Cross-border e-commerce enters an era of comprehensive competitiveness competition. Five major trends interpret cross-border e-commerce in 2024

In the past few years, cross-border e-commerce has become a highlight of foreign trade export growth. With the release of the "Several Measures on Accelerating the Integrated Development of Domestic and Foreign Trade" by the General Office of the State Council at the end of the year, the value of cross-border e-commerce in promoting economic development and facilitating the integrated development of domestic and foreign trade has become more prominent.

In the industry

This is the era of the fastest changes in cross-border e-commerce, and it is also the best era for the development of cross-border e-commerce. In 2023, cross-border enterprises represented by TikTok Shop, SHEIN, Temu and AliExpress began to enter people's field of vision more and more. They continued to expand in various markets around the world with their own different models and layouts. Looking forward to 2024, while cross-border e-commerce continues to maintain rapid growth, platforms, brands and sellers will usher in competition in comprehensive capabilities such as professionalism, product strength, brand strength and innovation. It is necessary to establish differentiated competitive advantages, focus on the creation of brands and added value, improve service experience such as logistics delivery, and do a good job in localized operations while opening up new markets around the world. At the same time, pay attention to legal and compliant operations. Only in this way can we continue to keep up with the market and enjoy the dividends of cross-border e-commerce development.

Growth, growth, and more growth

Data shows that in the past five years, my country's cross-border e-commerce imports and exports have increased nearly tenfold; the scale of cross-border e-commerce exports has increased more than 27 times in the past five years. As a new foreign trade format and model with the fastest development speed and a continuously prominent driving role, cross-border e-commerce has injected new impetus into China's export growth.

Xiao Lu, deputy director of the Department of Foreign Trade of the Ministry of Commerce, said that in 2022, the scale of my country's cross-border e-commerce imports and exports reached 2.11 trillion yuan, a year-on-year increase of 9.8%; from January to September this year, my country's cross-border e-commerce imports and exports reached 1.7 trillion yuan, a year-on-year increase of 14.4%. According to Shu Jueting, spokesperson of the Ministry of Commerce, cross-border e-commerce drove the growth rate of goods trade imports and exports by more than 1 percentage point in the first three quarters. Reuters believes that China has long been a major exporter of many consumer goods. Judging from the dynamics of its e-commerce market, the latest trend of China's cross-border trade has shaken global online shopping.

As the penetration rate of the global e-commerce market increases, cross-border e-commerce will undoubtedly continue to maintain a high growth trend in 2024. The US research company eMarketer predicts that by 2025, global e-commerce sales are expected to reach 7.39 trillion US dollars, and the penetration rate of e-commerce in the global retail sector will rise to 23.6%. Driven by the advantages of convenience, efficiency, and high cost-effectiveness, consumers continue to turn to online. In addition, due to the different development of the global e-commerce market and infrastructure, there are still many "blue ocean markets" that are experiencing explosive growth, which provides a continuous source of power for the continued development of cross-border e-commerce.

In the context of industry growth, major platforms have also raised their GMV targets for next year. According to LatePost, TikTok Shop expects next year's target to increase by 250% to $50 billion based on this year's $20 billion target; Temu may achieve more than $14 billion in GMV this year and set a target of $30 billion for next year. As for cross-border fashion retailer SHEIN, according to previous foreign media reports, its GMV target for 2025 is $80.6 billion.

Avoid homogeneity and establish differentiated competitive advantages

As more and more platforms, brands and sellers join the cross-border e-commerce track, both platforms, brands and sellers will pay more attention to thinking about how to avoid homogeneity and establish differentiated competitive advantages in the future. As the markets of all parties expand, we can also see that the different characteristics and advantages of each company have been reflected.

TikTok Shop e-commerce fully replicated the traffic advantage of Douyin and TikTok, and performed well in the Southeast Asian market. AliExpress is a representative of emerging markets, with outstanding advantages in Japan and South Korea.

As a cross-border platform under Pinduoduo, TEMU has developed rapidly in the past year with a full-category third-party merchant product model. It is regarded as a low-price department store e-commerce. Since its launch in September last year, TEMU has developed rapidly with its "low price" advantage. In the third quarter of this year, its global monthly visiting users, although still lower than SHEIN, have reached an astonishing 114 million. Despite doubts about losses and constant complaints from merchants, this has not affected Temu's rapid growth.

