Cross-border big seller enters logistics, with annual revenue exceeding 600 million!

Sellers are no longer just sellers, the cross-border circle has already started a trend of focusing on both sales and logistics !

Sellers also have to do logistics, it’s not just talk.

In the past few years, when third-party platform sellers were exploring the "second spring" of their careers, they all chose the logistics business, which also contributed to the rapid development and growth of this special group of sellers who are also logistics service providers.

The revenue from logistics business is almost as high as the revenue from selling goods. At present, many "leaders" have emerged in this special group , such as the well-known San Tai Shares and Savi, which have easily exceeded 100 million yuan in revenue year after year just from logistics business. Lejia Shares, which has already laid out cross-border logistics overseas warehouse business, can make a profit of more than 10 million US dollars just by selling several overseas warehouses.

It is foreseeable that due to factors such as the increasing restrictions on third-party e-commerce platforms, the trend of platform sellers, who are having an increasingly difficult time, to enter the cross-border logistics market will only become more and more obvious.

The big pie of cross-border logistics exports will naturally not be spared from the "grabbing" of domestic logistics giants . A number of well-known domestic express delivery companies such as SF Express, Cainiao, Best, JD.com, ZTO Express, and YTO Express have successively started their "going overseas" journeys. Some of them have even reversed their precarious revenue situation instantly by relying on cross-border e-commerce logistics exports.

International cargo transportation is an important part of the cross-border e-commerce export business chain . The competition among sellers and logistics giants must be due to the strong money-making ability of this track. However, we still need to think about how long the dividend period of cross-border logistics exports will last? How high is the gross profit and threshold of cross-border logistics exports? Cross-border sellers also sell goods. Is this a sustainable business model?

Cross-border sales "cross over" to logistics, with annual revenue exceeding 600 million

Savi, which is seeking to go public, can be called not only a big seller on Amazon, but also a rising star in the logistics field.

Judging from public information, the proportion of Savi's logistics service revenue has been increasing year by year.

In 2018, Savi's logistics service revenue was 37.0765 million yuan, accounting for 1.65% of all revenue.

In 2019, Savi's logistics service revenue was 97.1875 million yuan, accounting for 3.38% of all revenue.

In 2020, Savi's logistics service revenue increased by 203.21% compared to 2019, reaching nearly 300 million yuan , accounting for as high as 5.61%.

In the first half of 2021, in just half a year, Savi's logistics service revenue exceeded the 100 million yuan mark again, accounting for 3.91% of all revenue.

Although the proportion of logistics service revenue in Savi's overall revenue is relatively small, this also has another meaning: Savi's logistics business may still have huge room for growth in the future.

It is reported that Savi's logistics business started in 2015 , focusing on providing overall export logistics solutions for cross-border e-commerce. The logistics products provided include domestic direct mail, international dedicated lines, FBA transshipment services, and overseas warehouse comprehensive services (warehousing operations, terminal distribution, FBA warehouse returns, customer returns, etc.).

In terms of first-leg logistics suppliers, Savi has established strategic partnerships with major channels such as international air transport, sea transport, railways, and express delivery, locking in contract prices and space on a long-term basis; in terms of last-leg logistics suppliers, Savi has long-term and stable cooperation with service providers such as USPS, FedEx, UPS, and DHL.

At the same time, relying on its strong system and data integration capabilities, Savi also provides customers with services such as inventory management and forecasting, multi-warehouse inventory planning and allocation, customer regional distribution analysis, transportation and delivery method optimization, and big data analysis.

In addition to selling goods, other growth paths are also being explored. Savi is not the only one, nor is it the first one.

As a comprehensive enterprise engaged in export cross-border e-commerce retail and third-party export cross-border e-commerce logistics, Santai Co., Ltd. has derived export cross-border e-commerce logistics business as early as 2009. Now, cross-border logistics service income has become an important source of revenue for Santai Co., Ltd.

In 2018, Santai's logistics and warehousing revenue was 280 million, accounting for 23.71%;

In 2019, Santai's logistics and warehousing revenue was 330 million, accounting for 21.18%;

In 2020, Santai's logistics and warehousing revenue reached 600 million, accounting for 30.21%;

In the first half of 2021, Santai Co., Ltd.'s logistics and warehousing revenue was 260 million yuan, accounting for 21.59%.

