2014 China Cross-border E-commerce Report

Transcription

2014 China Cross-border E-commerce Report
(Brief Edition)
www.iresearchchina.com
1
Development Environment of China Cross-border
E-commerce
2
China Cross-border E-commerce Industry Chain
3
Status Quo of China Cross-border E-commerce
4
Typical Cases and Business Models
5
Characteristics and Trends of China Cross-border
E-commerce
2 2
Development Environment of China Cross-border Ecommerce
Definition of Cross-border E-commerce
Cross-border e-commerce can be defined in both broad and narrow sense.
• In a narrow sense, cross-border e-commerce is almost equal to cross-border retailing, in which transaction parties in
different countries reach agreements and settle accounts through the Internet and deliver/receive the goods via cross-border
logistics.
• In a broad sense, cross-border e-commerce equals electronic foreign trade. It’s a kind of international business, in
which the product display, negotiation and transaction are done via the Internet and goods are delivered through
cross-border logistics.
The cross-border e-commerce mentioned here refers to the latter one, which only covers cross-border e-commerce
transaction, excluding cross-border e-commerce services. It consists of the cross-border online B2B deals as well as
the B2B deals in O2O pattern.
Cross-border E-commerce
Cross-border E-commerce Transaction
(cross-border e-commerce in broad sense adopted by this report)
cross-border e-commerce = cross-border B2C e-commerce + crossborder B2B e-commerce
Cross-border E-commerce
Services (excluded)
Cross-border Retailing/Cross-border B2C
e-commerce
cross-border B2B e-commerce
(cross-border e-commerce in narrow
(O2O deals + online deals)
sense, cross-border e-commerce)
3 3
China Foreign Trade Conditions in 2013
Domestic and International Factors Slowed the Growth
The total foreign trade volume of China amounted to 25.8 trillion Yuan in 2013, and the growth rates of import and export both
attained certain rise versus 2012. However, due to the slow pace of world economic recovery, climbing domestic labor costs,
appreciation of the RMB and worsening trade friction, the growth rate of China’s total foreign trade volume was always below 10%
in recent two years. iResearch forecasts that such situation will remain in 2014 with limited rise in the total volume.
China’s Total Foreign Trade Volume 2005-2013
25
38.0%
23.9%
20.6%
19.5%
8.5%
20
-13.7%
16.8%
4.5%
30.5%
15.7%
6.5%
15.2%
7.3%
5.9%
1.0%
-18.3%
15
10
10.0
9.4
7.8
6.3
7.3
11.3
10.7
13.7
12.9
12.3
12.1
11.4
9.5
8.0
8.2
6.9
6.3
5.4
5
0
2005
2006
Total value of exports (tr Yuan)
2007
2008
2009
Total value of imports (tr Yuan)
2010
2011
% Growth of exports
2012
2013
% Growth of imports
Source: National Bureau of Statistics of China.
4 4
China Foreign Trade Conditions in 2013
Cross-border E-commerce Simplifies Foreign Trade
Due to the excessive dependence on traditional sales model, long transaction duration, relatively less profit margins and alike
problems, traditional foreign trade is increasingly unfavorable to the business development of small and medium foreign trade
companies.
As a business model based on the Internet, cross-border e-commerce is rebuilding the international trade chain of SMEs. By
breaking the monopoly of foreign channels such as importers, wholesalers, distributors and retailers which exists in traditional
foreign trade, cross-border e-commerce enables companies to contact with individual wholesalers, retailers and even consumers
directly, which effectively simplifies the transaction and saves goods circulation costs.
There was basically no traditional foreign trade companies and manufacturing companies in e-commerce sector prior to 2012, and
they began to set foot in this area in about 2013. Cross-border e-commerce is gradually becoming a significant choice of traditional
companies.
Traditional
Chinese
Foreign Trade Producer/Manufacturer
Chinese
Exporter
Foreign
Importer
Chinese
Cross-border
Producer/Manufacturer
E-commerce
Online
Merchant
Cross-border
E-commerce
Platform
Chinese
Cross-border
E-commerce
Platform
Foreign
Online
Merchant
Chinese
Cross-border
E-commerce
Platform
Foreign
Consumer
Foreign
Wholesaler
Foreign
Retailer
Foreign Online
Merchant
Foreign
Consumer
Foreign
Consumer
Foreign
Consumer
5 5
Policies About Cross-border E-commerce
More and More Supportive Policies
Early Stage
Development Stage
High-tide Stage
C Since 2013
B 2008-2012
10 policies involving
supervision, payment and
settlement, and so on,
placing extra emphasis on
support and guidance.
A 2004-2007
3 policies preliminarily
regulate the development of
e-commerce, placing extra
emphasis on the industry.
2004
2004
2005
2005
2006
2006
2007
2007
More than 10 policies
focusing on export
and involving
implementation.
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013-2014
2013-2014
6 6
Different Customs Supervision for Different Kinds of Customs Clearance
 Regarding the goods traded via cross-border e-commerce, there are mainly three means for goods to cross national boundaries:
(1) Customs clearance of goods: for the situation that Chinese import and export companies display products and make
agreements with foreign wholesalers and retailers online and finish shipments offline, these goods shall be included in customs
statistics. There are also some companies building cross-border e-commerce platforms for import and export companies, such
as Onetouch in Shenzhen which helps SMEs with their foreign business, and the involved goods are also included customs
statistics.
(2) Customs clearance of express: according to a survey carried out by General Administration of Customs , more than 95% of
the goods traded via cross-border e-commerce and delivered by the five biggest express companies in China are declared as
import and export goods at customs and are included in cargo statistics. Only less than 5% the goods are declared as personal
belongings and are not included in customs statistics.
(3) Customs clearance of mail: goods bought online and delivered by mail are mainly daily essentials. According to related
regulations issued by General Administration of Customs and the State Council, goods for personal use of reasonable amount
are out of compulsory customs clearance and statistics.
With the development of cross-border e-commerce, trading is becoming more and more fragmented. Some of traditional trade has
shifted to cross-border e-commerce, and goods are delivered by express or mail. Under this circumstance, General Administration
of Customs is searching for an improved statistical system to cover all goods.
