1. What is an Overseas Warehouse?

An overseas warehouse is a warehouse located abroad. In cross-border e-commerce, an overseas warehouse refers to a domestic enterprise transporting goods in bulk to the target market country, establishing a warehouse there to store goods, and then responding promptly to local sales orders by sorting, packaging, and delivering directly from the local warehouse. Enterprises engaged in overseas warehousing generally have a certain scale and have effectively localized their services.

The main customer groups for overseas warehouses are large sellers, integrated manufacturing and trading sellers, brand sellers, and independent website sellers.

**Overseas Warehouse Business Process Diagram**

Source: "2021 China Cross-Border E-commerce Logistics Industry Blue Book"

2. What Types of Overseas Warehouses Are There?

1. **Third-Party Overseas Warehouse:**

   The third-party overseas warehouse model involves third-party enterprises helping cross-border sellers overcome international trade barriers. They typically offer services like customs clearance, inbound quality inspection, order receipt, product sorting, and delivery for multiple cross-border e-commerce companies. These warehouses are mainly created by various logistics companies and require a high level of cooperation between e-commerce and logistics enterprises. Representative companies include Zongteng and 4PX.

2. **Platform Overseas Warehouse:**

   Platform overseas warehouses are warehousing and distribution logistics systems established by e-commerce platforms. Amazon's FBA (Fulfillment by Amazon) warehouses are the most typical example. FBA warehouses are self-operated by Amazon and provide comprehensive logistics services, including warehousing, picking, packing, delivery, payment collection, customer service, and returns processing. Currently, Amazon FBA warehouses' daily shipping volume, product variety, and number of consumers far exceed those of third-party overseas warehouses, making them a benchmark in the industry. The only downsides are the high shipping costs and complicated returns process.

3. **Self-Operated Overseas Warehouse:**

   Self-operated overseas warehouses are built and managed by the platform itself in the target country, with dedicated equipment and information service systems. Representative companies include Loctek and Aoji. The advantage of this model is its flexibility, allowing sellers to monitor, manage, and control the operation system themselves, providing a better shopping experience for customers and attracting more merchants. However, the costs of self-operated overseas warehouses are relatively high, so generally only larger companies opt to establish their own overseas warehouses.

Additionally, overseas warehouses can be classified into types such as transit warehouses, bonded warehouses, consolidation warehouses, and value-added service warehouses.

3. How to Choose the Right Overseas Warehouse?

1. **Demand and Scale:**

   Different-sized enterprises have different needs for overseas warehouses. When choosing an overseas warehouse, a company should first clearly define its business and scale. Additionally, it's important to adjust the choice of warehouse type flexibly according to peak and off-peak seasons. For example, during peak seasons, Amazon warehouses can easily become overloaded, making it difficult to get products in. In such cases, third-party overseas warehouses might be a better option.

2. **Geographical Location and Equipment:**

   Choosing warehouses close to the target market can reduce shipping time, lower logistics costs, and improve customer satisfaction. In recent years, e-commerce platforms have been consistently placing warehouse goods closer to customers, whether it's Amazon's latest warehouse network or the semi-fulfillment warehouses launched by TEMU and SHEIN. Therefore, sellers aiming for better performance should stock more goods in various warehouses. The more goods stocked and the closer they are to customers, the faster the sales growth and delivery times.

   Additionally, as goods become more segmented, more shelving is needed to distinguish products. It's also important to consider the warehouse's size, shelving, and sorting capabilities.

**3) Service Content:**

Enterprises need to evaluate the services provided by the overseas warehouse, as well as the fees and quality of other services, such as whether they offer last-mile delivery, relabeling services, and support for returns and other after-sales services.

**4) Logistics Services:**

It is crucial to choose an overseas warehouse that collaborates with official logistics partners and avoid using virtual warehouses for shipments, as platforms are increasingly cracking down on virtual warehouse shipments. To ensure the smooth operation of your store, never opt for virtual warehouse shipments.

4. Which Products are Suitable for Overseas Warehousing?

1. **Large, Heavy, High-Value Products:**

   Direct mail cannot meet the logistics needs of these products, and international courier fees are very high. These products can be shipped in bulk to overseas warehouses by sea, which not only overcomes product size restrictions but also significantly reduces logistics costs.

2. **Branded Products:**

   Branded products require quality and service to achieve brand premium, and overseas warehousing services can better meet these needs.

3. **Low-Cost Consumables:**

   Fast-moving consumer goods that meet local demand and require quick delivery, especially hot-selling items, are well-suited for overseas warehousing.

4. **Products with High Unit Price and Gross Margin:**

   Overseas warehousing can reduce the rates of damage and loss, providing better protection for high-value products.

5. **High Turnover Products:**

   These are best-sellers that benefit from faster order processing and capital recovery through overseas warehouses. Unsold products not only tie up capital but also incur storage fees, making high-turnover products more suitable for overseas warehousing.

6. **Seasonal Products:**

   Products with clear peak and off-peak seasons can benefit from overseas warehousing, including those related to holiday themes. These products emphasize timeliness and have the potential for follow-up purchases.

7. **Products That Cannot Be Shipped by Domestic Small Parcel Services:**

   High-profit items like liquid products, gel products, and products with lithium batteries are suitable for overseas warehousing.

5. What are the Benefits of Overseas Warehousing?

As a critical link in the cross-border e-commerce logistics chain, overseas warehousing plays a significant role in storage and final delivery. By setting up an overseas warehouse in the target market, enterprises can pre-ship goods to the destination country and fulfill orders directly from the local warehouse, greatly shortening delivery times.

According to relevant data, sellers using FBA have reduced order processing times by over 50%, with average delivery times shortened by 3-5 days. Additionally, the fast delivery service for Prime members significantly improves user satisfaction, increasing conversion rates by more than 20%.

Second, bulk shipping to overseas warehouses can achieve lower logistics costs compared to individual shipments. For example, shipping a 1kg item from China to the USA using DHL costs around 100 RMB, while shipping the same item from a US warehouse to the buyer costs only around 30 RMB, reducing costs by nearly four times.

Third, the presence of overseas warehouses allows enterprises to offer better localized services, including customer service in the local language, local payment methods, and participation in local promotional activities.

Fourth, it helps mitigate risks and respond more flexibly to market changes. Shipping from overseas warehouses allows for pre-clearance of customs, avoiding risks from policy changes. Additionally, overseas warehouses can store a certain amount of inventory, helping enterprises better respond to market demand changes, adjust inventory and supply flexibly based on regional sales data and trends, and improve market adaptability and competitiveness, ensuring stable product supply.

**References:**

1. "China Cross-Border E-commerce Logistics Industry Blue Book"

2. "All About Overseas Warehouses" by Zhang Sisi of Kuajing Xiaoxia

3. "Youpin Science: Comprehensive Analysis of Overseas Warehouses" by Youpin Cross-Border Logistics

4. "An Article to Understand Overseas Warehouses" by Zuohai Logistics

5. "Knowledge About Overseas Warehouses: How Much Do You Know?" by Shenzhou Overseas Warehouse

6. "Detailed Explanation of Overseas Warehouses" by Yongkang Inland Port

7. "Types of Overseas Warehouses" by Foreign Trade Daily

8. "2024 is the 'Hot and Boiling' Year for Overseas Warehouses!" by FLYKING Overseas Warehouse

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Cross-border e-commerce logistics Bai xiaosheng