After the 2024 Spring Festival, Li Tian felt that his work had entered a "hell" mode, and "8106" (arriving at the company at 8 o'clock, leaving work at 10 o'clock, and working six days a week) had basically become the norm for him to work every week.
Li Tian is the marketing manager of an international freight forwarding company in Shenzhen. As an intermediary in the field of foreign trade, his job is to communicate with upstream cross-border e-commerce, contact downstream logistics companies and shipowners, and deliver customer goods to designated countries on time. Since the beginning of this year, the growth rate of orders from cross-border e-commerce has exceeded his imagination, and the North American and Southeast Asian freight dedicated lines it connects to have continued to experience "stockouts" in the past month.
"Generally speaking, the sales peak of cross-border e-commerce usually occurs in the second half of the year, when there are many public holidays or shopping festivals. It is relatively rare to have a stock explosion in the first quarter. Nowadays, products from multiple overseas e-commerce platforms in China are being shipped in large quantities, and many merchants even charter planes at high prices. The space is very tight, and traditional and e-commerce goods are being squeezed." Li Tian said.
"Outbreak" is a term in the field of freight forwarding, referring to the serious shortage of logistics warehouse space. According to Li Tian's observation, the main categories of cross-border e-commerce that have been doing well this year are mostly subdivided, with small commodities as the majority. The products sold cover tools and accessories, home life, interests and hobbies, and other fields. One of his customers recently completed a large order in North America for "dog toilet bags". When the demand was matched, Li Tian felt incredulous. "The customer even said it was a small order for almost two tons of dog toilet bags.".
Zeng Wen, who is also with Li Tiantong in Shenzhen, has clearly felt an increase in demand for foreign trade orders this year. His company mainly produces pet products, with sales areas covering the world, but mainly focuses on the European and American e-commerce markets. In February, Zeng Wen's Amazon store's monthly GMV (total commodity transaction volume) reached a new high, nearly double the year-on-year growth in 2022.
The booming cross-border e-commerce market is a direct reflection of Shenzhen's successful start to foreign trade in 2024. According to the latest data released by Shenzhen Customs, in the first two months of 2024, Shenzhen's imports and exports reached 675.18 billion yuan, a year-on-year increase of 45%, setting a new historical high for the same period. The import and export growth rate ranks first among the top ten foreign trade cities in China; Among them, exports amounted to 441.44 billion yuan, a year-on-year increase of 53.1%. According to data released by the Shenzhen Municipal Bureau of Commerce, the total import and export volume of cross-border e-commerce in Shenzhen exceeded 300 billion yuan in 2023, a year-on-year increase of 75.2%.
The business is "easy to do". In the view of cross-border e-commerce practitioners, after the full liberalization of the existing epidemic, the practitioners accelerated their influx and actively expanded the market, which is more the result of China's cross-border e-commerce platforms represented by SHEIN (the cross-border e-commerce platform of Nanjing Xiyin E-commerce Company), TikTok (overseas version of Tiktok), Temu (the cross-border e-commerce platform of Pinduoduo), Shopee (a well-known cross-border e-commerce brand), and made the "cake" bigger overseas.
"Many customers have gone to TikTok and Temu this year. If the category is suitable, the starting quantity is very strong. If there is growth, then Temu should be the engine," Zeng Wen explained.
Expanding cross-border "cake"
Shenzhen has always been a major hub for cross-border e-commerce in China, from upstream factory manufacturing to midstream e-commerce operations and overseas logistics and freight forwarding. As a new business model in the foreign trade field in the past few years, cross-border e-commerce has formed a complete industrial chain in Shenzhen.
According to statistics from the Shenzhen Cross border E-commerce Association, in 2023, the import and export scale of Shenzhen's cross-border e-commerce accounted for over 12.6% of the total cross-border e-commerce scale in China, and the number of related enterprises has exceeded 150000. On Amazon, the world's largest cross-border e-commerce platform, one-third of Chinese sellers come from Shenzhen.
The company where Zeng Wen works is also one of them. Since 2018, Zeng Wen has been paying attention to the business opportunities contained in the pet toy category overseas. In his words, "the market size is not small, the gross profit is high, and it is easy to brand.".