SHEIN, a cross-border platform focusing on the fashion field, has developed with a unique dual-mode of "self-operated brand + platform". Since its inception, it has continuously built SHEIN's own clothing brand. This is the biggest difference between it and other e-commerce platforms. Behind its own brand, it continues to invest in the construction of a flexible supply chain to help the digital upgrade of domestic clothing manufacturing. The clothing brand of the same name, SHEIN, has surpassed internationally renowned brands such as ZARA and H&M to become one of the most popular fashion brands among overseas consumers; at the same time, SHEIN has gradually introduced more third-party seller brands to help sellers expand into the international market in different forms of full trusteeship and independent operation.

Whether it is a platform, a brand, or a seller, as more players continue to pour into the cross-border track, in order to avoid low prices and homogeneous involution, in 2024 and even longer, there will be competition in comprehensive capabilities such as professionalism, product strength, brand strength, and innovation. It is necessary to establish differentiated competitive advantages and pay more attention to product innovation to enhance product and brand added value in order to enhance their differentiated competitive advantages. Just a few days ago, a survey report released by Morning Consult, a well-known authoritative consulting firm in the United States, showed that SHEIN was selected in the "Top Ten Fastest Growing Brands in 2023" and "Top Ten Fastest Growing Brands among Millennials in 2023" lists in the United States, ranking fourth and second respectively, becoming the only Chinese brand selected in the above list along with many internationally renowned brands such as ChatGPT, Facebook, Coca-Cola, and Apple TV. This is a reflection of the continuous improvement of corporate development and brand strength.

Each seller and brand chooses a suitable cooperation model based on its own strengths. Under the dividends of going overseas, sellers and brands that focus on and give full play to their own advantages and characteristics can find their own place in the increasingly crowded track and win in the fierce market competition.

Operate in an orderly and compliant manner to promote the healthy development of the industry

Whether at home or abroad, orderly and compliant operations must be the premise for the long-term development of enterprises, brands and sellers. In particular, the laws and regulations of overseas markets vary, which greatly increases the difficulty and also faces the risk of competition in various markets. Some analysts pointed out that the rapid development of a large number of products on the TikTok Shop platform in Indonesia also put pressure on local small and micro enterprises, which once forced TikTok to close its e-commerce business in Indonesia and re-enter through cooperation with local companies. Cross-border enterprises go overseas because the laws and regulations of various countries and regions are different, and local enterprises have more advantages in terms of familiarity with the law and first-mover influence in the local market. This is also a risk that enterprises should pay special attention to and evaluate when expanding overseas.

In addition, the lawsuits of the two giants TEMU and SHEIN have also attracted much attention from the industry. On December 14, foreign media reported that Temu filed another lawsuit in the U.S. District Court for the District of Columbia, accusing the fast fashion platform Shein of increasingly anti-competitive behavior against Temu, saying that it had no choice. This is the rekindling of the war after both parties withdrew the U.S. lawsuit in October this year. Both sides stick to their own words, and people close to SHEIN said that Temu has not only been plagiarizing Xiyin's own-brand products on a large scale and continuing to engage in unfair competition, but also reversed black and white, and attempted to retaliate and discredit with malicious lawsuits. SHEIN will never compromise with such despicable behavior, and will actively respond to the lawsuit and resolutely safeguard its legitimate rights through legal means. Previously, in August 2023 and September 2023, the U.S. court and the British court also issued temporary restraining orders against Temu for infringement Shein respectively.

Just recently, on Law360, a well-known American legal information platform, updated documents from the U.S. court showed that the Eastern Division of the United States District Court for the Northern District of Illinois issued a TRO (temporary restraining order) to the parties involved, including Temu's 29 stores, and it was approved for renewal on December 19, requiring Shein to stop its infringing behavior.

Some overseas markets have perfect and thorough laws and policies on brand intellectual property protection, and the investigation and punishment of infringements are also strict and standardized. Merchants should pay special attention to the prevention of problems in this regard. In the "Several Measures on Accelerating the Integrated Development of Domestic and Foreign Trade", it is emphasized to strengthen intellectual property protection, focus on clothing, shoes and hats, carry out special actions to combat infringement and counterfeiting, and promptly correct and stop online infringements; at the same time, accelerate the construction of domestic and foreign trade brands, cultivate demonstration enterprises with intellectual property advantages, support enterprises to give full play to the combination effects of various types of intellectual property rights such as patents and trademarks, and enhance the comprehensive competitiveness of brands.

