various sales channels in the market from zero. In the actual business process, a wholesaler may also have multiple sub-levels of wholesalers under one wholesaler. Generally, the larger the geographical area of a country, the more levels of wholesalers.

Retailer

Retailers can be understood as channels for ultimately selling goods to consumers, such as supermarkets, convenience stores, and some e-commerce websites. Because retailers are directly facing consumers, they know which products sell well and which don't. What kind of products may even have better market performance in the future.

consumer

It is the person who ultimately purchases the product. Consumers in different countries will have different purchasing preferences based on differences in culture, geography, and degree of economic development. You should consider “investing in what you like” when selling products to them. Also, some business owners will buy things through retail channels as a company. At this time, business users are also a special kind of “consumer.”

The difference between cross-border e-commerce and traditional foreign trade

There are similarities between cross-border e-commerce and traditional foreign trade. Essentially, they all sell Chinese products abroad. The difference is that the efficiency of all aspects of cross-border e-commerce transactions has been greatly improved. Ultimately, quantitative changes have led to a qualitative leap forward.

Judging from the respective business models and links of the two, cross-border e-commerce has the following advantages:

Get it directly
Massive customers

Consumer feedback
One-handed control

Direct sale for consumption
Those with high profits

Fast payback
More stable

Here's a detailed introduction to the different roles in traditional foreign trade transactions:

Traditional foreign trade

● Many trading links, low profit
● Not understanding consumer needs, product design and demand are not easy to match
● The process is not transparent, and there are many uncontrollable factors
● No pricing power, relatively passive

Cross-border export e-commerce

● Direct sales to consumers, high profit
● Face consumers, design products in a targeted manner, and maintain long-term competitiveness
● Do business directly through cross-border export e-commerce websites. The information is transparent in real time, and the business is under control
● Has industry pricing power, thereby taking an active position in business decisions

The difference between cross-border e-commerce and domestic e-commerce

Compared to domestic e-commerce, since buyers and sellers are not in the same country, sellers of cross-border e-commerce have the opportunity to use China's complete supply chain resources to participate in a wider global retail market with more advantageous products and build their own global brands. While it has a wider market and opportunities, it also has more challenges. Specifically, cross-border e-commerce is different from domestic e-commerce and has the following characteristics:

Cooperation with global e-commerce sites is required

Consumers in different countries have huge differences in language, culture, consumption tendencies, and consumption habits. Understanding differences in local needs and preferences is the first step to a successful business. By cooperating with cross-border e-commerce websites that have been operating locally for many years, you can use their brand awareness and huge consumer base to better start and expand your business.

Delivery and completion of transactions are required through cross-border logistics

Cross-border logistics mainly refers to the delivery of sellers' products from domestic to overseas and delivery to consumers. You can intuitively understand all aspects of cross-border logistics through the following image:

Cross-border e-commerce sellers need to choose professional cross-border logistics services to complete professional tasks such as transportation, customs clearance, warehousing, and distribution.

Click here to learn more about cross-border logistics

I need to process receipts in different currencies

Foreign consumers on cross-border export e-commerce websites usually pay in local currency (such as US dollars, yen, euros, etc.), so sellers need to consider exchange rates related to converting foreign currency to RMB and issues related to cross-border financial compliance when settling payment.
Amazon provides relevant financial services and support for a wide range of sellers. For more details, please refer to this series of courses “0 Basics One-Stop Guide for Cross-border Beginners 1.3 — How to Use Strong Channels to Build a Track for Cross-border E-commerce?》。

Taxes are complicated

First, to do e-commerce exports across borders, you have to pay customs duties. Tariffs mean that when Chinese goods are exported abroad (“customs” to be exact), foreign countries are taxed on the goods, and the tariff rate is affected by many factors such as the exporter, nature of the commodity, and trade policy. In addition, each country (corresponding customs territory) has other taxes that it is required to levy. For example, the EU government charges value-added tax (VAT) from e-commerce sellers.

Tips: What is a border?
Customs territory is an abbreviation for “customs border” and is the territorial scope of implementation of the Uniform Customs Act. Under normal circumstances, the customs border coincides with the national border. However, the customs of some countries and regions are not entirely consistent with national borders. For example, if a country has a free port or free zone, it is not within the scope of that country's customs territory. At this time, the customs border is smaller than the national border; in countries that have entered into a customs union, their territory becomes a unified customs territory.

Is it still too late to enter cross-border e-commerce?

Driven by favorable policies and industrial clusters in China, going overseas across borders is becoming a new growth opportunity for many brands and sellers. In the global market, with the development of digital platforms, more and more consumers are also more inclined to shop online. Currently, the global cross-border e-commerce business is developing rapidly, and the prospects are promising!

Domestic cross-border e-commerce is developing rapidly, and positive policies continue to benefit

According to the data, in the first half of 2023, China's exports of cross-border e-commerce increased 19.9% year-on-year, about double the growth rate of China's cross-border e-commerce exports in 2022, and is expected to reach 2.95 trillion yuan in 2024. [1]

2.95

trillion yuan

Over the past five years, China's cross-border e-commerce pilot zones have also gradually covered 31 provinces across the country. In 2022 alone, 60 new China's cross-border e-commerce pilot zones will be added, for a total of 165. 2.

