Profits of over 500 million! The big seller will become the "landlord" in the United States

At the beginning of the year, Lucky announced that it would spend $32.6 million to build its own ship, and later announced that it would invest $17.6 million to buy land and build warehouses in the United States. Recently, it announced that it had sold a "small" warehouse of 360,000 square feet in California , and the profit from the sale was nearly $77 million.

Buying land and building warehouses to become a "landlord", Lege made a profit of more than $77 million by selling a "small" warehouse

Not long ago, Lechuang disclosed its financial report for the first three quarters. As of the end of September, Lechuang's revenue this year has exceeded 2.3 billion yuan, an increase of 10.10% over the same period last year. Among them, the profit attributable to shareholders of the listed company was 158 million yuan, a year-on-year increase of 28.12%.

It is worth noting that in this quarter's financial report, the reasons for changes in many financial indicators all involved its overseas warehouse business.

The day before yesterday, Lechuang announced through its official channels that its overseas subsidiary 6075 LANCE LLC sold its overseas warehouse in California, USA, for US$120 million, involving 360,000 square feet ( about 33,400 square meters ) , with a profit of US$ 77 million .

It is reported that the overseas warehouse was purchased by LEAC in 2020. It was the largest warehouse of LEAC in the western United States at that time . This also laid the foundation for LEAC's transformation from self-operated to a third-party public overseas warehouse. However, it rented out the overseas warehouse in December last year and stopped using it in March this year .

In fact, this sale is closely related to the overseas warehouse layout of Leckey. All along, Leckey's public overseas warehouses have been developing in accordance with the principle of " merging small warehouses and building large warehouses " .

In August this year , Lechuang announced that its wholly-owned subsidiary purchased land to build overseas warehouses . In October, Lechuang issued another announcement stating that part of the land used to build overseas warehouses had been delivered.

According to the "Progress Announcement on the Completion of Overseas Investment and Partial Land Purchase by a Wholly Owned Subsidiary" disclosed in October , the land it purchased is located in California , the United States , with a land area of ​​59.88 acres ( approximately 242,300 square meters ). The transaction price is US$ 1.761 million , which is equivalent to approximately RMB 126 million at the current exchange rate .

As a household product seller, Lechuang's overseas warehouse business started in 2013. As we all know, many household furniture products are large products. If they do not rely on overseas warehouses, sales will be inconvenient. In this way, it is not surprising that Lechuang wants to deepen its overseas market and build its own warehouse.

In 2019, Lechuang began planning for public overseas warehouses and vigorously promoted the development of this business in 2020.

As of June this year, in addition to the overseas warehouses purchased and leased in the core hub port areas of the United States, Leger's overseas warehouses are also located in Germany, the United Kingdom, Japan and other places. There are a total of 15 large warehouses in the world with an area of ​​277,700 square meters .

Lechuang's overseas warehouses do not only serve its own products, but also open up leasing forms to rent to other sellers to make more profits . Its financial report shows that in the first half of 2022, Lechuang's overseas warehouse business revenue reached 258 million yuan , of which third-party service revenue was 180 million yuan .

Currently, Lectop's overseas public warehouse business is still in the early stages of its explosive growth, but its revenue in the first quarter of this year was nearly 67 million yuan, and its revenue in the second quarter nearly doubled to 114 million yuan. Its shipments in June also increased by 102.74% compared to January .

Leckey said that its overseas warehouses have served nearly 400 small and medium-sized foreign trade companies.

Amazon is pushing its own overseas warehouse business by slashing storage capacity

Needless to say, the high profits brought by overseas warehouses are so high that even the retail giant Amazon has announced its involvement in this business.

On the eve of this year's peak season, many sellers had their inventory capacity slashed by Amazon, especially sellers on the US site, where some had their inventory cut by 20% or even more than half.

Many sellers complained to Entech, saying that the storage capacity was cut from hundreds of thousands to tens of thousands , and from tens of thousands to only two or three thousand.

Based on past experience, Amazon often cuts its storage capacity, and usually starts tightening around August. However, this year, Amazon has continued to do so until October, and the tightening is greater than before.

It is reported that at the same time as receiving the notification of Amazon's warehouse capacity reduction, sellers also received an email from Amazon recommending the use of its own overseas warehouses ( Amazon Warehousing & Distribution, AWD for short) .

In early September, Amazon announced a new delivery solution that gives sellers the option to store inventory in Amazon distribution centers and seamlessly replenish them to fulfillment centers. Sellers will be able to use new, purpose-built logistics facilities for bulk commodity storage and automatic delivery .