 For different trading modes of cross-border e-commerce, there are following differences in customs clearance:
(1) B2B export: if goods are exported on a large scale, they are actually in traditional trade. For goods exported on a small scale
by express or mail, it’s hard to get customs forms, and there are also some troubles in goods inspection, settlement of exchange
and tax reimbursement.
(2) B2B import: the overall situation is basically the same as that of B2B export.
(3) B2C export: because it mainly targets overseas customers with relatively small orders but high trading frequency, and goods
are usually delivered by express or mail, it is not included in current customs regulatory system, so there are also some troubles
in goods inspection, settlement of exchange and tax reimbursement.
(4) B2C import: these goods, which are delivered by express or mail, are mainly bought for personal use, and they’re not involved
in customs statistics. Domestic consumers have large demands for overseas products, which encourages emergence of parallel
traders and illegal purchasing agents. Besides, the current cargo regulatory system is unsatisfactory in maneuverability, so
relevant departments are trying to improve and perfect it.
7 7
Pilot Cities: Exploration of Customs Clearance of Express and Mail
In cross-border e-commerce, goods delivered by express and mail often face troubles in customs clearance, settlement of
exchange and tax reimbursement. In order to solve these problems, General Administration of Customs selected some pilot cities to
study the standard regulations and management system of cross-border e-commerce and improvement of customs clearance
management and service. The project innovates in two aspects: policy innovation, which explores management system suitable for
cross-border e-commerce, and innovation of information technology, which enables related departments to work together and share
data with enterprises in e-commerce, payment and logistics sectors.
In December 2012, General Administration of Customs officially selected five cities including Shanghai and Chongqing as the pilot
cities. In October 2013, the project was carried out in some other suitable cities which are usually logistics centers, port cities,
places of origin, etc.
There are four kinds of business can be applied for by pilot cities. According General Administration of Customs, only six cities,
including Chongqing, Guangzhou and Shanghai, are allowed to operate import business of cross-border e-commerce, and other
cities can only deal with export business.
Pilot Cities of Cross-border E-commerce
Group
Project
Startup
Stage
Project
Expanding
Stage
Approval
Time
Pilot City
2012
Zhengzhou, Shanghai,
Chongqing, Hangzhou,
Ningbo
20132014
Examination and
Approval
Authority
General
Administration of
Customs
10+ cities including
Changsha, Shenzhen,
Suzhou, Qingdao,
General
Guangzhou, Pingtan,
Administration of
Yinchuan, Mudanjiang,
Customs
Harbin, Yantai, Xi’an and
Changchun
Approved Cross-border E-commerceBusiness for
Some Pilot Cities
City
Direct
Purchase
Import
Bonded
Import
General
Export
Bonded
Export
Chongqing
√
√
√
√
Guangzhou
√
√
√
√
Shanghai
√
√
√
√
√
√
√
Ningbo
Hangzhou
Zhengzhou
√
√
√
8 8
Pilot Cities: Exploration of Import Business
Currently, the exploration of cross-border e-commerce can be divided into two parts, namely export and import:
(1) Export: according to General Administration of Customs, by April 28, 2014, cities including Hangzhou, Zhengzhou, Guangzhou
and Chongqing had been involved in export business of cross-border e-commerce and more than 250,000 export lists had been
checked and approved, which equaled to 1,393 export declaration forms with an approximate value of 29.25 million Yuan.
(2) Import: making their special functions and advantages into full play, pilot cities create bonded import and direct purchase import
models for online shopping. By April 28, 2014, cities including Shanghai, Ningbo, Hangzhou, Zhengzhou and Chongqing had
been involved in import business and nearly 60,000 packages had been checked and approved with an approximate value of
20.48 million Yuan. These pilot cities had made many attempts, and relevant platforms such as Kjt and KJB2C were launched
one and after under the instruction of related governmental departments.
Comparison of Two Import Models of Cross-border E-commerce
Import Model
Operation
Advantages &
Disadvantages
Goods Price
Structure
Direct Purchase Import
Consumers buy goods from abroad. These goods Foreign goods are temporarily stored in bonded areas after arriving in China.
are shipped by international transportation means If someone purchases the goods, they will be regarded as personal items
and then reach domestic consumers directly.
and be delivered to domestic consumers with local logistics.
Advantages: it provides a variety of products, so
Chinese consumers can directly communicate with Advantages: it takes less time to finish delivery; quality is guaranteed by
overseas businesses and buy scarce and novel
customs supervision; convenience in after-sale services like changing and
products with good quality.
refunding improves shopping experience.
Disadvantages: it takes a relatively longer time,
Disadvantages: limited categories of goods
from 7 to 10 days.
Commodity price + logistics costs + personal postal Commodity price + personal postal articles tax (subject to adjustment of
articles tax (subject to adjustment of merchants)
merchants)
Typical Pilot City Hangzhou, Guangzhou
Result
Bonded Import
N/A
Kjt, KJB2C, Emaoe, Igetmall
According to customs in Shanghai and Ningbo, kjt.com was launched at the
end of 2013. By the end of March, 2014, Kjt had finished 26,766 orders,
which mainly consisted of imported food like Frappuccino and milk powder.
Since Ningbo commenced cross-border e-commerce import business at the
end of November, 2013, 15,017 orders had been examined and approved
which valued 49.75 million Yuan by March 30, 2014. These orders were
mainly about diapers, stainless steel thermal cups and food.
9 9
Investment in Cross-border E-commerce
More and More Attention From Investors
In recent years, e-commerce industry has always been a highlight in capital market. From January 1, 2010 to September 30, 2014,
there were 567 investment and financing cases in e-commerce industry, including 99 cases in 2010, 176 cases in 2011, 92 cases in
2013 and 103 cases by September 30 in 2014. Many cross-border e-commerce operators, such as Alibaba, DHgate, Lightinthebox
and OSell, etc. all attained investment of different amounts. The details are as follows.
