Industrial products (products used for processing, production, or business operations) are becoming another important category targeted by cross-border e-commerce platforms.
The rise of digital procurement has brought a structural opportunity for cross-border e-commerce exports, and industrial products are one of the most explosive tracks. Recently, Yang Jun, Vice President of Amazon China and Head of Enterprise Procurement for Amazon Global Store Asia Pacific, stated in an interview with Daily Economic News that the export of industrial products will become a key strategy and main focus of "Amazon Enterprise Procurement" this year.
Just a week ago (September 4th) at the "2024 Amazon Enterprise Shopping Annual Forum", Amazon announced that it will delve into 60 industrial product industrial belts in China, focus on 100 core industrial product categories, and incubate 500 high-value industrial product overseas brands.
According to the "China Industrial Products Going Global Roadmap" released by the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce at the forum, it is expected that by 2028, the global MRO (non production raw material industrial products) market size will exceed 470 billion US dollars, and cross-border e-commerce of industrial products will be a new growth point for China's cross-border e-commerce exports.
B2B cross-border e-commerce transactions will become an important driving force for the process of global economic integration in the future, so Chinese sellers need to start with quality and explore broader global markets, "said Zhang Yi, CEO of iMedia Consulting, in an interview with Daily Economic News.
Can Amazon, which is being squeezed by TikTok and Temu in the global market, take this opportunity to find new incremental markets?
The B2B cross-border e-commerce market is in a fierce competition
In the current global economic landscape, the flourishing development of B2B cross-border e-commerce is not an accidental phenomenon, but an inevitable result of multiple intertwined factors.
For example, COVID-19 has not only changed people's daily lifestyle, but also profoundly reshaped the global supply chain and procurement model.
In terms of specific categories, Yang Jun stated that B2B overseas categories mainly focus on industrial products, office supplies, commercial IT and other fields. However, in recent years, emerging procurement scenarios such as energy storage, laboratory supplies, and garden tools have emerged, providing Chinese sellers with a broader market space. Amazon Enterprise has further launched the "New Three" potential categories based on this, including intelligent manufacturing categories represented by 3D printing and 3D scanners, service robot categories mainly composed of swimming pool robots and lawn mowing robots, and new energy categories represented by electric vehicle charging piles and generators.
Zhang Yi told reporters that during the COVID-19, a large number of purchasers were forced to turn to online to find suppliers. This behavior not only fostered their habit of finding source products online, but also provided unprecedented development opportunities for B2B cross-border e-commerce platforms.
Specifically, the limited international exchanges and reduced flights caused by the epidemic have forced traditional procurement methods to face many challenges. Online procurement, with its advantages of high efficiency, convenience, and low cost, has rapidly emerged as the first choice for many buyers. This transformation not only reduces procurement and communication costs, but also greatly reduces additional expenses such as travel, further improving procurement efficiency and economic benefits.
In addition, Zhang Yi stated that the improvement of the informatization level of intermediary platforms and the popularization of the internet have also provided a good opportunity for the formation of online procurement behavior.
Therefore, major giants are also laying out their strategies and seizing the market with unique advantages.
Specifically, Alibaba International has completed the acquisition of Visable, a local B2B digital trading platform in Europe, further strengthening its presence in the B2B market. Temu, on the other hand, has objectively greatly reduced the difficulty of connecting Chinese sellers with overseas B-end customers by launching a fully managed model.
In Zhang Yi's view, each of the above platforms has its own advantages: Amazon's strengths lie in brand endorsement, a comprehensive logistics system, and online data resources, which provide solid support for B2B procurement; Temu is known for its low price and high cost-effectiveness, attracting a large number of source suppliers to settle in and forming a differentiated competitive advantage; Alibaba International Station, backed by the mature 1688 platform in China, has abundant sources of goods and upstream supplier resources. The company has also established a sound transaction credit system and review mechanism to provide reliable transaction protection for international buyers.
From the perspective of sellers, Chen Liyuan, Cross border E-commerce Director of Yieryi (Group) Co., Ltd., introduced to the Daily Economic News reporter that Yieryi will choose different channels based on its own product promotion strategy and the attributes of different platforms. For example, Yieryi places more emphasis on product professional positioning and brand image display on Amazon.
Yieryi adopts a flexible marketing strategy for emerging e-commerce platforms such as Temu and eBay. Considering the wide user base and high price sensitivity of these platforms, we will focus on promoting inventory products, attracting user attention and promoting sales through price advantages and promotional activities, "said Chen Liyuan.
Snatching the Industrial Products Market
Each platform also faces its own challenges, and how to effectively manage a large number of third-party sellers to ensure product quality and service levels is an important issue facing Amazon. On the other hand, Temu's low price strategy may lead to limited profit margins and the need to find long-term sustainable profit models.
This challenge is particularly severe for Amazon.
In the past period, with the rapid development and expansion of platforms such as Temu, their user base and purchasing scenarios are gradually overlapping with Amazon. Especially when platforms such as Temu improve in quality and service, their threat to Amazon will further increase.