It is reported that Santai Co., Ltd.'s export cross-border e-commerce logistics business mainly serves domestic cross-border e-commerce retail companies, independent site sellers and other customers. The business process of cross-border logistics services mainly includes door-to-door collection, sorting, labeling, arranging transportation and tracking logistics information, etc. It makes profits by providing customers with international dedicated lines, international postal, commercial express or warehousing services and charging fees.

In addition to San Tai Shares and Saiwei, Lechuang, a well-established independent website founded in 2002, has also long been eyeing logistics. After years of development, Lechuang has now formed two mature industries: ergonomic health and public overseas warehouse cross-border logistics. Although Lechuang did not disclose the specific revenue data of its logistics business in its financial report, judging from public information, it should have a considerable income.

It is reported that the logistics and distribution of LEACHO's public overseas warehouses mainly rely on express logistics companies such as Fedex. In general , its bargaining power with express companies such as Fedex exceeds that of general overseas warehouse operators, and far exceeds the price discounts that a single small and medium-sized enterprise can obtain by bargaining with express companies . This reduces LEACHO's own cross-border e-commerce express logistics costs on the one hand, and at the same time, it earns price difference profits when providing services to small and medium-sized enterprises.

Leckey's logistics business segment continues to expand.

In January this year , Lecce announced its shipbuilding plan: the company plans to sign a contract with a first-class domestic shipyard to build a 1,800TEU container ship. The total construction price of the container ship is US$32.6 million, or approximately RMB 207 million.

Leckey said that shipbuilding is the result of repeated research and planning for a long time at the strategic level, and it is not a momentary impulse. The high cost of renting a ship is the most important reason. According to the company's calculations, the ship can be purchased with the rent for three years!

Just when the outside world thought that "Legacy spending 200 million yuan to build a ship" was already a crazy thing, Legacy was still planning something that looked even crazier.

Leckey said that it does not rule out the possibility of increasing shipbuilding in the future . With the increase in customers, overseas warehouses and shipping will be steadily expanded in the future, and the number of additional warehouses will be owned or leased based on the operating conditions. For example, ships can have more routes in the future, and they can be rented or rebuilt after prices fall.

Behind the dual focus of cross-border logistics: the sweetness and distress of sellers!

Well-known cross-border sellers have already entered the logistics business, and a large number of small and medium-sized sellers who have been quietly making money in the industry have also already stepped into the threshold of the logistics industry.

During the editor's random interviews, it was found that it is very common for sellers to also act as logistics service providers. One of the important reasons why many of them enter the cross-border logistics industry is that it seems too easy to make money!

Is it true that selling goods is not profitable? In the eyes of many sellers, this is indeed the case. The export cross-border e-commerce industry is still in a rapid development stage, and there are a large number of small and medium-sized enterprises in the export cross-border e-commerce industry. There are still a large number of entrepreneurs pouring in, and the market share is also facing the squeeze of self-operated brands of third-party e-commerce platforms such as Amazon and Wish, and the competition is fierce.

Export cross-border e-commerce companies that have capital, technology, talent, brand, marketing, product development, supply chain and management capabilities will continue to have strong advantages in the above competitive environment, but this places higher demands on the comprehensive capabilities of cross-border sellers. In the current situation where they are stuck in the bottleneck of sales growth, it has become instinctive to find another growth path.

The advantages of focusing on both sales and logistics are obvious. Not only can it fully integrate the upstream and downstream resources of the cross-border e-commerce industry chain and create synergy advantages in product sales and logistics delivery , but it can also provide overseas end consumers with efficient and high-quality service experience. It can be said to kill two birds with one stone.

However, is the logistics track, which is regarded by sellers as a "second spring" of their career, really so attractive? It is undeniable that cross-border logistics exports do have huge development potential.