Investment and Financing Cases in E-commerce Industry 2010 – Sep. 30, 2014
Company
Time
Investor
Announced Amount
Unit
Sep. 18, 2012
China Investment/CITIC Capital/CDB Capital/Boyu
Capital
2
Bn USD
Oct. 8, 2011
DST/Silver Lake/Temasek/Sequoia Capital
1.6
Bn USD
Sep. 12, 2014
China Growth Capital/TDF Capital
Hundreds of Millions
RMB
Mar. 11, 2010
Warburg Pincus, etc.
200
Mn RMB
Sep. 27, 2011
Jan. 1, 2011
Northern Light Venture Capital
SIG Asia Investment
3.95
N/A
Mn USD
Jun. 5, 2010
Northern Light Venture Capital
4
Mn USD
Mar. 23, 2012
Ceyuan Ventures, GSR Ventures
GSR Ventures/Trustbridge Partners/Ceyuan
Ventures/Banean
8
Mn USD
35
Mn USD
Alibaba
DHgate
OSell
Lightinthebox
Global Market
Oct. 25, 2010
Jun. 1, 2010
Shanghai International Group
11.31
Mn USD
Jun. 28, 2014
Founders’ Fund, Legend Capital, Formation 8, GGV
Capital, Yang Zhiyuang
50
Mn USD
Apr. 1, 2014
GGV Capital, Formation8
19
Mn USD
Sep. 1, 2014
Sealand Jianguo Capital
Tens of Millions
RMB
Oct. 1, 2013
Qingsong Fund
Million
RMB
Wish
ZZKKO
Source: China Venture.
10 10
1
E-commerce
2
3
4
5
E-commerce
11 11
China Cross-border E-commerce Flow
In terms of the export flow of cross-border e-commerce, producers or manufacturers display their products on cross-border ecommerce platforms. After the products are selected and paid by customers, they will be sent to logistics companies by crossborder e-commerce operators for delivery. The products will finally reach the customers after two inspections at customs (for export
and import). Some cross-border e-commerce operators cooperates with third-party comprehensive service platforms and entrust
them with logistics, goods inspection and alike procedures. Import flow is just opposite to that of export flow.
Product
Cross-border Ecommerce Company
Logistics
Company
Payment
Company
Overseas
Logistics
Domestic
Logistics
Import
Export
Consumer/
Company
Cross-border
E-commerce
Platform
Customer
Customs
Third-party Comprehensive
Service Platform
Consumer
Company
Self-run Crossborder Ecommerce
Company
Customs
Clearance
Logistics
Payment
Cross-border
E-commerce
Company
Producer/
Manufacturer
12 12
Information
Service Platform
2B
Cross-border E-commerce Company
Trading Service
Platform
2C
Platform
Consumer/Company
self-run Site
Shopping Guide Site
Others
Comprehensive
Service Company
Logistics Integrating
Company
Payment Company
Third-party Service Company
IT, Marketing, Third-party
Opration, etc.
Logistics Company
Logistics Service
Provider
Finance Company
Financing Company
Insurance Company
13 13
Classification of Cross-border E-commerce Companies
Classification of Cross-border E-commerce Companies
Export
vs
Import
Platform
vs
Self-operation
2B
vs
2C
Export Company: Made-in-China, AliExpress, Dhgate, etc.
Platform: AliExpress, DHgate
(without purchase and delivery)
2B: Made-in-China, Alibaba, etc.
Self-operation + Platform: OSell,
Lightinthebox, etc.
(price difference for self-run business and
commission for platform business)
2B+2C: Dhgate, OSell, etc.
Comprehensive
Comprehensive: Made-in-China, AliExpress, etc.
vs
(large traffic, large number of goods and diversified business)
Vertical
Others
Import Company: Ymatou, Kjt, etc.
Self-operation:
DealExtreme, Milanoo, etc.
(with purchase and delivery)
2C: eBay, AliExpress, etc.
Vertical: Liming Heavy Industry, Milanoo, etc.
(focus on core products and business)
Changing with the development of users demand and companies (such as cross-border shopping guide, etc.)
14 14
1
E-commerce
2
3
4
5
E-commerce
15 15
History of China’s Cross-border E-Commerce Platform
In 1998, the first group of cross-border e-commerce platforms represented by Alibaba B2B and Made-in-China emerged. These
websites mainly released information, promoted deals and bridged sellers and buyers. However, there were also some problems.
Firstly, without professional and in-depth service, logistics and payment are satisfactory. Secondly, the websites could hardly offer
other profound and professional services except for information. Finally, enterprises would negotiate and make deals offline after
online inquiry. With the development of this sector, some B2B e-commerce enterprises represented by DHgate gradually
transformed into transaction platforms with commission as their major profit source. Since 2013, B2B enterprises began to offer
services during and after the trading, covering logistics, storage and financing.
Meanwhile, there were gradually some cross-border B2C enterprises since 2006, including DX, Lightinthebox and OSell. These
companies greatly reduced the intermediate parts of the industry chain and made generous profits from the difference between
purchasing and selling price. They are developing rapidly in recent years.
Information Service
Transaction Service
Resource Integration
Membership fee + Marketing Charge
Commission
Commission + Service Fee
B2B
Early Stage of B2C
B2C
Difference Between Purchasing and Selling Price
1998-2002
 Made-in-China, Global
Market, Alibaba B2B,
Onetouch, etc. were
founded one after another;
 Early cross-border B2B ecommerce enterprises
made profits by releasing
paid information.
1997
2002
2003-2005
2006-now: Development Stage of B2C
 Chukou1, DHgate, 4PX,
BizArk, etc. were founded;
 Enterprises made profits by
collecting commission and
began to offer some valueadded services.
 In 2006, DealExtreme, Lightinthebox, Tradetang,
OSell and other B2C enterprises were found in
sequence;
 Most B2C enterprises established during this
stage made profits from the difference between
purchasing and selling price. Lightinthebox was
listed in the NYSE in 2013.
2005
2008
2011
2013 2014 ……
16 16
3.1 Trillion Yuan GMV in 2013
The GMV of China cross-border e-commerce amounted to 3.1 trillion Yuan in 2013, rising by 31.3% and making up 11.9% of the
total foreign trade volume. With unveiling of many favorable policies concerning cross-border e-commerce, many insiders are
actively improving the industry chain. It’s expected that this sector will maintain a rapid and stable progress for a few years and will
contribute 20% or so to the total foreign trade volume in 2017.
