Unit 1
Cross-border E-commerce Basics

Text A
Cross-border E-commerce Overview

The term“cross-border E-commerce”has become the darling of the media in recent years. The entire cross-border E-commerce industry has firmly stood at the first place of the capital market. Although various kinds of news reports, papers, blogs, and information are flooding in the Internet, what is cross-border E-commerce? I believe many industry insiders still cannot clearly explain it.

1. What Is Cross-border E-commerce

Cross-border E-commerce is a kind of E-commerce. As the largest E-commerce platform in the world,Amazon entered Shanghai Free Trade Zone on August 20, 2014. The memorandum signed on cooperation shows that“Amazon will open its new cross-border E-commerce platform in the free trade zone”. From here we know that cross-border E-commerce should be translated from the English. So, what exactly is the definition of cross-border E-commerce?

In Wikipedia, cross-border E-commerce refers to an international business activity where the trading entities that belong to different customs achieve transactions, payments, and cross-border logistics delivery through the E-commerce platform.

2. The Model of Cross-border E-commerce

2.1 The Difference between Cross-border E-commerce and Traditional Foreign Trade

We’ve made definition for what is a cross-border E-commerce, but the dispute in the pattern of cross-border E-commerce has lasted a long period. In fact such arguments are nothing more than confusing cross-border E-commerce with the traditional foreign trade. Then, what on earth are the differences between cross-border E-commerce and traditional foreign trade?

2.1.1 The Cost Piffers

Traditional foreign trade is mainly concentrated on large quantities of goods, and then the goods enter into a multiple-level distribution by overseas logistics companies. Finally the goods will eventually reach the end consumers (enterprises or individuals), while cross-border E-commerce is directly facing to the end customers.

2.1.2 The Process Differs

In traditional trade, the import and export process are cumbersome, while cross-border E-commerce companies require the links be reduced as much as possible. They can even send goods directly to consumers.

2.1.3 The Ways of Spread Differ

Traditional trade uses information platforms such as wholesale message, mails, and exhibitions to disseminate information. Cross-border E-commerce companies sell products directly to consumers through platforms such as Amazon, eBay, and Wish.

2.1.4 The Model Differs

Because the traditional trade uses information flow to spread, the basic model is B2B, while cross border E-commerce can reduce intermediate links, therefore the goods is mostly sold directly by the platform. And its main model is B2C.

Obviously, the cross-border E-commerce model and the traditional foreign trade model make a big difference, so what distinguishes traditional foreign trade from cross-border E-commerce models? Cross border business is divided into import and export. Similarly, the cross-border E-commerce model can also be divided into import cross-border E-commerce and export cross-border E-commerce. For import cross-border E-commerce, it is usually the domestic consumers that visit overseas sellers to select goods. After the orders are placed, overseas sellers directly send international express delivery to consumers. Export cross-border E-commerce is just the opposite, domestic sellers directly deliver goods to the hands of overseas buyers.

2.2 Import Cross-border E-commerce

2.2.1 M2C Model

It is an investment platform, and it is manufacturer-to-customer. In this model, merchants need to obtain qualifications and authorizations for overseas retail sales. The products are directly mailed overseas and can provide local return service, but usually the price is relatively high.

2.2.2 B2C Model

It means self-operated and direct purchasing, and it is business-to-customer. In this model, the platform will generally directly participate in the flow of goods purchasing and logistics warehousing. For example, buying a television set from an electronics retailer would be a B2C transaction.

2.2.3 C2C Model

Consumer to consumer, or C2C, is the business model that facilitates commerce between private individuals. Whether it’s for goods or services, this category of E-commerce connects people to do business with one another. The goal of a C2C is to enable these relationships, helping buyers and sellers locate each other. Customers can benef it from the competition for products and easily find products that may otherwise be difficult to locate.

2.2.4 B2B Model

That is business-to-business which refers to commerce between two or more businesses such as those involving a manufacturer and wholesaler or retailer. In general, it is used to improve efficiency for companies.

2.2.5 Overseas E-commerce Direct Mail

The representative company is Amazon. The model is characterized by having a global high-quality supply chain system and a wealth of SKUs.

2.2.6 Third Partner

In fact, there are two types of this model: One is technical, and the other is operational. Generally,there are advantages in the early stage of cross-border E-commerce, easy to start, low cost, rich SKUs, but lack of competitiveness, and need real-time updates and other strong technical support.

2.2.7 Content Sharing/Community Information

This model is the promotion base for brands, because it mainly achieves natural conversion through content.

