7 billion yuan of funds flowed into the service provider sector. Is it no longer attractive to be a seller?

If a person wants to sell goods on a cross-border e-commerce platform, there is one group that cannot be avoided, and that is the cross-border e-commerce service providers.

Cross-border e-commerce can be described as a dark horse in today's industries, and the outbreak of the COVID-19 pandemic has put its development on the fast track. According to customs statistics, China's cross-border e-commerce imports and exports reached 1.98 trillion yuan in 2021, of which exports accounted for 1.44 trillion yuan, an increase of 24.5%.

When it comes to the rapid development of the cross-border e-commerce industry, people often first pay attention to cross-border e-commerce sellers. In fact, as the industry rushes forward, there is a group that also shines with a different brilliance, and they are cross-border e-commerce service companies. In 2021, service providers accounted for 40 of the "Top 100 List" of China's cross-border e-commerce, a significant increase from 30 in the previous year. At the same time, a total of 50 service providers received more than 7.15 billion yuan in financing last year.

Service providers and sellers complement each other and achieve mutual success, but due to some chaos in the service industry, there will also be conflicts between sellers and service providers. Now with the help of capital, I believe that all service providers will have certain improvements in both service and technology. From another perspective, service providers can develop better and more orderly, which is also a good thing for sellers.

Cross-border e-commerce service providers, a group that sellers love and hate

Want to do Amazon but have no operation experience? Find an operation service provider.

Shipping goods overseas? Find a logistics service provider.

Do you need to pay taxes when selling goods on European sites? Find a VAT service provider.

Amazon is facing a serious internal competition and wants to switch to independent website track? Find a website building service provider.

Store management is cumbersome and troublesome. How can we improve operational efficiency? Find a SaaS service provider

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It can be found that for every demand of the seller, there are relevant service providers. And they are around the sellers all the time, in industry exchange groups, forums, social media, wherever there are sellers, you can see them. For example, if a seller posts a demand in a WeChat group, his "new friend" application will definitely get a very fast response.

In an article on 36Kr, it divides the numerous cross-border e-commerce service providers into four categories: 1. Software service providers ( mainly SaaS), mainly including ERP, supply chain, product selection, and independent sites; 2. Marketing /operation service providers ; 3. Financial service providers , mainly including three aspects: acquiring, collecting, and foreign exchange settlement and sales; 4. Logistics /channel service providers , including logistics companies, freight forwarders, and logistics service platforms.

In addition to these four major categories, there are also some service providers such as store registration, brand authorization, category review, and anti-copycat sales. Although the content of these services is small, there are a large number of practitioners, the company is not large, and even individuals can do it.

If you simply type "Amazon" on Taobao , you will immediately see services such as Amazon settlement, Amazon bidding, and Amazon operation tutorials. Click on one of them, and you will find many services such as a complete set of Amazon novice store video tutorials for 39 yuan, one-on-one Amazon settlement and store opening guidance training for 88 yuan, and US Amazon postcard address collection and forwarding for 100 yuan.

However, some people simply divide service providers into two types: 1. Technology-based service providers; 2. Resource-based service providers.

Sellers love and hate this group. They love it because service providers can help with many things, from store registration to cargo transportation to product promotion. Sellers can conduct cross-border business smoothly, quickly and efficiently. Service providers can even handle some thorny problems, such as reviving a dead store and recovering frozen funds. Because of this, they are also shrouded in mystery. They hate it because there are many chaos. In the cross-border e-commerce industry, it is not uncommon for service providers to run away with money, delete accounts and lose contact, and not compensate for lost goods.

I once saw a picture: an Amazon seller was digging a pit, and there were many people standing around him. In addition to the manufacturer and Jeff Bezos, the majority were logistics, VAT and other service providers. Although this picture was used to complain that the money earned by the seller was all sucked away by these people, it also shows the variety and number of service providers surrounding the seller.