China Foreign Trade Volume and Cross-border E-commerce GMV 2010-2017
60
41.0%
40.1%
32.0%
31.3%
30.6%
29.3%
25.9%
22.2%
14.8%
17.6%
20.5%
23.1%
11.9%
50
6.3%
9.6%
7.5%
40
34.6
32.0
29.5
30
24.3
23.6
20
27.1
25.8
20.2
10
2.3
1.8
1.3
3.1
8.0
6.5
5.2
4.0
0
2010
2011
2012
2013
2014e
2015e
2016e
Total foreign trade volume (tr Yuan)
Cross-border e-commerce GMV (tr Yuan)
% Contribution of cross-border e-commerce to Foreign Trade
% Growth of cross-border e-commerce GMV
2017e
Note: China cross-border e-commerce GMV involves cross-border e-commerce retailing and cross-border B2B e-commerce.
Source: The data is based on the data released by National Bureau of Statistics of China, financial results published by enterprises, interviews with experts and iResearch
statistical model.
17 17
Nearly 90% of China Cross-border E-commerce Were Export
China’s cross-border e-commerce structure reveals that in 2013, export accounted for 88.2% of the total GMV, so the import
business is still in its early stage. With domestic consumers’ increasing demand for overseas products, it’s expected that the import
sector will grow constantly in future. However, as import business is sensitive to state’s policies, its growth will be relatively steady
and slow.
Share of Import and Export in China Cross-border E-commerce GMV 2010 -2017
100%
6.5%
7.6%
9.8%
11.8%
13.3%
14.6%
15.6%
16.2%
88.2%
86.7%
85.4%
84.4%
83.8%
2013
2014e
2015e
2016e
2017e
80%
60%
93.5%
92.4%
90.2%
40%
20%
0%
2010
2011
2012
Export
Import
statistical model.
18 18
B2B Accounted for 93.9% of China Cross-border E-commerce
From the perspective of transaction modes, B2B was absolutely the dominant mode with a share of nearly 93.9% in 2013, and such
situation is expected to maintain due to its considerable and stable orders. B2C will also gain certain progress in future thanks to the
fragmentation trend of cross-border e-commerce. It’s estimated that B2C’s share will rise to 10% in 2017.
Share of B2B and B2C in China Cross-border E-commerce GMV 2010 -2017
100%
2.3%
3.2%
4.6%
6.1%
7.6%
9.2%
10.4%
11.1%
95.4%
93.9%
92.4%
90.8%
89.6%
88.9%
2012
2013
2014e
2015e
2016e
2017e
80%
60%
97.7%
96.8%
40%
20%
0%
2010
2011
B2B
B2C
statistical model.
19 19
1
E-commerce
2
3
4
5
E-commerce
20 20
DHgate: A Third-party Cross-border B2B Transaction Platform
DHgate.com was launched in 2014 as a cross-border B2B e-commerce platform. It mainly sells electronic products, mobile phones
and accessories, computers and Internet products, wedding articles, etc. Europe, America and Australia are its major market, and
currently it owns 1.2 million domestic suppliers, 5.5 million buyers and 25 million kinds of products.
Was founded
2004
Gained the firstround investment
2005
2006
DHgate2.0 was
launched
2007
2008
● Finished the thirdround financing
● Launched online small
loan service with CCB
2009
2010
Set up overseas
customer service
center in the
Philippines
2011
2012
2013
● Finished the fourthround financing
● Russian version was
released
2014
● Launched Yiwu Global
International
transaction
platform was
official launched
Became Google’s
important strategic
partner in China
 Became a
partner of UPS
 Dhpay was
launched
 Dhexpress was
launched
 Mobile platform
was launched
Online Goods Center
● Started online delivery
service
● Became Google’s ad agent
in China
● mobile visits accounted for
one third of total visits
21 21
DHgate: Commission + Service Fee
DHgate.com is a transaction platform providing transaction services for both buyers and sellers in order to promote online trading.
Based on the positioning, Dhgate’s profit consists of two parts: (1) commission: DHgate.com serves as a transaction platform for
buyers and sellers and charges the buyers a certain amount of commission for successful transactions, and (2) service fee: since
cross-border e-commerce is operated by users in more than 200 countries and one hundred thousand cities around the world, it is
much more complicated than domestic e-commerce. Also, the whole transaction process of cross-border e-commerce takes more
time, and buyers and sellers call for services of higher standards. The complicated and commercial features of these transaction
determine that multiple services are needed in the whole cross-border transaction process. Given the characteristics, Dhgate
provides services like intensive logistics, financial service and agency service for some fees.
Transaction:
Commission
交易佣金
Service: Service Fee
 Transaction commission: it is free to
register, upload product information
and display them on DHgate.com. The
buyer will only be charged
commission based on the transaction
volume for a successful transaction.
 Commission model: DHgate adopts
the single commission rate model,
which means that a fixed proportion of
commission is charged according to
the category. This model works with a
multistep commission policy—when a
single order is worth no less than
USD300, the commission rate is
4.5%.
 Service fee: DHgate provides services for
merchants including opening a new shop,
platform operation, marketing, fund
settlement and so on.
 Marketing: to improve product exposure, it
provides merchants with marketing tools,
including priced advertising, bidding
advertising, display plans, etc. by charging
fees in the form of DHgate coins.
 Third-party
Operation: it tailors services
电商研究
for merchants in terms of training, shop
decoration, account management, etc.
Fees are charged according to different
services.
 Integrated foreign trade service: it
provides services including online financial
service, intensive logistics, and a set of
services of storage, customs clearance, tax
refund and goods inspection by charging
certain service fee.
22 22
DHgate: Nationwide Suppliers + Platform + Integrated Service +
Impressive Performance of Mobile Sector
Nationwide Suppliers
Service object: expanding from small and medium
merchants to large foreign trade companies,
manufacturers and brand owners.
Platform expansion: besides transaction platform,
DHgate launched online cargo center for traditional
foreign trade companies. In August 2013, DHgate
launched a “global online cargo center” by
cooperating with the merchants in Yiwu.