2.3 Export Cross-border E-commerce

2.3.1 B2B Model

It is divided into two types: information service platform and transaction service platform. For the information service platform, it is mainly to conduct information distribution or information search to complete transaction through a third-party platform. The representative companies are Alibaba International Station and Global Sources. The transaction service platform is to build a platform business model that enables online transactions and payments between supply and demand parties. Representative companies include Dunhuang.com and the others.

2.3.2 B2C/C2C Model

It is divided into an open platform and a self-operated platform. The open platform realizes the systematic docking of applications and platforms, and builds an ecosystem around the platform itself. The representative platform includes Amazon, Wish, AliExpress, eBay, Lazada, and other small-scale platforms.The self-operated platform manages the products in a unified way. It trades online and delivers products to consumers through logistics.

3. Dilemmas of Cross-border E-commerce

Although the cross-border E-commerce has been developing at a high speed in recent years, it has also received great support with policies. However, the entire process of cross-border E-commerce needs the integration and cooperation of procurement, supply, logistics, distribution, payment, and after-sales service to achieve stable development. At present, it still faces the following dilemmas.

3.1 Limited Supply Channels

For cross-border E-commerce, the supply channels is of utmost importance. It is difficult to guarantee the quantity and quality of goods through limited channels.

3.2 Logistics Constraints

Logistics is a core factor in both cross-border E-commerce and traditional trade. At present, logistics is also a major bottleneck among cross-border E-commerce. Restrictions are mainly reflected in two aspects. First, there are still large gaps between the logistics companies in diferent countries. When transshipping the goods, the supply chain will easily break and eventually afect the logistics speed of goods. The usual solution is to establish overseas warehouses. Another dilemma is how to increase the turnover of overseas warehouses and reduce operating costs.

3.3 Online Payment Dilemma

The development of the third-party payment industry is undeniably rapid, such as Alipay and Paypal have been eligible for cross-border E-commerce. Even so, payment still face many difficulties like customs clearance and tax refunds. In cross-border business, convert, credit, security, and risk are also factors of restricting.

3.4 After-sales Service Problems

After-sales services are very important links. The after-sales problem of cross-border E-commerce is also an important factor that discourages consumers because of the numerous links in the entire process,such as customs clearance, logistics, and so on. The after sale cost is high.

With the continuous development of cross-border E-commerce, the above problems are in fact still inevitable. However, when you understand China brands, these problems can be solved.

（1）China brands have more than one million products covering more than 100 categories. The entire suppliers are more than 10,000, with more than 1,000 brand suppliers. The quality inspection rate is 100%,guaranteeing the quality of all products on the platform.

（2）China brands cooperate with 1000+ leading logistics companies in the world with more than 10,000 logistics lines, covering more than 200 countries and regions in the world , and China brands storage covers more than 20 countries around the world.

（3）For the after-sales services, after cooperating with China brands, we will provide 7×24 hours of customer service, 100% real-time online reply, and the customer service language covers Chinese, English,German, French, and other 10 languages.

4. Trends of Cross-border E-commerce

Most of the above-mentioned cross-border E-commerce dilemma exist at the technical level. I believe the difficulties will be solved one by one with the vigorous development of the cross-border E-commerce industry and the support of the governments’ series of policies. Let’s forecast the future trend of cross-border E-commerce.

4.1 Rapid Growth

Throughout the past few years, the average annual growth rate of the cross-border E-commerce industry has been above 30%. In fact, few industries can maintain such a high growth rate, because the premise is that the environment will not change within a few years. Therefore, we can boldly predict that the cross-border E-commerce industry will continue to maintain rapid growth in the next 3-5 years.

4.2 Big Seller

Any tuyere industry will experience a process of reshuffling. In the future, the overall resources of the cross-border E-commerce industry will be further concentrated on the large platforms and big sellers. This trend is unavoidable, but it does not mean that small and medium sellers have no chance at all. They will generally enter the vertical and subdivided markets.

4.3 Professional Competition

For the high-speed development of the cross-border E-commerce industry, it can be said that the package does not keep up with the pace of development, but it does not mean this will always be the case.For cross-border E-commerce players, the requirements must be higher. In the future, the competition will be more professional.

4.4 Standardization

For an industry to have a benign development, there must be standardized policies. For the cross border E-commerce industry, whether it is import or export, there are now more and more related policies.The industry will be more standardized in the future, and for the practitioners, there will be more rationalization requirements.