In fact, the seller's inventory is sent and stored to the Amazon AWD warehouse (near the FBA warehouse) through third-party cross-border logistics and Amazon cross-border logistics services ( AGL), and then automatically replenished according to the FBA's inventory situation.

Some sellers said that from the perspective of warehousing fees, the cost in this area has indeed been reduced, but various processing fees, transportation costs incurred in transfer, etc. are also expenses .

In addition, some sellers said that the AWD warehouse is not perfect yet, and the automatic replenishment is not sensitive . It cannot keep up when replenishment is needed, and it will be sent to FBA desperately when replenishment is not needed . In addition, it must wait until the storage capacity becomes larger before automatic replenishment will be sent in. Therefore, the seller recommends that small and medium-sized sellers should use it with caution if the sales scale is not large .

The AWD warehouse has only been launched for two months, and it remains to be seen whether it can truly help sellers after continuous improvements.

Advantages are highlighted, and overseas warehouse construction is stepping up

The sudden outbreak of the epidemic in 2020 restricted cross-border logistics, causing a large number of companies engaged in cross-border business to be hit. At this time , overseas warehouses began to enter the public eye .

Data shows that from January to July this year , the number of newly registered overseas warehouses by Shenzhen Customs increased by 2.7 times year-on-year , and customs-supervised overseas warehouse exports also doubled. According to incomplete statistics, as of the end of December 2021, Shenzhen companies have built and operated more than 230 cross-border e-commerce overseas warehouses, with a construction area of ​​more than 2.6 million square meters .

As of December 2021, the number of China's overseas warehouses has exceeded 2,000, with a total area of ​​more than 16 million square meters. Among them, the total number of overseas warehouses in North America, Europe, Asia and other regions accounts for nearly 90%.

In Hangzhou , where cross-border e-commerce is also leading the development , as of August this year , Hangzhou has 283 cross -border e-commerce overseas warehouses with a total area of ​​5.769 million square meters , and 17 international cargo routes are operated on a regular basis .

In 2021, the Zhejiang Provincial Department of Commerce took the lead in launching the "Overseas Smart Logistics Platform (Overseas Warehouse Service Online)" scenario application by integrating the digital warehousing data of third-party public overseas warehouse operators. As of the date of publication , the platform has settled in 3,569 overseas warehouses, covering 1,986 cities in 50 countries around the world , with a total area of ​​more than 51,935,000 square meters .

Not only cities, domestic e-commerce giants are also expanding their overseas warehouse businesses.

Alibaba 's Cainiao has opened overseas warehouses in more than 20 countries including the United States, the United Kingdom, Germany, and Vietnam . Currently , including overseas warehouses, bonded warehouses, GFC warehouses, etc., Cainiao has more than 100 cross-border warehouses serving import and export foreign trade, covering more than 30 countries and regions in Asia, Europe and America, with a total area of ​​3 million square meters.

In addition, starting from 2020, JD.com has successively established self-operated overseas warehouses in the United States, Germany, the Netherlands, Vietnam, Malaysia and other countries. As of June 2022, the area of ​​JD.com's self-operated overseas warehouses increased by 100% year-on-year.

The country has also introduced a number of measures to promote the development of overseas warehouses.

At the beginning of 2022, the "14th Five-Year Plan for the Development of the Digital Economy" issued by the State Council clearly mentioned the need to cultivate and expand a group of leading overseas warehouse companies and build a cross-border e-commerce industry chain and ecosystem .

In May this year , the country's first cross-border e-commerce overseas warehouse standard - "Cross-border E-commerce Overseas Warehouse Operation and Management Service Specifications" was officially implemented , clarifying the operation and service management scope, requirements , and specifications of cross-border e-commerce overseas warehouse companies , and striving to standardize and normalize the operation and management of overseas warehouses.

At present, the density of overseas warehouses in mature markets such as Europe and the United States is high and competition is fierce . Taking the United States as an example, from 2019 to 2021, the number of its overseas warehouses was 432 , 639, and 925, respectively , with an average growth rate of more than 44%. Among them, many small and medium-sized overseas warehouses are not included in the statistics.

At the same time, factors such as the epidemic's unlocking causing consumers to return to physical stores, the economic downturn leading to a decline in consumer online shopping demand, coupled with fierce competition, rising overseas warehouse rents , and a sharp drop in cargo volume , have resulted in many small and medium-sized overseas warehouses being idle this year, which has led to them facing serious losses and being unable to continue operating.

In summary, overseas warehouses may play a more important role in future cross-border e-commerce, but the challenges they face cannot be ignored.

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