Integrated Service
Apart from basic services based on the platform,
DHgate is optimizing its integrated services:
Payment: DHpay has access to more than 30 payment
means in the world;
Logistics: online delivery, warehousing and
concentrated freight services. The DHlink supports
more than 20 logistics channels including EMS, UPS,
DHL, etc.
Credit: DHCredit cooperates with financial institutions
to provide credit service.
Other value-added services: training, marketing,
third-party operation, etc.
Platform
Positioning: a third-party B2B cross-border
transaction platform, committing to helping
Chinese SMEs to enter global market through
cross-border E-commerce platform.
Platform advantage: by June 2014, DHgate had
owned 1.2 million merchants, 25 million kinds of
online goods and 5.5 million buyers, with 100
thousand visitors per hour. It has great
advantages in users, traffic and goods categories.
Impressive Performance of Mobile Sector
App: in 2011, it launched the first app for buyers in
cross-border e-commerce sector, followed by a
WAP platform for buyers and an app for merchants.
Also, a mobile laboratory was set up in Silicon
Valley.
Development: its mobile business develops
rapidly. By June 2014, visits of mobile DHgate.com
accounted for 42% of the total visits. Compared to
the same period in 2013, the transaction volume,
new buyers and active buyers respectively
increased by 200%, 248% and 220%.
23 23
Lightinthebox: A Cross-border B2C E-commerce Website
Established in 2007, Lightinthebox is the biggest foreign trade B2C website in China now. At first, Lightinthebox focused on selling
customized wedding dresses. Later, its business scope has expanded to 14 categories and more than 60 thousand kinds of goods,
including apparel, electronic products, toys, accessories and household items. Europe and North America are its major markets. On
June 6, 2013, Lightinthebox went public in New York Stock Exchange. The offering price was USD 9.5 and it got financing worth
USD 78.85 million. In Q3 2014, the net revenues reached USD 99 million. Specifically, the net revenues of apparel, its major
category, increased to USD 37 million at a YoY growth rate of 103.9%. In addition, the number of orders and customers both
experienced an over 50% YoY growth.
 The third warehouse in
Shenzhen
 Attained second-round
 Established VIIE
Was established and

Went public in New
investment of USD11.27
Focused on B2B
York Stock Exchange
million in 2009
foreign trade of

Self-operation and
 The second warehouse
electronic products
special offers of apparel
in Suzhou
2007
2008
2009
 Established LightInTheBox
Holding Co., Ltd.
 Attained first-round investment of
USD5 million
 Began to sell wedding dresses
 The first warehouse in Shenzhen
2010
 Attained thirdround investment
of USD35 million
 Acquired Ouku
2011
2012
2013
2014
 Announced its global open
platform of fashion goods
strategy
 Established a logistics center in
Europe
 Established a mobile Internet
R&D center in Chengdu
 Established wedding dress
design center
24 24
Lightinthebox: Difference Between Purchasing and Selling Price
As a foreign trade B2C website, the main operation pattern of Lightinthebox is selling goods made in China to oversea individuals.
Currently, its profits come from the price difference between product purchasing and selling. In May 2014, Lightinthebox released its
strategy of global fashion open end platform, that is, it attracts businesses around the country to its platform and promises to
provide them with four services consisting of glocalization, order fulfillment, customer service and open data. Concerning income
pattern, Lightinthebox takes certain proportion of sales as its income instead of charging annual fee. So far, the price difference of
self-support goods accounts for the biggest part of its income.
Self-operation: Difference Between
Purchasing and Selling Price
Platform: Commission
 Purchase: bypassing middlemen,
70% of goods are purchased directly
from manufacturers to save
purchasing cost.
 Potential clients: domestic
traditional offline brand owners,
online brand owners and foreign
trade manufacturers.
 Sales: it purchases goods directly
from manufacturers in China at low
prices and sells them to consumers at
oversea market prices, which
generates high gross profit.
 Categories: only apparel, mainly
ready-made clothes but not
wedding dresses, the key product
of Lightinthebox. More categories
are likely to be operated when the
platform gets mature in the future.
 Gross profit: in Q3 2014, the net
revenues of Lightinthebox rose to
USD99 million at a fast pace and the
gross profit grew to USD36.65 million
at a stable growth rate. While
maintaining certain gross profit,
Lightinthebox expanded its scale to
gain scale effect.
 Charging pattern: Lightinthebox
obtains 15% of sales from
merchants without annual fee.
25 25
Lightinthebox: Supply Chain + Online Marketing + Localization
Supply Chain
Supply chain: Lightinthebox purchases products from
manufacturers and sells them to consumers directly, which
achieves the shortest supply chain — from factories to
websites and then consumers. This pattern helps it to earn
higher gross profit.
Supply chain management: on one hand, to provide
more various goods on the website, Lightinthebox seeks
cooperation with more suppliers and keeps enriching the
category of goods. On the other hand, it engages suppliers
in the supply chain and makes them update the products
actively so as to accelerate the update of goods on the
website.
Customized goods: Lightinthebox trains suppliers’ ability
to coordinate production in advance. Suppliers produce
according to demands. After receiving an order, products
will be produced within 10 to 14 days and then delivered to
Lightinthebox’s warehouse. For customized standard
products, suppliers usually deliver them to Lightinthebox’s
warehouse within 48 hours. Besides, Lightinthebox
established wedding dress design center to enhance
design capacity.
Standard products: some suppliers are required to
produce goods in advance and store them in
Lightinthebox’s warehouse. By this way, it’s more efficient
to deal with orders and effectively avoid inventory risk.
Online Marketing
Online marketing: accurate online marketing
technology — penetrating into target market by
promotion means including socialized marketing, search
engine, display ads, etc. Lightinthebox shifts from online
marketing to brand building and seeks a balance
between product promotion and mobile business.
Marketing expense: Lightinthebox invests equally in
Google, SNS like Facebook, local Internet associations,
etc. for marketing. The marketing efficiency is improved
at lower expenses.
Localization
Oversea warehousing: Lightinthebox has established
warehouses in Europe and North American and
warehouse in South America is under planning.