Therefore, while Amazon is striving to maintain its B2C base, it is also vigorously exploring the B2B market, hoping to "fight" a bloody path through the high repurchase rate of B2B customers.
In terms of specific categories, Yang Jun introduced that the next structural growth point for cross-border e-commerce is the industrial products sector. Industrial products have a wide range of categories, covering numerous segmented markets such as 3D printing, laboratory equipment, measuring instruments, etc.
In the past, most sellers of industrial products in China used the method of stocking. This is because industrial products are mid to long tail products. Therefore, the entire industrial product category can be considered a new blue ocean, but the penetration rate and concentration of Chinese sellers in this category are relatively low. Moreover, each category extends into a category, and I believe that every route can lead to a leading enterprise like Anke. Therefore, industrial products are a track that we attach great importance to, "Yang Jun said.
Another reason for Amazon's efforts in the B2B market is the extensive industrial belt foundation in China. Yang Jun introduced that in the past few years, industrial belts such as Suzhou tools and measuring instruments, Ningbo lamps and tools, Zhongshan lamps, Xiamen plumbing and bathroom, Anping County wire mesh in Hebei, Jinan laser engraving machine, Jinhua hardware manufacturing, Taizhou molding, Shanghai light industry products, and Chongqing general machinery have all been deeply penetrated by "Amazon Enterprise Purchase".
According to Yang Jun, in the first half of 2024, the number of newly launched factory type sellers in the industry belt covered by Amazon Enterprise Shopping is five times that of the same period last year, and the total sales of these sellers are more than ten times that of the same period last year.
However, while China's industrial belt is flourishing, it still faces the problem of low brand premium ability.
Yang Jie, Secretary General of Jiangsu E-commerce Association, stated in an interview with media such as Daily Economic News that many enterprises in Suzhou have indeed demonstrated strong capabilities in manufacturing and design, but they are relatively inferior in building their own brands.
Taking Changshu Tongrun as an example, although the enterprise enjoys a high reputation nationwide and even globally, and occupies an important position as a key host supporting supplier, its brand's direct influence and brand appeal in the market are still insufficient. This situation, with the continuous evolution of market environment and market structure, has brought new challenges to enterprises.
Therefore, from the perspective of brand building, Chinese brands going global first need to innovate in products, improve quality, and more importantly, form internationally influential enterprise and product standards. To make the standards of Chinese products better understood and recognized by foreign countries, this may be something we need to continuously deepen our brand going global in the future, "Yang Jie said.
Promote the upgrading of the structure of traditional foreign trade enterprises
While cross-border e-commerce giants are promoting the export of industrial products, they are also profoundly influencing the structure and model of traditional Chinese foreign trade enterprises.
Yang Jun told reporters that the biggest underlying change is the reconstruction of the innovation chain. In the past, most Chinese foreign trade enterprises were in the OEM stage, lacking independent research and development capabilities and brand awareness. However, with the rise of cross-border e-commerce and the diversification of consumer demand, this traditional model is no longer sustainable.
At the same time, in the process of promoting the transformation of B2B cross-border e-commerce, factory enterprises also face many challenges and opportunities. In the past, most Chinese industrial product sellers used a distribution model, but with the intensification of market competition and the diversification of consumer demand, this model is no longer able to meet market demand.
In addition, Yang Jun stated that the transformation of the organizational structure and thinking mode of factory enterprises also requires time and effort; The upgrading and transformation of production processes require a significant investment of resources and funds; The intensification of market competition and the diversification of consumer demand require enterprises to have stronger innovation capabilities and market response speed.
In order to address these challenges and seize opportunities, some Chinese foreign trade enterprises need to complete the transformation from OEM to independent research and development, and from OEM to branding.
When talking about the impact of AI technology on cross-border e-commerce, Yang Jun said that the widespread application of AI technology will profoundly change the operation mode of cross-border e-commerce, which is not limited to the Amazon platform itself, but will also penetrate into various links of sellers and supply chains.
He pointed out that currently over 60% of Chinese sellers have used big data and generative AI tools on the Amazon platform, which have played an important role in precise product selection, process optimization, and conversion rate improvement.
In addition, Amazon Enterprise Shopping has also promoted the digital upgrade of the supply chain. By using digital means to achieve transparency and traceability in the supply chain, Chinese foreign trade enterprises can more accurately grasp market demand and inventory situation, thereby optimizing production planning and inventory management.
Yang Jun stated that this digital upgrade not only improves the operational efficiency and market response speed of enterprises, but also reduces operating costs and risks.
In fact, Amazon's high-profile entry into the B2B market this time can be seen as another measure of Amazon's continuous deepening of its industrial belt sellers. As Amazon continues to increase its efforts, it remains to be seen which platform will ultimately dig deep into the vast industrial product market in China as a rich mine. Everything is still worth looking forward to. But there is no doubt that the competition in China's cross-border e-commerce market will become even more intense.