Sellers are the cornerstone of cross-border e-commerce platforms and play a frontline role in the entire cross-border e-commerce industry. Therefore, when cross-border e-commerce emerged as a new trading format, many sellers also emerged from it at the first time. Capital pursues profits and naturally pays attention to this group first, which is why big sellers such as Anker Innovations and Zhiou Technology have raised funds and gone public.

Facts have proved that their choice was not wrong. Data show that in the past five years, the scale of China's cross-border e-commerce has increased nearly 10 times, and export cross-border e-commerce has grown rapidly. Cross-border e-commerce sellers standing at the cusp of the trend have also seen their performance soar. Especially in 2020, driven by the epidemic, many sellers have made a lot of money. There is even a Shenzhen seller who completed his annual performance target in 7 months.

However, it is well known that many cross-border e-commerce sellers are too dependent on Amazon. If its policies are tightened, sellers will be greatly impacted. For example, in the 2021 account blocking wave, a large number of sellers suffered heavy losses. During this process, some laid off employees to reduce their burdens, some stopped their listing plans, and some even went bankrupt.

It was also at this time that the investment direction of capital underwent a new change. They began to shift from investing in sellers in droves to companies that provided services to sellers, that is, cross-border e-commerce service providers.

In 2021 , 50 service providers received capital financing exceeding 7.1 billion yuan

Last year, compared to sellers who had to survive through account suspension, plummeting profits, layoffs and other hardships , service providers had a much easier time. In particular, logistics service providers, who sellers paid more attention to and had more contact with, made a lot of profit from the high prices of sea and air freight due to the continuous "traffic jam" in global logistics last year . For example, the year-end bonus of a shipping company at the end of the year was 40 times the monthly salary, which made people jealous.

In fact, this group has also attracted the attention of capital.

On December 28, 2021, the independent website building SaaS service platform "FunPinPin" announced that it had received tens of millions of US dollars in Series A financing. This was also the last round of financing completed by the cross-border e-commerce service provider market last year.

Last year, the financing market for cross-border e-commerce service providers was extremely hot. According to data from the e-commerce big data database "Dianshubao" (DATA.100EC.CN) under the China Internet Network Information Center, there were 50 financing events in the field of cross-border e-commerce service providers in China in 2021, with a total financing amount of more than 7.15 billion yuan. In addition to FunPinPin, service providers that received financing also include cross-border payment companies familiar to sellers such as "Air Cloud Exchange", one-stop service platform "Dian Xiaomi", and SaaS service provider "Lingxing".

Among these service providers, most received one financing, but a few received two or even three. For example, Airlink and Mabang received three in one year, and Dianxiaomi and Lingxing received two. In terms of the provincial distribution of financing, Guangdong accounted for the majority, followed by Shanghai, and Zhejiang ranked third , with 23, 11, and 8 respectively , which is basically consistent with the distribution of cross-border e-commerce sellers.

There is no doubt that the cross-border e-commerce service provider sector has become a hot spot for capital market investment and financing. Why is there such a surge in investment?

First of all, while cross-border e-commerce is striding forward as a new development hotspot, the service ecosystem is also developing rapidly.

Relevant data show that from 2018 to 2021, the compound growth rate of global e-commerce sales reached 20.8%. According to customs statistics, China's cross-border e-commerce imports and exports in 2021 were 1.98 trillion yuan, with excellent exports accounting for 1.44 trillion yuan, an increase of 24.5%. Tianyancha shows that there are more than 600,000 cross-border e-commerce related companies in China in 2021. Cross-border e-commerce business has obviously become a new economic accelerator in China.

Just recently, the Ministry of Commerce twice stated that it would support the development of cross-border e-commerce: On February 23, the Ministry of Commerce and the China Export Credit Insurance Corporation jointly issued a notice, stating that they would give full play to the role of export credit insurance, increase support for foreign trade enterprises, and encourage greater support for new business formats such as cross-border e-commerce ; On February 24, Gao Feng, spokesperson for the Ministry of Commerce, stated that the Ministry of Commerce will increase underwriting support for new foreign trade formats such as cross-border e-commerce and overseas warehouses, strengthen product model innovation, and provide personalized service solutions for enterprises.