Overseas office: it set up an overseas office in the US
in early 2014
Staff and service: it employs local people in America,
Spain, Poland, etc. It also employs local staff to localize
customer service, serving more than 20 countries.
Localized marketing: it builds and strengthens brand
popularity and reputation in local market through local
Internet associations and socialized marketing.
26 26
OSell: A Cross-border E-commerce O2O Platform
OSell was established in 2009. It mainly sells goods like electronic products, apparel and gardening products in six major regions —
Russia, Brazil, India, Europe, America and Australia. It has more than 10 branches in America, Canada, Japan, Australia, etc. It’s
one of the biggest cross-border e-commerce O2O platforms in China, owning nearly a thousand employees from China and
overseas. OSell has more than 1,000 local sales channels around the world, more than 20 oversea warehouses, over 50 logistic
channel cooperators and more than 70 payment means.
Was established
2009
 Launched Groupbuy
 Promoted its own payment
tool — Dino Wallet
 Finished first-round
financing in January
 Finished third-round
financing in September
2010
 Obtained the firstround venture
capital in January
2011
2012
 Launched 18985,
a domestic
suppliers platform
 Established cloud
warehouse
2013
2014
 O2O business entered Russia,
Brazil and India
 Access to cross-border ecommerce customs clearance
service platform of GACC and
Pingtan
 Cross-border e-commerce
O2O conference
 The first publicly supervised
warehouse in China was built
in Dongguan
27 27
OSell: Difference Between Purchasing and Selling Price + Service Fee
OSell adopts the cross-border O2O model. Concerning product supply, besides purchasing for self-run business, it attracts
businesses on 18985, a domestic supplier platform, and OSell cross-border O2O association for its platform business. Chinese
suppliers can launch new products, manage orders and clients and accomplish payments with e-wallet on 1898 platform. Also, they
can promote goods to oversea retailing market by participating in cross-border O2O online trading association. Concerning product
selling, it adopts OSell cross-border O2O platform for overseas business and establishes and integrates oversea retailing system,
which improves after-sale service greatly. Overall, OSell has two profit models: (1) self-run business mainly earns profits from the
price difference between purchasing and selling products; (2) platform business mainly makes profits by charging service fees.
Supplier
Supply
Goods
Supplier
Registration
Supplier
Overseas
Consumer
Dinodirect
18985
Platform
OSell
Osell Crossborder O2O
Association
Osell Crossborder O2O
Association
Offline O2O Store N1
Offline O2O Store N2
……
Offline O2O Store Nn
Overseas O2O Exhibition
Self-run: Difference Between Purchasing
and Selling Price
 Category: popular categories include
apparel, shoes and accessories, mobile
phone, tablet, Internet items, automobile
and motorcycle accessories, camera,
video camera, etc.
 Sales: OSell gains profits by purchasing
goods directly from manufacturers in
China at a low price and selling them to
overseas consumers or businesses at an
overseas market price.
Overseas
Retailer
Overseas
Retailer
Overseas
Domestic
Registration
Self-run
Business
Platform: Service Fee
 Cloud warehouse service: OSell
provides services including receiving
cargo, pre-process activities like
sorting, printing code and goods
inspection, delivery and storage. Fees
are charged according to goods
weight, quantity or service time.
 Other services: fees are charged for
services like transnational trade
settlement and customs clearance
agency.
28 28
OSell: Cross-border O2O + Cloud Warehouse + Localized Operation
Cross-border O2O
 Model: OSell is a pioneer and leader of crossborder O2O. It connects domestic suppliers via
18985 and cross-border O2O online trading
association and establishes and integrates
global retailing network through OSell. In the
form of cross-border O2O exhibition and offline
experience shop, it sells Chinese goods to
oversea retailing market and builds a platform
providing service and customization.
 Advantages: OSell solves the delivery problem
of Chinese suppliers when selling in global
market and guarantees services and credits
while overseas retailers purchasing from China.
Localized Operation
 Office: overseas sales offices are established
in Moscow, Sao Paulo, New Delhi, Montreal,
Canberra, etc., owning more than 200 foreign
employees who are in charge of sales and
promotion in overseas market.
 Channel and storage: OSell has more than
1,000 local sales channels around the world
and over 20 overseas warehouses.
Cloud Warehouse
 Cloud warehouse: Osell’s transnational e-commerce storage
and delivery solution covers receiving cargo, sorting, goods
inspection, printing code, storing and delivering. Sellers send
products to the warehouse where the products will be packed
and shipped. Besides the basic services above, cloud warehouse
provides value-added services such as weighing, taking pictures
of products and parcels, customized package, etc., in order to
satisfy different clients’ needs.
 Storage: OSell has warehouses in Yangze Delta and Pearl River
Delta. The total area of the two big warehouses in Shenzhen is
30 thousand square meters. It has a publicly supervised
warehouse in Dongguan which links up with customs as well as
inspection and quarantine departments to complete one-stop
customs clearance. In Heilongjiang, it has cooperative delivery
centers which facilitate foreign trade companies to explore
Russian market. In addition, it also has warehouses in Russia,
India, Britain, America, Australia, and so on.
 Delivery: its delivery service reaches more than 200 countries
around the world and it is not limited by weight, volume and sea
route congestion in busy seasons.
 Advantages: it helps Chinese manufacturers and merchants to
conduct localized selling in overseas market by reducing logistic
costs. Meanwhile, real time inventory management and
supervision can be achieved. It takes less time to receive goods,
which improves buyers’ satisfaction.
29 29
1
E-commerce
2
3
4
5
E-commerce
30 30
E-commerce
Characteristics: Participants, Industry Chain and Brand Operation
After developing for more than a decade, China cross-border e-commerce has experienced the periods of information publishing,
transaction platform and the current booming of B2C. It shows different characteristics in each stage. Since two years ago, as the
public pays increasing attention to cross-border e-commerce and participants commit to the sector, there are some new
characteristics, including the following aspects:
Participants
•Before 2012, micro and small businesses, individual merchants and online
merchants were the main participants. Since 2013, the main participators in
traditional trade like foreign trade companies, manufacturers and brand owners
began to enter this sector and have gradually formed certain scale.