As an important part of the cross-border e-commerce industry chain, the cross-border e-commerce logistics industry has gradually emerged with the continuous development of the cross-border e-commerce industry, and has played a key supporting and guaranteeing role in cross-border e-commerce transactions. According to iResearch Consulting, the scale of China's B2C cross-border e-commerce export logistics industry in 2020 was about 476.42 billion yuan, a year-on-year increase of 103.6%. It is expected that the scale of China's B2C cross-border e-commerce export logistics industry will reach 1,193.50 billion yuan in 2025. Thanks to the rapid development of the export cross-border e-commerce industry , China's export cross-border e-commerce logistics industry will also take a new step in development as a whole.

Under the influence of the epidemic, cross-border logistics demand has soared, and the total value of China's imports and exports of goods has repeatedly hit historical highs, making all major players in the shipping market taste the feeling of "counting money until their hands cramp . "

Among them, the one that is widely talked about is COSCO SHIPPING Holdings. When it was still COSCO Shipping, it was dubbed the "Loss King of A-shares" due to losses of 10.5 billion and 9.5 billion in 2011 and 2012 respectively. Who would have thought that COSCO SHIPPING Holdings, which lost "a small goal of 100 million" in a few days, could make a daily net profit of nearly 300 million 10 years later .

In 2021, COSCO SHIPPING Holdings' net profit was 89.3 billion yuan, an increase of 800% year-on-year; its earnings before interest and taxes (EBIT) was 131.5 billion yuan (US$20.4 billion), approaching that of Maersk (US$24 billion), the leader in the international shipping industry.

In the first quarter of 2022, COSCO SHIPPING's net profit increased by another 78.6% to 27.6 billion.

Not only have companies such as COSCO Shipping that are already engaged in cross-border logistics exports reaped the "industry dividend", but a number of well-known domestic logistics companies such as SF Express, Cainiao, Best, JD.com, ZTO, YTO, and Yunda have also increased their resources into international business and successfully achieved new business growth .

SF Holding stated that in February 2022, the operating income of SF's supply chain and overseas business reached 5.969 billion yuan, a year-on-year increase of 485.77% .

It is reported that in recent years, SF Express has continued to expand the coverage and scope of international express delivery and cross-border e-commerce delivery through various means such as self-construction, joint ventures, investment and mergers and acquisitions .

On the surface, both big sellers and logistics companies have experienced a "second spring" in their careers in the vast prospects of cross-border logistics exports. But in fact, such a lucrative industry will not favor every entrant.

Some sellers once thought that the threshold for cross-border logistics was very low, but after actually entering the market, they discovered that if they wanted to stay in this industry for a long time, the difficulty was no less than selling goods.

The export cross-border e-commerce logistics business chain is long and has many links, involving multiple links such as collection, warehousing and sorting, domestic customs clearance, cross-border transportation, overseas customs declaration, warehousing transit, and overseas delivery . Cross-border e-commerce products are also characterized by small pieces, fragmentation, and massive SKUs. They place high demands on cross-border e-commerce logistics companies' complex operations (including loading and unloading, sorting, etc.), information integration (including business flow, logistics, and capital flow information), and on-time delivery (multi-link full-link connection) .

If players enter this track with the mentality of making quick money, they will not last long.

Real cross-border logistics, the gross profit margin of big sellers is much lower than expected

Cross-border e-commerce sellers have developed diversified demands for cross-border e-commerce logistics , and have also derived a variety of cross-border e-commerce logistics models under the two major categories of direct mail and overseas warehouses.

The direct mail model includes international postal services, commercial express delivery and international dedicated lines. Different logistics models also mean different profit points. Generally speaking, the gross profit margin level depends on the cross-border logistics company's bargaining power in purchasing as well as its overseas storage and processing capabilities.

The editor found from the logistics business revenue of Santai Co., Ltd. and Suntech Power that their gross profit margins are not as high as the outside world imagines.

In 2018, 2019, 2020 and the first half of 2021, the gross profit margin of Savi's logistics services was 13.46%, 9.37%, 11.32% and 12.17% respectively. Although Savi's logistics service revenue is growing rapidly, due to the fierce market competition and rapid changes in market prices, the gross profit margin is relatively low .

In 2019 , Suntech began to focus on developing international business and warehousing business. In the early stage of market development, the gross profit margins of various business lines were relatively low.