As the cross-border e-commerce industry develops rapidly, the cross-border e-commerce service ecosystem is also growing at the same time. According to incomplete statistics, there are more than 1,500 comprehensive foreign trade service companies in the country , serving more than 200,000 customers. Not only that, the China Internet Network Information Center E-Commerce Research Center recently released the " 2021 China Cross-border E-commerce "Top 100" List", which shows that there are 40 cross-border e-commerce service providers, 10 more than in 2020, including Airlink, Jijia, Captain BI and other service providers active in the sellers' field of vision.

The main businesses of these service providers involve logistics, payment, SaaS, marketing and other services, showing the huge potential of cross-border e-commerce service demand.

The second is that there are fewer investment opportunities on the seller side.

In recent years, we always hear complaints from sellers: "Being a seller is too hard, and it's getting harder and harder to make money. It's better to transform into a service provider, where seller accounts can be connected from birth to death, with low risk and profitability." It can be seen that the service business has become the next gold-digging track in the eyes of many people.

Some sellers have said before that their friend lost 200,000 yuan when starting a business on Amazon , but after switching to training services, he made 1 million yuan.

All this seems to indicate that competition in the seller track that was previously favored by capital is becoming increasingly fierce, and the corresponding investment opportunities will also decrease.

In this case, capital will naturally adjust its investment direction. Obviously, their ideas are the same as those of sellers, and they are all targeting the service provider field.

Liu Huanbin, vice president of Jushuitan, an e-commerce SaaS collaboration platform that invested in Lingxing in 2020, once said that if investors do not see good investment targets on the To C side, they will consider moving to the back end.

The backend of the seller is undoubtedly the service. Judging from the situation in 2021, capital is gradually taking a fancy to the opportunities emerging in the cross-border e-commerce service system. For example, SaaS service providers are their top priority.

The third is the butterfly effect of Amazon’s account ban wave.

In this wave of Amazon account bans, a large number of sellers have been hit hard, including some big sellers who were preparing to go public through capital operations.

Recently, the Guangdong Provincial Council for the Promotion of International Trade and the Compliance Technology Research Institute of Southern Finance and Economics Media Group jointly launched a research report titled "Cross-border E-commerce Overseas Compliance, Promoting the Development of New Foreign Trade Business Forms". The report research team distributed a compliance awareness questionnaire to 100 cross-border e-commerce export sellers. The results showed that during the Amazon store closure in 2021, 23% of the sellers interviewed said that their business activities were affected. Among the affected sellers, 34.78% said that the impact was very large, and 21.74% said that the impact was large.

This wave of Amazon account bans has also sent a very strong signal to investors: cross-border e-commerce sellers have great concerns about data security and risk control, the investment risks are too high, and they are very likely to lose all their money.

This can be seen from the fact that after a company in Shenzhen Tianan Cloud Valley had its Amazon account blocked, the capital directly withdrew 150 million yuan of financing . It is not difficult to see that when the enthusiasm of capital fades, it is very quick and ruthless .

In fact, after this round of account blocking, it can be clearly felt that the investment enthusiasm of capital on the seller side is declining. According to industry insiders, even the listing plans of some big sellers may be in doubt now.

However, with investment on the seller side cooling, data shows that the financing amount of the entire cross-border e-commerce market in 2021 has nearly doubled compared to 2020, and it is obvious that these funds have flowed into the service provider field.

The chaos in the service provider market: extortion, running away, cutting leeks...

As can be seen from the above, service providers cover a wide range of fields. As long as they provide services to cross-border e-commerce sellers, they can be called service providers. Some people say that there are more service providers than sellers in the cross-border e-commerce industry.