"Pets are considered family members by customers in some European and American countries, and they are willing to spend money on them," Zeng Wen further explained.
There are many categories of pet toys they distribute, such as teeth grinding sticks, dog balls, plush toys, as well as pet products such as dog houses, dog poop bags, and dog brushes. The characteristic of these products is that they are very easy to find contract factories for production in the Pearl River Delta, and the cost is not high. When they are transferred to overseas e-commerce platforms, the selling price is generally around $5 to $20.
According to Zeng Wen's rough estimate, the total sales of his company's pet toy category have doubled in the first two months of this year.
Zeng Wen felt somewhat surprised by the unusually booming cross-border e-commerce since the beginning of this year. In his view, the time point for explosive sales growth in overseas markets in the past was mainly in the second half of the year, especially for e-commerce companies with major markets in Europe and America. Public holidays and shopping festivals in the second half of the year were the core factors promoting sales growth.
Seeing the sales growth since the beginning of the year, Zeng Wen didn't think too much: "If we have to find a reason, we can only say that the overseas economy is accelerating recovery, so there is more consumption. Another point is that there is also a trend of 'affordable consumption' in Europe and America now."
In the view of Li Tian, who has access to more categories of cross-border e-commerce, the recent high growth of the cross-border e-commerce industry cannot be separated from emerging platforms such as SHEIN, TikTok, Temu, and Shopee, which together have made the "cake" bigger.
"Temu is developing very quickly now, and many merchants have started to layout the Temu channel this year. Many products with low unit prices in general categories can be found in the market on it. At the beginning of this year, many of my customers were also doing Temu," said Li Tian.
Since its launch in September 2022, Pinduoduo's overseas e-commerce platform Temu has entered a "radical" expansion phase overseas. According to data released by website data analysis platform SimilarWeb, Temu has ranked second on the list of the fastest-growing large websites in the United States in 2023.
On the homepage of Temu USA, you can see a wide variety of products from China, with prices ranging from $1 to $15. Most of these products are common household items, such as portable energy storage batteries, dash cams, shoe cabinets, power banks, charging cables, etc. The four piece bedding set that the reporter browsed even achieved monthly sales of over 100000 pieces. It is worth noting that compared to the traditional four piece bedding set, one of the main selling points of this Temu product is its ability to be waterproof.
"Very suitable for children. It's very easy to replace and looks good. I haven't tried its waterproof effect yet, but I will let you know after trying it, and I will definitely buy more." An American consumer commented under the product page.
Zeng Wen started laying out platforms such as Temu and TikTok around October last year. He also noticed the huge growth potential of these emerging platforms, but he still said, "For our company, the volume of platforms such as Temu and TikTok is still relatively small and their base is low, so they are rising rapidly. The core is that the e-commerce penetration rate in overseas markets is further increasing."
"The overseas market has always had a lag compared to the domestic model, such as the" Red Man Leading Goods "and" Pinduoduo's Affordable Price Model ", which are old tricks in China, but when copied overseas, they expand quickly."
In a research report published on February 28, 2024, Huajin Securities also pointed out that the global e-commerce penetration rate has increased from 10.4% in 2017 to 19.5% in 2023. From a regional perspective, there is still a certain gap in the current penetration rate of e-commerce retail in major countries around the world compared to China (47%), and there is significant room for improvement in the future.
"I judge that at least in the next two years, the cross-border e-commerce market will still be a blue ocean," Zeng Wenxiang said.
"Walking on multiple legs"
"Cross border e-commerce has not only been growing in the past two years, but has always been like this. This is a rapidly growing industry, and I have been in this industry for over eight years. Every year, I see many sellers and brands showing significant growth," said He Ling, CMO (Chief Marketing Officer) of Wujiu Technology Co., Ltd.
The main product of Wujiu Technology is DIY intelligent devices that are self-developed and manufactured. "Our company now has intelligent engraving machines, intelligent hot press machines, polymer film materials, drawing software, graphic content libraries and other products, mainly targeting the DIY culture in overseas markets," He Ling said.