165

count

Cross-border E-commerce Comprehensive Pilot Zone

From a policy perspective, favorable measures have been introduced one after another to help reduce costs, promote development, improve efficiency, and vigorously push Chinese sellers to the world.

● In September 2022, the Ministry of Commerce issued “Certain Policies and Measures to Support the Stable Development of Foreign Trade”.

● In November 2022, the State Council issued the “Approval on Agreeing to Establish Comprehensive Pilot Zones for Cross-border E-Commerce in 33 Cities and Regions Including Langfang”.

● In February 2023, the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation jointly issued the “Notice on Tax Policies for Cross-border E-commerce Export and Return Goods”.

Global consumption continues to shift to online, and the potential for cross-border e-commerce is limitless

Looking at future development prospects, as the penetration rate of the Internet and smartphones continues to increase, consumers are becoming more and more accustomed to online shopping. Gen Z, which is heavily influenced by the Internet, is becoming the main force in online consumption. In 2023, one-third of the global population aged 14 and above will shop online, and the number will exceed 2.73 billion. [3]

According to more data, the total amount of overseas retail e-commerce is estimated to be nearly US$3.13 trillion in 2024, accounting for 12.8% of overseas retail sales; it is estimated that by 2027, the total overseas retail e-commerce volume will reach 4 trillion US dollars, and the growth rate will be 2 times the global retail growth rate +. [4]

Developed e-commerce regions represented by North America, Europe, and Japan continue to maintain steady growth. Emerging e-commerce regions represented by the Middle East and Latin America have risen strongly. They are the two regions with the fastest e-commerce growth rate in the world in 2023; more than 90% of overseas respondents have a friendly attitude towards Chinese brands and are more willing to buy Chinese brands; The compound annual growth rate of Chinese brand sellers in 2021-2022 was 50% + higher on average compared to non-branded sellers. [6]

What are the costs to consider when doing cross-border e-commerce?

Before starting a cross-border e-commerce business, it is important to prepare sufficient start-up capital. Next, I'll take you step by step to “settle the account” and see what costs will be included in cross-border e-commerce, from registering and opening a store to selling products!

Explanation of specific costs

Among the costs associated with Amazon, the Amazon Professional Selling Plan monthly service fee (that is, site listing commission) and Amazon referral fee are fixed relative to sales, while logistics tariff costs and other possible costs will fluctuate according to production, sales, and operation conditions.

Referral Fee

It is roughly between 8% and 15%, and the fee will vary depending on the site launched.

Logistics tariff costs

It accounts for roughly 15% to 20%, including first-way logistics costs, warehousing costs, last-end logistics costs, import customs clearance tax, destination country consumption tax, etc.

Professional Sales Plan Monthly Service Fee (Site Opening Commission)

It is recommended to choose “One-click Global Registration”. With only one $39.99 monthly rental profile, you can open 17 major sites*, saving time and money when registering!Currently, it has entered 4 major emerging sites in Singapore, the Middle East (UAE, Saudi Arabia) and India, and can also enjoy free monthly rental activities for a limited time.

*Note: The 17 major sites include North America (US, Canada, Mexico) /Europe (UK, France, Germany, Spain, Italy, Poland, Sweden, Netherlands, Belgium) /Japan/Australia/Singapore/Middle East (UAE, Saudi Arabia).

Other costs that may vary

When considering the full cost of doing business on Amazon, in addition to the costs mentioned above, be sure to consider additional costs you may encounter, such as the cost of the product, wear and tear costs associated with returning the item, shipping costs, labor costs, refund fees, inventory fees, the cost of choosing a third-party service provider, and other options to help you increase sales, such as advertising costs, and the cost of taking relevant officially paid courses. Among them, the proportion of common advertising and marketing expenses (including Amazon advertising and off-site marketing) is roughly between 10% and 15%.

What are the three major factors to consider when doing cross-border e-commerce?

The prospects for cross-border e-commerce are so promising. How exactly should new sellers go overseas to meet challenges and seize opportunities?

Amazon recommends that you look at the “three forces” and use ingenuity and show your strength to successfully embark on a cross-border path!

Once you have an overview of the preparations for cross-border e-commerce, you can once again complete the self-inspection of the preparation phase through the following figure:

Click to download the PDF courseware

Data sources:
1. Ai Media Consulting
2. General Administration of Customs
3. Worldwide Ecommerce Forecast Update 2022, eMarketer , 2022
4. https://forecastsna1.emarketer.com/5a53f4d9d8690c0d70ffaa04/5a53e370d8690c0d70ffa9a5，2022
5. https://www.polarismarketresearch.com/industry-analysis/cross-border-b2c-e-commerce-market，2021
6. Amazon China Seller Survey 2022; Ipsos “2021 Chinese Brand Global Trust Index”