In the global cross-border e-commerce competition, Chinese cross-border e-commerce platforms and Amazon are starting to learn from each other's tactics. In this race of copying each other's strategies for price and speed, what is the ultimate future of cross-border e-commerce?

Source of the Image: Internet

1. TEMU: Strengthening Local Investment and Infrastructure in the US

With a large number of young users and traffic, along with strong internal market development execution, TEMU has quickly penetrated the global market. As of July this year, TEMU has entered more than 70 countries and regions worldwide. TEMU's rapid growth mainly relies on three models:

Full Management: Stockpiling goods in TEMU's domestic warehouses.

JIT Mode within Full Management: Customizing products for dropshipping to clear inventory.

Semi-Management: Stockpiling goods in overseas warehouses and completing the final logistics independently.

The full management model alleviates the operational pressure on merchants, and the low participation threshold greatly enhances enthusiasm. The platform can also obtain sufficiently low product prices. However, the direct shipping model under full management has certain drawbacks, such as being suitable only for lightweight and small items, limited categories, slower logistics speed from domestic shipping after an order is placed, and an overall weaker logistics supply chain.

Similar to Amazon's FBA and Walmart's WFS, which fully undertake sellers' warehousing and fulfillment services, TEMU is now doing the same to further strengthen its logistics supply chain. In addition to launching semi-management and collaborating with third-party logistics companies to provide warehousing and logistics services, TEMU is also strengthening its warehouse construction in the US and exploring local shipping models. TEMU views semi-management as a critical step to establishing a consumer mindset of "products like Amazon but at lower prices," aiming to attract consumers seeking high efficiency and quality goods.

According to relevant statistics, currently, 20% of TEMU's products sold in the US are shipped directly from local warehouses in the US, rather than from China. Earlier this year, this percentage was 0%. For a platform that started recruiting local US sellers only four months ago, this represents a significant and rapid change. TEMU is diversifying its supply chain away from direct shipping from China to reduce reliance on duty-free threshold goods.

Additionally, according to Marketplace Pulse research, TEMU recently recruited its first thousand US sellers. Implementing the new model means these new local US sellers can wholesale imported goods and store them in local warehouses, enabling them to sell large items such as furniture and electric vehicles.

The transformation of TEMU's supply chain is also evident on its homepage. Among the 120 recommended products, 103 are shipped from US warehouses, capable of delivering to consumers within five days. Most discount and best-selling items on the page are also locally delivered.

These products are essentially the same but are no longer shipped directly from Chinese factories to consumers. Instead, they are first shipped to local warehouses in the US and then delivered to consumers from there to achieve the fastest logistics speed. According to relevant forecasts, TEMU's local warehouse sales are expected to equal direct shipping from China within six months, demonstrating TEMU's determination and significant investment in building its overseas supply chain.

Source of the Image: Marketplace Pulse

2. Amazon: Creating a Fulfillment by China Warehouse Model

Amazon has announced that it will open a low-price store on its main site, featuring white-label products priced under $20 and weighing less than 1 pound. Merchants only need to send their goods to Amazon's warehouses in China, with Amazon handling the subsequent promotion and logistics. This indicates that Amazon is learning from platforms like TEMU and starting a fulfillment by China warehouse model, shipping products directly from Chinese warehouses to US consumers, sacrificing fast delivery for lower prices to better compete on cost.

The initial plan includes setting up a dedicated entrance on Amazon's homepage for the low-price store, with the products sold being separate from those on the main site. The early phase will adopt an invitation-based entry. The first batch of recruited categories will be fashion, home, and lifestyle products, focusing on low-priced, lightweight items, with individual product prices not exceeding $20. Amazon will establish price caps for specific subcategories, within which sellers can set their prices. An FBA warehouse will be set up in China, where sellers only need to send their goods. Amazon will handle the subsequent fulfillment. Cross-border transport from China is expected to take 9-11 days, with shipping costs 45% lower than before. Amazon will manage both internal and external promotions and charge commissions to sellers. Low-priced products will support refund-only returns, with a dedicated team monitoring malicious refund-only behavior.

In this plan, Amazon's categories, logistics, promotion methods, and refund strategies are highly similar to TEMU. The difference is that TEMU's full management does not charge commissions, and merchants have no pricing rights, while semi-management involves zero commissions and zero advertising fees.

For nearly a decade, Amazon has been the primary channel for Chinese sellers to reach Western shoppers. According to research by Marketplace Pulse, Chinese sellers account for 50% of the top third-party sellers on Amazon. Until now, products sold by Chinese sellers have always involved FBA warehouses.

Now, Amazon's direct shipping model from China enables on-demand manufacturing and consumer-to-manufacturer (C2M) retail, achieving faster and iterative creativity at the cost of slower delivery speeds, which wholesale imports cannot achieve. At the same time, not everything needs to go through FBA circulation; the direct shipping model allows for the creation of different things without requiring large-scale production.

Source of the Image: Marketplace Pulse

Facing the continuous encroachment of Chinese e-commerce platforms in the low-price market, Amazon has realized the need to make adjustments. Now, by borrowing TEMU's low-price product model and launching a Chinese version of FBA, Amazon is adopting more of a defensive strategy rather than making it their main battleground. However, this process is not that simple. Amazon also faces challenges such as the need to quickly deploy a warehousing system in China, from merchant recruitment to warehousing construction and operation, as well as product compliance management and international trunk line resource matching.

3. Ultimate Price vs. Ultimate Speed

TEMU is vigorously developing its semi-managed overseas warehouses to pursue faster speeds, while Amazon is launching a direct fulfillment model from China to pursue lower prices. Both sides are starting to copy each other's strategies.

For Amazon, it cannot be denied that the perfected supply chain models of Chinese e-commerce platforms like TEMU have become an important part of modern retail. TEMU has lowered the threshold for millions of Chinese sellers to sell abroad through its full management model. By leveraging strong execution and aggressive bidding systems, TEMU has created the weapon of extreme low prices, selling Chinese low-priced goods globally and breaking into the stable US e-commerce market, which is one of the reasons TEMU can surpass Amazon in some aspects.

For Chinese e-commerce platforms like TEMU, taking shortcuts on the infrastructure built by Amazon and initiating a semi-managed model similar to Amazon FBA can attract a large scale of merchants. By leveraging the shipment of goods in bulk overseas, they can further enhance logistics costs and prices.

However, in the short term, Amazon's barriers will not be easily broken. It’s worth noting that nearly 60% of Amazon Prime orders in the first quarter of this year were delivered the same day or the next day. According to the latest data, so far this year, Amazon's same-day and next-day delivery services have delivered over 5 billion packages, a growth of more than 30%, setting a record high. Most of these 5 billion items were delivered by Amazon logistics for independent sellers, with over 60% of Amazon store sales coming from independent sellers.

This achievement is mainly due to Amazon's investment of over $100 billion in the past 18 years, establishing 185 distribution centers worldwide. To pursue even faster speeds, in the past year, Amazon has also been advancing warehouse segmentation services, pre-assigning batches of products to different warehouses, bringing products closer to users.

In conclusion, for Chinese cross-border e-commerce platforms to enter more mainstream markets and gain a larger market share, they must break through the "cross-border" label and become comprehensive e-commerce platforms with both local and overseas supply chains. This means not just solving global demand with Chinese supply but increasingly solving local demand with local supply. To catch up with Amazon's ultimate speed, Chinese e-commerce platforms may still have a long way to go.

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Public Account: Cross-Border E-Commerce Logistics Baixiaosheng