One of the intelligent hot press machines developed by Wanjiu Technology only requires simple arrangement of the desired pattern on the computer design software. In the next second, the hot press can be used to print on items such as T-shirts, bags, hats, cups, etc., creating a customized product of your own.
"Our overseas users are basically divided into three categories: the first category is called 'make money', which is the largest user group. Many overseas users design and produce DIY items through our machines and then sell them to make money. If you are a popular person and have fans, you can also design some exclusive plans, and your fans will buy your products. The second category is called 'make happiness', which we position as pure handicraft enthusiasts. They love our DIY products and are willing to constantly make them, release pressure, express themselves, and realize themselves through DIY. The third category is called' make friends'." "Making friends", DIY products have certain social and interactive attributes. Some people make them as gifts for their couples, while some parents engage in parent-child interaction with their children, which can satisfy users' emotional value. "He Ling explained.
The DIY devices of Wujiu Technology are mainly sold to countries with strong DIY culture such as Europe and America. Some consumers may even open their own stores and start their own businesses after purchasing DIY devices. According to He Ling, currently, Wujiu Technology has two independent brands, HTVRONT and LOKLiK, serving over 10 million users in more than 50 countries and regions worldwide.
"It is still quite unimaginable in China because the DIY culture needs to be cultivated, and many people initially did not believe that DIY equipment could have such a large market scale overseas." He Ling said.
When it comes to the key points of the company's product overseas growth in recent years, He Ling believes that "the times make heroes". "Due to the nature of our products, during the epidemic, our products have experienced greater outbreaks and growth compared to before the epidemic. Firstly, during the epidemic, everyone worked from home and was unwilling to go out. Our products themselves can meet everyone's needs at home. At home, he can pass the time by himself or make orders at home through this machine, and also earn some money.".
Li Tianze stated that in the past, in the cross-border e-commerce field in Shenzhen, the best-selling categories were mainly 3C. However, since 2023, the sub categories of accessories, toys, luggage, outdoor and other tracks have also accelerated their growth.
"Many people's understanding of cross-border e-commerce and foreign trade is still stuck in many years ago, thinking that it should be some plastic toys, clothes, bags, and so on. However, from last year to now, I have seen many well done customers targeting a specific segment of the general category. For example, in the home furnishings field, I have a customer who sold a shifter last year and had a huge order." Li Tian said.
The so-called furniture shifter is a moving tool with a lever and a universal wheel installed at the bottom. When moving furniture, as long as the tool is inserted into the bottom of the furniture and lifted, it can be easily moved. According to Li Tian's observation, in recent years, there has been an increasing number of e-commerce companies developing segmented products based on common scenarios in daily life.
"Small products that go global also need innovation, which does not necessarily require high technological content. Some can even be called 'small inventions', such as a four piece bedding set with waterproof function, which immediately attracts users." Li Tian said.
"Cross border e-commerce is like this, where good quality and low price will never be the core advantage. It must be that the products meet the huge needs of overseas users in specific markets and scenarios." Zeng Wen said.
Li Tian also shared a story that left a deep impression on him: "Two years ago, when we went bankrupt in the Japanese market, portable energy storage was the only option. Why? Because there were rumors in the Japanese market about the 'power shortage', and everyone was competing for portable energy storage devices. Sometimes when doing cross-border e-commerce, you never know why your products would sell well."
In He Ling's view, currently, the majority of Chinese products exported mainly rely on "cost-effectiveness", but in order to maintain sustained growth in the future, it is necessary to establish brands and independent paths belonging to merchants.
"We have made a breakthrough in quality and affordability, and our backend supply chain has played a significant role in this regard. Any small product has huge sales and demand globally. Currently, most cross-border e-commerce enterprises have a similar development path. At first, we chose to operate on multiple platforms and categories. Initially, we engaged in Amazon business, and then we also chose to conduct multi platform analysis and category analysis. Finally, we found that the DIY sub category has great potential, so we continuously cut down other categories and focused on this track." He Ling said.
"We are also doing Temu, Amazon and other similar businesses, and we also have our own e-commerce platforms and offline agents. This time in the Netherlands, one of our goals is to find local offline agents. Cross border shipping must have 'multiple legs'," He Ling said.
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