Service providers exist to meet market demand, but it is undeniable that behind the prosperity of the service provider field is a mixed bag. Currently, there is no systematic regulatory measure for the entire service industry, and the requirements for practitioners in some services are relatively low, which has led to various chaos. In the chaos, sellers have become the victims.

Some sellers lamented that it is already very difficult to sell goods now, and now they have to be on guard against falling into various traps of service providers.

Indeed, judging from everyone's feedback, sellers are being cheated by various service providers more and more frequently. They find shop operators to operate their stores but are defrauded of all their money, they find logistics companies to transport their goods but the goods are lost and they cannot get compensation, they find VAT service providers to register their tax numbers but are told that the tax numbers they applied for are invalid, and there are even review-deleting service providers who directly threaten sellers that they will give them bad reviews if they do not pay and cooperate...

These traps are varied, not only for novice sellers, but even "old hands" who have been in the industry for many years may not be able to guard against them. Of course, novices are the most likely to fall into traps. During the epidemic, cross-border e-commerce has made great progress, and many people want to seize this opportunity, but they would never have thought that before they stood on the vent, they would become fish on someone else's chopping board. When someone shared his friend's experience of being cheated on Zhihu, he said that a company that does cross-border service providers directly found his friend and said that as long as he paid a certain amount of money, he could run a store without a source of goods and earn at least 20,000 yuan a month, but he was cheated.

For sellers, the most common way to contact service providers is to "add friends", but this also provides opportunities for some scammers who use the name of service providers. Once they get the money, they will directly delete, blacklist, and cancel the account three times, and the sellers have no way to recover the money. There was a period of time last year when this situation was intensively exposed in various industry communication groups. Many scammed sellers sent their experiences of being cheated and screenshots to the group to remind other sellers to pay attention.

Many times, some bad service providers will restrain themselves after being exposed for cheating sellers, but some are not afraid of being exposed and are so arrogant that sellers are angry. For example, a seller once said that when a service provider pretending to be a real person was exposed by him and said he would expose him, the service provider was arrogant and said that he had been exposed by multiple sellers and industry media, and one more would not make a difference. He also threatened that the sellers were lambs to be slaughtered and he would give the sellers bad reviews.

Moreover, some service providers only care about money when providing services , and have no professional ethics or bottom line. For example, some service providers openly launch advertising services to attack their competitors in public channels such as WeChat Moments, communication groups, and forums.

In 2020, the Shenzhen Freight Forwarders Association officially released two batches of "Shenzhen International Freight Forwarders Blacklist", with a total of 742 companies on the list. A month ago, the Shenzhen police launched a crackdown operation, three agency operating companies were destroyed, and a total of 255 suspects were controlled. Behind these data, we can get a glimpse of the chaos in the service market.

We can also see that some sellers who have fallen into traps will go to the service providers to seek explanations in order to protect their rights and recover losses. There are no shortage of physical conflicts and even bloodshed. This is the case when the person can be found. Now, many times when the seller goes to the door, they find that the other party has already left. For example, at the end of last year, a VAT service provider in Shenzhen, Shenzhen XX Cross-border Service Co., Ltd., suddenly ran away with the money. The seller paid the money, but the VAT declaration receipt was delayed. When the seller reacted and went to the door to check, he found that the other party had already left, and thousands of sellers’ tax numbers were affected.

In fact, the service provider industry is full of chaos, and it is not only the sellers who are hurt, but also some institutions and companies that are dedicated to providing services. As the negative news about service providers continues to be exposed, sellers are also afraid of being cheated. Therefore, when the word "service provider" is mentioned now , it often triggers some bad emotions, which is very unfavorable to those companies that are dedicated to providing services.

There are all kinds of birds in the forest. The editor recognizes service providers who provide positive help to sellers, but is unwilling to classify those who cheat money and run away or intimidate or deceive sellers as service providers. I hope that in the future, some bad practices and illegal behaviors in the service field can be eliminated, and sellers can be provided with better services, so as to create a win-win situation.

Cross-border e-commerce service provider

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