Industry Chain
•Steps like marketing, customs clearance, commodity inspection, logistics and
payment may affect the development of cross-border e-commerce. Concerning
that, cross-border e-commerce companies keep expanding their services and
try to provide integrated services by combining various resources. With the
emergence of new service providers, the whole industry chain and the service
chain of the industry are getting clearer and sounder.
Brand Operation
•By taking China’s advantage in manufacturing, selling cheap but good-quality
goods and OEM were the main patterns of early cross-border e-commerce. In
recent two years, many companies start running their own brand. Especially
some big companies begin to build their own platforms to introduce their
brands to oversea market and increase their value.
31 31
E-commerce
Problems: Products, Logistics, Customs Clearance, etc.
Different trading models in cross-border e-commerce lead to different problems. Block export and import deals conducted in traditional
trading models still need paper documents, which hinders the convenience of trade and application of e-commerce in trade. For
fragmented trade, there are also some industrial problems related to products, logistics and customs clearance.
Severe homogeneity of products: in the recent two years, the rapid development of cross-border e-commerce has attracted
many businesses, resulting in fierce competition in the sector. Some products like 3C products and accessories are popular and
profitable, so many cross-border e-commerce companies are selling them. Some of these companies even compete with very low
price.
Brand advantage is yet to be built: the rapid development of cross-border e-commerce greatly relies on China’s manufacturing
advantages and low product price. Many products like 3C products and apparel in cross-border e-commerce are produced by
small factories. Hence there are problems in quality control and most cross-border e-commerce companies have not built their own
brands yet.
Time-consuming and unstable logistics: related policies in different countries vary greatly, so unlike domestic e-commerce,
cross-border e-commerce cannot deal with logistics by building the companies’ own logistic systems. Logistics of cross-border ecommerce is time-consuming. For instance, it usually takes 7 to 15 days to reach America and Europe, and even longer to reach
South America, Brazil and Russia (25-35 days). Apart from that, the delivery time is uncertain sometimes, so it may take 7 or even
20 days to receive the goods.
Difficulty in customs clearance and exchange settlement: as cross-border trade tends to be conducted in small volume, B2B
companies of small-volume trade also face problems of customs clearance as B2C companies. Since small-volume B2B and B2C
cross-border e-commerce is different from common exporting, it has to face the difficulties in quick customs clearance, exchange
settlement and tax reimbursement. Although the authorities adopt a customs clearance pattern of “checklist verification and
consolidated declaration” for B2C businesses, many small and medium businesses engaging in small-volume B2B foreign trade
do not get benefits. In terms of importing, problems are as follows: importing from illegal channels to elude customs regulation,
difficulty in identifying the quality of imported commodities, and insufficient protections of consumer interest, etc.
Shortage of cross-border e-commerce talents: the reasons are: (1) limitation of language: most cross-border e-commerce
talents are English majors, but markets in Brazil, India, Russia, Arab and Mongolia are so potential that talents speaking those
languages are needed. (2) High requirements for capacity: besides language, talents in cross-border e-commerce should have
knowledge about home and overseas markets, transaction modes, consuming habits, etc. In addition, they should learn the trading
rules and characteristics of major platforms. Therefore, it’s common to see shortage of cross-border e-commerce talents.
32 32
E-commerce
Trend Ⅰ: Diversified Commodities and Markets
New characteristics of cross-border E-commerce are emerging: more categories of traded products and wider range regions of
trading objects.
 Concerning the category of products, categories extend from easily-transported products including apparel, 3C, computer and
accessory, household and gardening product, jewelry, auto parts, food and drug, etc. to products with large volume like furniture
and automobile. According to eBay’s data, three categories with the fastest growth on eBay are: household and gardening, auto
parts and fashion. Moreover, 71% of big sellers plan to enrich the current category and 64% of big sellers plan to expand to other
product lines. Providing more product categories is the major technique to expand business scope. More categories will create a
closer relationship between Chinese products and global consumers’ daily life, and help cross-border E-commerce capture the
cross-border online shopping groups with the strongest purchasing power. According to iResearch, E-commerce is playing an
increasingly important role in daily life. Solutions to science and technology as well as logistics are getting more innovative. Thus,
product categories covered by cross-border E-commerce retailing exporting industry will keep increasing in the future.
 Concerning target markets, mature markets represented by America, Britain, Germany and Australia will continue to grow fast
and still be the major target markets for cross-border E-commerce retailing exporting industry, which is a result of popular crossborder online shopping notions, mature consuming habits, regulated business and comprehensive logistics facilities. Meanwhile,
the growing markets are the new driving force for cross-border E-commerce retailing exporting industry: 1. Although E-commerce
is developing in countries like Russia, Brazil and India, consumers there have a strong demand for consuming, so in those
markets, low price and good quality are competitive advantages of products made in China. 2. A multitude of companies are
exploring Southeast Asian market. Indonesia is the most populous country in Southeast Asia and the fourth in the world. Ecommerce giants like eBay, Amazon, Rakuten have started entering Indonesian market. 3. In regions like Central and Eastern
Europe, Middle East and Africa, E-commerce is still at the early stage and is believed to achieve great breakthroughs in the
future.
33 33
E-commerce
Trend Ⅱ: Larger Share of B2C, Co-development of B2B and B2C
The improvement of international trade infrastructure and emergence of new technologies in logistics, finance and the Internet lead to
changes in international trade. One of the most significant changes is a greater diversity of ways by which products move from factories to
consumers. Companies are paying more attention to cross-border B2C e-commerce which booms in recent two years, and dominant
advantages attribute to the rise: (1) High profits: compared to traditional cross-border trading pattern, B2C bypasses all intermediate
process and finds the shortest way between factory and product, which generates high profits. (2) Good for brand building: OEM is no
longer what domestic manufacturing and trade companies want. Some Chinese brand owners want to “go out” by attempting crossborder e-commerce. B2C helps them adjust to overseas market and introduce products made and designed in China to the world. (3)
Satisfying market demands: facing consumers directly does good to meeting market demands and providing customized services. (4)
Broad market: block trade usually deals with traditional products and has single market. Different from that, small B2C trade is more
flexible and selling is not bound by territories—reaching more than 200 countries and regions. The bigger market efficiently releases the
competition pressure in a single market.
