1. Will Amazon Fully Implement Full-Service Management?

As platforms like TEMU and SHEIN are rolling out full-service and partial-service models, Amazon has announced the launch of a new "Low-Price Store" project. This indicates that Amazon is preparing to launch a counteroffensive in the full-service management competition. However, the pace at which Amazon will fully implement full-service management may not be swift.

Firstly, a fully managed small-package special line service across the entire supply chain requires the support of remote intercontinental freighter capacity, which is a prerequisite for Amazon to fully roll out its full-service management business. However, Amazon’s current fleet primarily consists of 767 and 757 aircraft, with fewer wide-body freighters like the 777 and 747, or none at all. This limitation in mainline air freight capacity restricts the expansion of Amazon’s full-service management business. In July, Amazon leased eight Boeing 747 freighters, planning to gradually put them into operation by the third quarter of next year. A significant increase in Amazon’s full-service management business volume is expected to be noticeable by next year.

Secondly, Amazon’s managed warehouses are likely to be located in the Guangdong region, with site selection probably underway. However, deploying a warehousing system in China, from site selection to construction and operation, still presents a series of challenges and will require time.

Finally, the biggest bottleneck currently facing full-service management is insufficient logistics infrastructure capacity. While there are plenty of warehouses, the lack of air freight capacity remains a challenge. Therefore, whether it's the four major platforms or Amazon, the expansion of full-service management will be constrained by freighter capacity.

This bottleneck in air freight capacity is expected to persist for the next 5-10 years. Currently, more than 90% of the world's long-range wide-body freighters are produced by Boeing, and Airbus’s A350 has not yet been mass-produced. Additionally, some freighters are scheduled to be retired in the coming years, meaning that the newly added freighter capacity each year may only compensate for the retiring capacity. Hence, with air freight capacity peaking, the full-service management business in the industry is unlikely to see significant growth in the next 5-10 years.

2. Why Has TEMU's Full-Service Management Model Gained Global Popularity?

In the past, Amazon mainly focused on brand sellers. Now, by establishing a low-price store and offering full-service management for white-label sellers, Amazon is launching a disruptive strategy. This reflects the current trend in the global consumer market towards segmentation—into high-end and low-cost segments. Moreover, with inflation levels still relatively high in Western countries, consumers are more inclined towards affordable products compared to high-end goods. Amazon’s launch of the low-price store capitalizes on this opportunity, and Pinduoduo’s recent success in international markets further supports this trend.

Over the past two years, the most significant change brought by Pinduoduo's TEMU to the industry has been introducing many Chinese companies, which had never engaged in foreign trade, to overseas markets for the first time. In fact, many of TEMU's merchants may have never engaged in cross-border e-commerce or understood foreign trade before, but the full-service management model allows these companies to enter the cross-border e-commerce industry with lower barriers. This, in turn, has attracted many merchants to join TEMU.

Furthermore, leveraging China’s unique supply chain advantages, TEMU has maximized the comprehensive industrial categories and product chain systems that China possesses, creating an international version of the “omnipotent Taobao.” In many overseas countries, including Europe, the Americas, Africa, and the Middle East, the variety of products is not as rich as in China. TEMU not only offers lower prices but also provides overseas consumers with a wider range of choices. This is the logic behind TEMU’s success overseas and its rapid global expansion over the past two years.

3. Changes Brought by Platforms Becoming Cross-Border Logistics Integrators

Whether through full-service management, partial-service management, or segmented procurement by the platform, the end result is that e-commerce platforms become top integrators in cross-border logistics. This explains why cross-border logistics companies are currently only playing a supporting role when serving e-commerce platforms.

When facing large-scale orders and shipment volumes, all platforms aim to transform into logistics integrators, as the only way to truly enhance efficiency and connect data is to collaborate with foundational service providers at every stage. Connecting basic infrastructure includes linking data between Chinese ports and overseas ports, between Chinese customs and overseas customs, and between airlines and ground stations. To effectively connect these mainline freight nodes, cooperation with each node’s link companies and infrastructure service providers is necessary. If secondary or tertiary distributors are involved, data connectivity becomes difficult, and bottlenecks and obstacles to efficiency and data linkage can easily arise, leading to inefficiencies.

After platforms become the largest cross-border logistics integrators, three types of companies are likely to see good development in the industry:

The first type is companies that are closer to upstream resources, such as shipping companies, airlines, and leasing companies. Companies need to continuously explore the upstream freight capacity layer or secure long-term freight resources. The closer they are to freight resource providers, the more likely they are to achieve good development. However, in China, there are only a few freight airlines and shipping companies, so only a small number of companies can move upstream.

The second type is companies that invest in infrastructure, becoming resource providers. For example, companies can invest heavily in specific stages such as trunk, customs, warehousing, or distribution, becoming infrastructure service providers. The trunk freight segment involves relatively high asset investment and has a certain entry threshold for companies. In the customs clearance segment, many companies apply for customs clearance licenses at local ports overseas or establish bonded warehouses. In the warehousing segment, companies can set up transit warehouses near airports or docks for cargo transfer, deconsolidation, secondary delivery, relabeling, and returns processing, all of which are long-term needs that can develop into long-term businesses. Additionally, companies can bind with major clients to meet custom warehouse requirements.

The third type is companies that explore opportunities in different niche fields and markets, offering various solutions. For example, in China, different industries and categories have different needs, and customized solutions for vertical industries can also achieve good market success. Globally, different niche markets also contain opportunities, including remote areas in the US (Midwest, West Coast, East Coast), and areas near the borders with Mexico and Canada where logistics costs are higher. Some overseas countries are experiencing rapid cross-border e-commerce growth, but cross-border logistics infrastructure still has many pain points and obstacles, far behind the development of cross-border e-commerce.

Moreover, today, Chinese companies going global is no longer just about cross-border e-commerce; it involves various industries, including the food and beverage industry, new energy sector, and more, all of which require logistics service solutions. Therefore, cross-border logistics companies should not only follow cross-border e-commerce platforms in selling goods but should also have a broader perspective in serving China’s industrial chains abroad. They should co-create deeply with the industrial chains, break free from platform thinking, and seek growth opportunities beyond the platform. By focusing on cross-border logistics and embracing more industries, they can find their positioning in the era of globalization. This is something many cross-border logistics companies need to consider and explore in the future.

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Public Account: Cross-Border E-Commerce Logistics Specialist