How many rolls are there in the overseas race track? Even the big brother of cross-border e-commerce, Amazon, has started to follow the "low price" strategy. Amazon recently announced that starting from January next year, it will reduce the commission rate for clothing product sellers selling below $15 to 5% in response to the diversion of low unit price products by rising stars such as Temu; The commission rate for clothing priced between $15 and $20 will be reduced to 10%. Previously, the commission rate for both categories was 17%. The decrease in commission also means that sellers have more space to make price adjustments for their products.
On one hand, emerging players such as SHEIN, TEMU, and TIKTOK are rapidly seizing the cross-border market, competing for more Chinese sellers and products through various policies; On the other hand, it is the big brother Amazon who actively guards the important town and continues to deepen the moat. Recently, after a gap of three years and nine months, Amazon has returned to Shenzhen and opened an investment promotion conference for sellers. The 2023 Amazon Global Store Cross border Summit will be held in Futian from December 12th to 15th. In addition to global executives leading the way in announcing various favorable policies, Amazon's Asia Pacific Innovation Center has settled in Qianhai, Shenzhen, which is also the first innovation center for Amazon's global store opening in the world.
The world's cross-border e-commerce looks at China, and China's cross-border e-commerce looks at Shenzhen. In 2022, the import and export volume of cross-border e-commerce in Shenzhen exceeded 190 billion yuan, a year-on-year increase of over 2.4 times, ranking first in Guangdong Province, a major foreign trade province, and leading the country in scale. With the listing of Shenzhen Saiwei Times and Sanxing Shares on the Shenzhen Stock Exchange, Shenzhen also has 10 cross-border e-commerce listed companies, ranking first in the country. This has also become a true gathering place for Chinese sellers. Various platforms have increased their bets on cross-border e-commerce in Shenzhen, and it is not difficult to see new trends in China's overseas economy in Shenzhen.
Full custody tube is very popular
But still encourage companies to build brands
What is the scale of this summit? On the 12th alone, there were over 10000 attendees at the conference, including over 30 executives from Amazon, including leaders from high potential sites in Europe, Japan, the Middle East, Australia, Latin America, and more.
In the one-on-one consultation area, sellers from all walks of life gather and the venue is fully booked. For high potential sites, sellers are willing to inquire whether their products have opportunities to expand into the market, and which categories are more worthy of deep linking and advertising. Similarly, for Amazon executives and seller service staff, one-on-one conversations with sellers can better capture customer pain points.
Similarly, there is a full custody model in the cross-border market that has been brought up by SHEIN, TEMU, and TIKTOK. You don't need to understand the long chain links of operations, warehousing, and logistics. You just need to be responsible for delivering goods to the corresponding warehouse and doing overseas business. SHEIN, TEMU, and TIKTOK focus on connecting industrial belt factory sellers or suppliers with first-hand sources of goods. They hope to use a "one-stop" overseas service model to attract more source sellers, in order to bring more cost-effective products to platform consumers.
However, even though rising stars are vying to embrace full hosting, Amazon's global store opening still stubbornly rejects this model. In the words of Dai Yanfei, Global Vice President and CEO of Amazon's Asia Pacific region, it is "perhaps the path we need to take is a bit difficult, and the requirements for enterprises may be higher in the short term, but it is the path they must take to achieve sustainable development." In Dai Yanfei's view, Amazon prefers sellers to have innovative products, rather than competing with the same products based on price.
Comprehensive upgrade of the 4+1 strategy
Formally open end-to-end supply chain solutions
Despite that, Amazon is also eager to showcase its differentiation capabilities to Chinese sellers. For example, the development and empowerment of high chain value, as well as the hard power accumulated through years of deep cultivation in global supply chain logistics.
In August, Amazon opened global stores in China and announced the launch of the "Ten Initiatives of the Industrial Belt"; In September 2024, Amazon launched the recruitment of new sellers and extended it to industrial belts and third - and fourth tier cities in various provinces; In December, Amazon announced that it will comprehensively upgrade China's existing service system through a "4+1" strategy in 2024.
In "4+1", "1" refers to the establishment of a new innovation center in Shenzhen, aimed at promoting more industrial belts to accelerate transformation through cross-border e-commerce, and helping Chinese sellers leap towards the high-end of the global value chain.