In 2020 , as the overseas epidemic continued to spread, cross-border logistics costs continued to rise, and small cross-border e-commerce companies were hindered in overseas shipments. The company's scale advantages and price advantages gradually became prominent, leading to a significant increase in logistics service revenue in 2020, and the gross profit margin level also increased to a certain extent .

In the first half of 2021 , due to the varying degrees of increase in logistics channel quotations, the gross profit margins of domestic direct mail and international transportation businesses decreased; the warehousing business can provide value-added services such as warehousing and delivery by relying on its overseas warehouse advantages, and the gross profit margin has increased slightly.

In 2018, 2019, 2020, and the first half of 2021, the gross profit margin of San Tai's logistics and warehousing business was 13.25%, 11.43%, 12.39% and 8.35% respectively . Overall, the gross profit margin of San Tai's international dedicated lines and international postal products is slightly higher than that of Savitech's domestic direct mail products . The main reason is that San Tai has a certain degree of first-mover advantage in the field of cross-border e-commerce logistics compared with Savitech.

Savi and Santai can be regarded as two typical companies that entered the cross-border logistics export market at different times. From their gross profit margins and revenues, we can also draw the following conclusions:

On the one hand, the intensity of market competition , cargo volume and scale faced by cross-border e-commerce logistics business , to some extent, determine the bargaining power with upstream suppliers ;

On the other hand, logistics export companies can only outperform their peers by continuously deepening their presence and increasing investment in some advantageous routes .

Future development trend of cross-border logistics export

The ability to integrate resources and control the supply and key links determine the position and future development space of cross-border e-commerce logistics companies in the cross-border e-commerce logistics value chain. In addition, efficient, accurate and visual information interaction and collaboration capabilities are the premise and foundation for providing sellers with high-quality logistics services. In the production and operation links, resources in various links can be intelligently and automatically allocated. In the marketing link, timely insights into customer and market needs can be achieved, and high-quality routes can be designed and optimized, etc., all of which put forward higher requirements for logistics companies. These are also the key to getting rid of internal circulation and forming misaligned competition.

It is foreseeable that with the iterative upgrading of logistics companies, the cross-border e-commerce logistics industry will usher in the following three development trends in the future:

(1) The market share of the overseas warehouse model will increase . Affected by factors such as changes in the value-added tax policies of importing countries in the UK and the EU and the reform of the terminal fees of the Universal Postal Union, it is expected that the cost-effectiveness advantage of the direct mail model over the overseas warehouse model will weaken in the future, and the market share of the overseas warehouse model will increase.

For cross-border e-commerce logistics companies , the logistics delivery method that focuses on direct mail or overseas warehouses will bring different development priorities to the company.

When focusing on the direct mail model, cross-border e-commerce logistics companies will be more suitable for a light-asset model, which mainly involves packaging and sorting after the first kilometer in China, domestic customs clearance and trunk lines (charter flights or booking), and foreign customs declaration.

When focusing on the overseas warehouse model, cross-border e-commerce logistics companies will have the characteristics of heavy assets, and will pay more attention to the layout of domestic and foreign warehouses. They will play the role of the first consignee through domestic warehouses to achieve the concentration and sorting of packages, and will be responsible for the sorting, inventory management, delivery and return management of goods through overseas warehouses, shortening the time from consumers placing an order to receiving the goods.

(2) Providing comprehensive solutions will become the future development direction of the industry . Only cross-border e-commerce logistics companies that take the lead in deploying core resources, focus on capacity upgrades, and have the ability to coordinate and integrate third-party resources can stand out in the long-term industry competition .

In terms of platform docking capabilities , the ability to dock with mainstream cross-border e-commerce platforms and the proportion of direct cross-border e-commerce customers will help logistics companies obtain more customer traffic and help increase their business scale and added value .

In terms of warehousing, picking, ground services and customs clearance capabilities , logistics companies with higher warehousing and picking efficiency and wider ground service coverage are more likely to attract sources of goods, while customs clearance capabilities determine the potential for integrating business flow, logistics flow and capital flow, which helps to improve customs clearance efficiency and give full play to network efficiency .

Overseas warehouse