According to iResearch, B2C is moving on a smoother way, because of the development of logistics and Internet technology and some
favorable policies. B2C will take a bigger share of the whole market. As a main trend in global trade, B2C will still be the most important
pattern for Chinese companies to explore overseas market, so it will grow together with B2B.
 Cross-border B2C provides opportunities for Chinese manufacturing
and export companies to explore new business. However, the
volume of B2C orders is small and unstable, so it cannot satisfy
manufacturers’ need for scale production. In addition, B2C
companies are also facing market demand cycle, high marketing
costs, difficulty in acquiring users and competition with overseas
shopping websites.
 As the main trend of global trade, B2B will still be the most important
pattern for Chinese companies to explore overseas market. On the
other hand, as an effective way to be closer to consumers, B2C is
important for Chinese companies to build their brands in a shorter
time. B2B and B2C are complementary to each other despite of
differences. They are both good tool to explore overseas market.
B2B
B2C
34 34
E-commerce
Trend Ⅲ: Great Potential in Mobile Business
The development of mobile Internet technology blurs the line between online and offline commerce. The “whole-channel” shopping
will grow quickly focusing on the Internet, seamless link and multi-screen. (1) Concerning B2C, mobile shopping enables consumer
to shop anywhere and anytime, which greatly stimulates market demands and provides more opportunities for cross-border ecommerce of export retailing. (2) Concerning B2B, the trend of small volume and fragmentation of global trade is noticeable.
Transnational transaction can be achieved seamlessly thanks to mobile Internet technology. Sellers can upload pictures of products
in warehouse or factory in the daytime to do instant selling. At night, they can reply offers and affirm orders. Via mobile Internet,
communication between buyer and seller is very convenient.
 Potential of mobile cross-border e-commerce:
Development of mobile cross-border e-commerce is related to
the development of the Internet in different countries. For
developed markets like America, the sound Internet environment
guarantees sufficient space for cross-border e-commerce to shift
from PC to mobile devices. In some emerging markets, ecommerce there is several years behind China. For instance, in
Russia, South East Asia and Africa, a large number of users
enter mobile cross-border e-commerce market without entering
the PC one first. Mobile cross-border e-commerce will make
more profits in those markets.
 Cross-border e-commerce companies’ mobile business:
Cross-border e-commerce companies are experiencing a fast
development in mobile business. By June 2014, visits on mobile
DHgate.com accounted for 42% of the platform’s total visits and
orders on mobile DHgate.com increased by 215% at a year-onyear growth rate. Lightinthebox thought mobile business was the
driving force for revenues, so it adopted a multi-app strategy for
its mobile business. As a result, in Q2 2014, orders on mobile
devices accounted for 28.2% of the total orders, increasing by
11.4% compared to Q2 2013. Mobile and PC platforms will
interact further with each other through combined purchasing.
35 35
E-commerce
Trend Ⅳ: Better Industry Ecology and Synergic Development of
Different Parts
Cross-border e-commerce includes flows of material, information, capital and document. As cross-border e-commerce economy is
developing, supporting enterprises, including software companies, third-party service companies, online payment companies,
logistics companies, etc., start clustering around cross-border e-commerce companies. Services provided by those supporting
companies include online shop decoration, translation and description of pictures, website operation, marketing, logistics, refunding
and exchanging commodities, financial services, quality inspection, insurance, etc. The whole industry is having a sounder ecology
system and clearer division of work. The current cross-border e-commerce service sector is effectively boosting the cross-border ecommerce industry.
Concerning logistics, to cater to cross-border e-commerce, cost-saving, fast and safe logistics services providing more after-sale
services are borne. There are also lots of logistics integrators, such as logistics service providers focusing on overseas
warehousing in cross-border e-commerce. Companies like 4PX Express and CK1 have put emphasis on combining logistics and
supply chain. If having overseas warehouse, small-volume cross-border delivery usually takes 1 to 30 days. This period can be
greatly shortened by combining different shipping means according to different buyers’ demand. In addition, sellers will be more
competitive in international trade with the perfection of their overseas warehouses.
Concerning financial services, State Administration of Foreign Exchange granted pilot licenses of foreign currency payment in
cross-border e-commerce to 17 third-party payment agencies in China, which diversifies payment and propels cross-border ecommerce. Focusing on transaction process, eBay, a cross-border e-commerce platform, launched cross-border insurance
products by cooperating with China Pacific Insurance Company and Bank of China Insurance. Concerning Internet finance, some
financial institutions like Bank of China and Ping An Financial Science provide fiduciary loans without collateral for cross-border ecommerce companies, which releases financing pressure of small and medium enterprises.
Besides, the spring up of companies providing third-party services and marketing service makes the whole industry and supporting
facilities more comprehensive.
E-commerce platform is not enough for cross-border e-commerce. It needs upstream guide of information technology and
downstream support of logistics. To change the traditional business pattern and realize fast growth, cross-border e-commerce
needs strong support from information flow, capital flow and logistics.
36 36
Legal Notice
The report is produced by iResearch Co., Ltd. All texts, figures and tables in this report are under the copyright protection of relative
laws and regulations on intellectual property rights in the Peoples’ Republic of China. No organization or individual is allowed to use
the information in this report for any business purpose without the written consent from iResearch. Some texts and data in this
report are collected from public information and their copyrights are held by the original authors. No organization or individual is
allowed to use the information in this report for any business purpose without written consent from original authors and iResearch.
Data related to operators’ revenues and market forecasts are mainly obtained through interviews related to the industry, marketing
survey, secondary sources and other research methods, some of which have not been directly confirmed by the related operators.
Some data published in this report is based on sampling method and is therefore influenced by sample structure. Due to the
limitation of research method, sample size and scope of data collection, part of the data may not precisely reflect real market
situation. This report is for reference only and iResearch is not liable for the accuracy of the data in this report.
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2014 China Cross-border E-commerce Report

Transcription

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