1688 launches cross-border business. Will the future of cross-border business be B2B?

At the end of 2023, a big news came from the overseas circle - 1688 is going overseas.

Many sellers are wondering, doesn’t 1688 already have overseas business, why did it suddenly launch a cross-border version?

Prior to this, 1688 already had a " cross-border supply " business, which was the first choice for many sellers to prepare and ship goods. It is reported that nearly a quarter of the sales of the 1688 platform came from cross-border business, and the platform already has a strong overseas gene.

As cross-border e-commerce moves towards full trusteeship, platforms have cut out middlemen and cooperated directly with factories. 1688, which has always focused on B2B domestic trade small wholesale, light customization and factory finding, has actively joined the " full trusteeship " overseas competition, targeting the overseas B2B market.

Some sellers have already started to settle in 1688 Cross-border, and everyone is watching whether this new platform can bring higher value and profits.

Cross-border " veterans " officially go overseas

Although 1688 has had cross-border business for a long time, especially many offline small wholesalers in Southeast Asia know 1688 , but in fact, many overseas buyers say that this product is not easy to use .

Overseas, the APP links are not connected, language, currency, logistics are all problems, and there is no after-sales fulfillment service . If overseas buyers want to place orders on the 1688 platform, they generally need to hire Chinese to purchase on their behalf, or set up an office in China and find someone to select goods on the 1688 platform , which brings a lot of trouble .

The cross-border business launched by 1688 aims to open up the links and allow overseas buyers to directly purchase industrial products from China. The original cross-border webpage area has added a new cross-border interface to make it more convenient for overseas buyers to use.

It is understood that 1688's cross-border business targets three types of buyers: cross-border ERP, which refers to SaaS software service providers that provide order, platform, and inventory management for cross-border merchants; super buyers , which refer to buyers who directly purchase in large quantities; and purchasing agents, which are the middle link of " B2B2B " , purchasing Chinese goods and then distributing them to overseas local merchants.

Different from the self-operated or hosted model of other B2C platforms, 1688 Cross-border adopts the " ecological integration " approach, cooperates with service providers, adds foreign language conversion, currency exchange, overseas logistics and other services , and improves the service chain of overseas B2B procurement and fulfillment .

Overseas buyers can customize their needs, and the platform will recommend popular pallets for the local market and provide supporting services for localized fulfillment.

The epidemic has prompted the onlineization of B2B transactions. Taking the United States as an example, data shows that in 2021, the total sales of B2B e-commerce in the United States will exceed US$1.6 trillion. In 2026, the North American B2B e-commerce market will exceed US$2.47 trillion . More and more buyers are purchasing goods from online platforms.

The overseas B-end buyer ecosystem has also changed. In the field of fast-moving consumer goods such as clothing, overseas small B retailers will purchase in bulk from SHEIN and Temu . One trend is that overseas large-order purchases are decreasing, overseas small B buyers are getting younger, and purchasing needs are becoming fragmented, personalized, and customized. The trend of " high-frequency small orders " is becoming more and more obvious.

This also means that the supply chain will be honed in the direction of flexibility and small orders with quick returns.

On the seller side, many DTC brands have started to engage in B2B business, launched overseas wholesale platforms such as Wholesale, and run B2B and B2C businesses in parallel. With the changes in the platform, such as TikTok Shop's temporary withdrawal from Indonesia, many sellers who cannot keep up with the platform's trends have also turned to B2B channels to clear their inventory.

1688 launched cross-border business, which enables factories to connect with overseas buyers more conveniently and shortens the commercial links of China's supply chain going overseas. However, whether the new business is reliable and profitable is the most concerned issue for sellers.

Can it be sold?

A seller in the clothing flexible supply chain told Ennet that he has joined 1688 Cross-border and provides clothing small-order quick return services to B-end buyers or other brand sellers.

For the original 1688 sellers, it is not difficult to join 1688 Cross-border. They only need to apply for " 1688 Global Cargo " in the background , without registering an additional store. However , at present, the number of orders from 1688 Global Cargo is not high. Many sellers ask on social platforms: " Has anyone placed an order? "

On social platforms, many sellers said they had joined 1688 Cross-border, but they did not share many orders. More sellers were still waiting to see the subsequent development of the platform , hesitating whether to join .

As a new project, 1688 Cross-border obviously needs to go through a lot of growth space before it can provide sellers with a stable shipping channel. However, as a primary business of Taotian Group, it can be foreseen that in 2024, 1688 Cross-border will be promoted as a key project of the group, which will also bring more opportunities for sellers.

Currently, 1688 has entered the merchant recruitment stage and has started cooperation with the largest local purchasing agent in Vietnam. At the same time, it is exploring the Japanese market, and Europe, the United States, the Middle East, Eastern Europe, Africa and other regions are also in the plan.

Southeast Asia is the first stop for 1688's cross-border business. At the end of October 2023, 1688 Vietnam Station was launched , cooperating with Vietnam VelaVrop Group, and 1688 provided product procurement and technical support .

1688 cross-border also adopts the escrow model. Sellers only need to send goods to domestic transit warehouses, and the subsequent delivery, return and tax rate issues will be solved by channel merchants and the platform. Sellers only need to operate the store's traffic and domestic delivery, and the platform is responsible for selling goods.

It is understood that 1688 has also released an AI product called " Cross-border Sourcing " . It can provide cargo trays and image, word, and link search functions through API interfaces, and can also use label filtering to complete price comparison, product selection and other processes. 1688's goal is to open up overseas procurement links, while looking for service providers overseas, improving overseas fulfillment services, and improving service experience.

1688 has identified three strategic focuses: user-first, AI-driven, and strengthening the supply chain. Specifically for 1688's cross-border business, the direction of strengthening the supply chain is to absorb more supply from mid-tier and lower-tier companies with e-commerce capabilities, and to leave reasonable profits for these manufacturing companies and sell at a higher premium. It is reported that 1688 will retain 5%-10% of the net profit for merchants.

As a fully managed B2B overseas business, the core of 1688 Cross-border is not brand overseas expansion, but cargo overseas expansion.

Data shows that from the perspective of China's export trade, B2B business accounts for 70%-75% of the market share. In 2022, the To B market size will be close to 9 trillion yuan and will maintain an annual compound growth rate of 9.7% within five years.

With the younger and more fragmented overseas B-end buyers, B2B e-commerce going overseas will usher in a new wave of growth.

Official data shows that as of November 2023, there were 5.94 million registered cross-border buyers on the 1688 platform. From January to November 2023, the number of 1688 cross-border buyers increased by 76% year-on-year, the number of cross-border sales items exceeded 130 million pieces, and the annual scale of cross-border online transactions was close to 200 billion yuan.

In 2024, 1688's goal will be to reach 200 million buyers. Currently, the number of domestic buyers is about 70 million, and the 1688 cross-border version will help 1688 achieve the goal of 200 million buyers.

As China's supply chain continues to expand overseas, B2B overseas expansion is an option for some factory-type sellers. How far 1688's cross-border business can go remains to be seen.

1688

B2B