"4" refers to the four major services. Including: setting up four regional centers in East China, South China, West China, and North China, and adding a Central China regional center, including setting up new service teams in Wuhan and Zhengzhou, covering industrial belts in different regions; Enhance seller training to meet the learning needs of different stages of development; Upgrade "Exclusive Account Manager Service" to "Seller Growth Service", and launch more refined services for sellers of different sizes, types, and development stages; Enhance third-party service capabilities and coverage, explore new service categories such as intellectual property, brand building, and overseas marketing, and simplify the process and complexity of global operations.
The heavy lifting is the end-to-end delivery of goods. At the summit, Amazon announced that the end-to-end Supply Chain by Amazon solution has officially been opened to Chinese sellers. This supply chain supports sellers to deliver their products directly from manufacturers to customers around the world in a one-stop shop. At the same time, Amazon SEND announced the addition of air delivery routes from China to the United States, increasing the number of destinations departing from China to seven countries, and the Brazilian site officially opened to Chinese sellers. In fact, this move will also be interpreted as approaching the full custody model, after all, shipping is a key link in the process of going abroad besides operation.
Reduce commission to cope with the containment of rising stars
Can a platform eat all the food for all types of sellers?
Supply chain logistics, showcased by big brother Amazon. But the encirclement of the rear pursuers still put pressure on Amazon. At least, this is the case in the fiercely competitive clothing track.
In November, Amazon followed the "low price" strategy and reduced commission rates by up to 70%. Starting from January next year, Amazon will reduce the commission rate for sellers of clothing products priced below $15 to 5%; The commission rate for clothing priced between $15 and $20 will be reduced to 10%, whereas in the past, both categories had commission rates of 17%. In addition, Amazon will implement a series of cost changes in 2024, including sales commissions, cold start for new products, and logistics and warehousing services.
In the industry's view, such measures are mainly aimed at sellers with relatively low prices. For Amazon, such cost adjustment policies are relatively rare, perhaps due to strategic adjustments made to maintain an advantage in the increasingly competitive market. By reducing commission fees, Amazon hopes to attract more merchants who offer low-cost clothing to join the platform, thereby enriching its product range and lowering prices, and improving its competitiveness in the field of low-cost clothing.
At the summit, it is not difficult to see from the sharing of executives that Amazon currently has a rough classification of Chinese sellers: well-known brand sellers with solid supply chain capabilities in China, factory type sellers and industrial belt sellers transitioning from traditional foreign trade, and new sellers born into globalization. Can all these sellers of all types be eaten on one platform? Or, another question, can Amazon continue to maintain its leading advantage?
Data shows that in the past year, the number of Chinese sellers with sales exceeding $1 million on Amazon has increased by over 25% year-on-year; The number of Chinese sellers with sales exceeding 10 million US dollars increased by nearly 30% year-on-year; The number of products sold by Chinese sellers to consumers and corporate customers through Amazon's global website has increased by over 20% year-on-year.
However, according to data from mobile analytics company GWS, the daily active users of Amazon's US site decreased from 54 million to 46 million from April to July this year, clearly impacted by these emerging competitors. At the same time, full custody allowed Temu and SHEIN to soar overseas. It is reported that Temu's GMV exceeded $5 billion in the third quarter of this year, far exceeding its performance of $3 billion in the first half of the year. SHEIN also frequently reports listing information. In addition to SHEIN, TEMU, TIKTOK, Wal Mart, AliExpress, etc., are actively tracking market share.
In the view of Yang Jun, Vice President of Amazon China and Head of Corporate Purchasing for Amazon's Asia Pacific Global Store, the track of cross-border e-commerce in China is not crowded, but instead faces more development opportunities. From the first quarter to the third quarter of 2023, China's cross-border e-commerce exports accounted for 5% of China's total exports. Based on the structural changes in China's foreign trade exports, there is still great potential here.
Although targeting all types of sellers, Amazon currently stands out in building brand strength. For sellers who want to invest less and make money by shipping directly, there may still be a certain threshold. "We understand that for many sellers who are transforming their factories, achieving transformation is not an easy task. Therefore, we will continue to explore better solutions," said Dai Jianfei.