Cross-border e-commerce leaders are quietly entering a new battlefield.
According to reports, Amazon recently released its second-quarter earnings report, with a net profit of $6.75 billion, a record high since the fourth quarter of 2021.
There are also hidden concerns behind the bright figures. Although Amazon has an absolute leading position in overseas markets, it is facing a sniper from China’s cross-border e-commerce platform.
According to the data of mobile analysis company GWS, since the beginning of 2023, the number of users of Amazon UK App has lost more than 1 million; Since April, the number of daily users of American stations has dropped from 54 million to 46 million.
At the same time, Temu and SHEIN have rapidly increased in the number of overseas users. Temu was launched in the UK in April 2023, and the number of its mobile users increased sharply to about 3.5 million in just one month. The number of users of SHEIN has doubled in the past six months, from 1 million to 2 million.
Faced with the strong data growth of cross-border e-commerce platforms in China, Amazon has started to make adjustments this year, even allowing sellers to develop private domain traffic. This is a rare change for Amazon, which relies on traffic and advertising revenue.
This year, the full hosting model is very popular in the cross-border e-commerce industry, and there are rumors that “Amazon may launch a full hosting model similar to Temu”, but Amazon officials have not yet responded to this.
China’s cross-border e-commerce platform has flooded into the full hosting field in a short time, but Amazon, the industry leader, has been slow to move. On the surface, full hosting mobilizes China’s cheap and abundant production capacity, and gives the platform enough control, which is a model of pleasing both sides. But in fact, the full hosting business is a game that only belongs to the strong.
The full custody mode only allows the seller to be responsible for stocking, delivery and replenishment, while other links such as product selection, performance, pre-sales and after-sales are the responsibility of the platform. The successful implementation of full custody mode is mainly due to China’s strong supply chain foundation and the ability of many small and medium-sized businesses and factory businesses to expand sales channels.
In recent years, the rapid growth period of overseas platforms such as Amazon and Shopify has gradually ended, and these platforms have begun to guide sellers to transform into brands. However, not all sellers have the ability to carry out brand transformation.
Zhou Xiang, a cross-border e-commerce seller, believes that it is difficult for sellers to have the capabilities of production development, supply chain management and marketing operation at the same time, especially if they are unfamiliar with overseas markets. This is the attraction of the full hosting model.
For the “Four Little Dragons at Sea” (AliExpress, Temu, Shein, Tiktok Shop), the advantage of full custody mode is that it eliminates the intermediate links such as agent operation and traders in the cross-border e-commerce chain, improves the transaction efficiency and reduces the product cost. In this process, the platform controls all links and grasps the “pricing power” of commodities.
In the stage of implementing the full hosting model, there is more or less traffic tilt in all platforms, and preferential subsidies are provided. Shopee launched the full hosting service at the end of July, providing new businesses with exclusive activities, platform traffic, product subsidies, product labels and other benefits to help them gain multi-channel traffic exposure. Lazada’s full hosting model has zero commission, zero marketing/promotion cost, zero storage fee, zero freight and zero customer service expenditure.
Unlike Amazon, which is far away from the United States, these four cross-border e-commerce platforms directly connect with the domestic supply chain, which greatly boosted China’s powerful production capacity. In this sense, the full hosting model is more likely to be promoted by China companies.
At present, the competition of cross-border e-commerce at sea is fierce, and sellers pay attention to the traffic drainage of the platform, which can handle the tail goods and unsalable goods and promote new products. However, once the bonus period of platform preferential subsidies ends, the seller’s meager profits may affect the sustainability of the full hosting model. Will it be rolled into Amazon if you fall into the full hosting mode of the inner volume?
In essence, full hosting mode is a strategy adopted by various e-commerce platforms to compete for supply chain resources in China. Through this model, the platform can obtain higher quality supply chain resources and promote more cost-effective products, thus attracting more consumers and expanding and consolidating its share in the market.
Post time: Aug-10-2023