Shu Jueting, spokesperson of the Ministry of Commerce, said that in the next step, the Ministry of Commerce will continue to adhere to the problem-oriented approach, attach equal importance to regulation and development, and focus on three aspects. The first point is to strengthen capacity building. Give full play to the role of industry organizations, focus on platform compliance, intellectual property protection and other issues of concern to enterprises to carry out training, and help cross-border e-commerce companies to expand overseas markets. As a platform, it should strengthen its main responsibility and establish a sound intellectual property protection system; merchants should pay attention to legal and compliant operations to prevent losses due to infringement issues.

Improve logistics delivery and other service experience

The recent ship attacks in the Red Sea have greatly increased the attention paid to foreign trade logistics and transportation. In fact, in the field of cross-border e-commerce, in addition to rich and diverse products and high cost-effectiveness, high-quality and fast logistics and delivery experience is also an important factor affecting consumer stickiness. Take Amazon, which is good at logistics, as an example. Amazon recently announced that as of now, Amazon has more than 55 same-day delivery facilities in the United States, and provides same-day delivery services in more than 90 metropolitan areas in the United States. With the support of Amazon's same-day delivery sites in the United States, 1 billion packages have been successfully delivered.

AliExpress is one of the few cross-border e-commerce platforms in China that ensures the logistics and delivery experience by building its own logistics. This year, AliExpress and Cainiao jointly launched the "Global 5-Day Delivery", which was first launched in five countries: the UK, Spain, the Netherlands, Belgium, and South Korea. Before this year's Black Friday promotion, the inventory of AliExpress Cainiao's preferred warehouse increased by 9 times compared with last year, and most of the goods will be shipped to countries covered by the "5-Day Delivery" service.

As the platform strategy deepens, SHEIN is also accelerating the construction of logistics and distribution. Previously, George Chiao, president of SHEIN's US business, said in an interview that the company plans to build a large distribution center in the United States to shorten the logistics and distribution time by 3-4 days. Subsequently, SHEIN also announced the opening of three distribution centers in Poland, Italy and the United Arab Emirates to enhance the order delivery and processing capabilities in the EMEA region (Europe, the Middle East and Africa).

Temu started building overseas warehouses in June this year, planning to build a warehouse in the eastern and western United States, striving to improve the efficiency of express delivery at the end of the journey, and cooperating with many logistics service providers, such as Jitu in the Philippines and Mexico. However, according to media reports, Temu has also reached shipping cooperation with shipping companies such as Matsun, ZIM, CMA CGM, Maersk, and COSCO Shipping to reduce logistics costs.

Expanding new markets globally while maintaining local operations

Whether from the perspective of risk diversification or the faster growth of emerging markets, major cross-border e-commerce platforms, brands and sellers will accelerate global expansion and vigorously explore emerging markets in 2024. Data shows that in addition to the European and American markets, the four major regions of Southeast Asia, Latin America, the Middle East and Africa have shown many positive signals, with an average growth rate of 20% in e-commerce and a per capita GDP growth rate exceeding the global level, showing obvious incremental market characteristics.

Taking the Latin American market as an example, according to the "Latin American E-commerce Forecast 2023" report released by Insider Intelligence, e-commerce sales in Latin America will increase by 14.3% in 2023 compared with last year, and are expected to exceed the 200 billion US dollar mark in 2026. In the next three years, annual e-commerce sales in Latin America are expected to continue to grow rapidly at a double-digit rate. SHEIN continues to invest in Latin America; TEMU opened its first South American site in Mexico. At the Amazon Global Store Cross-border Summit held in December, Amazon also highlighted the opportunities in Europe, Japan, the Middle East, Australia and Latin America in 2024.

Expanding market layout has brought more market growth opportunities, but the differences in users, culture and even customs in various markets have also brought challenges. As the scale of cross-border e-commerce expands rapidly, the industry gradually requires various platforms, brands and sellers to further enhance their localization and refined operation capabilities, which also puts forward higher requirements for the localization of user services, warehousing and logistics.

Of course, there are many ideas for global localization. Take SHEIN as an example. In the second half of this year, it successively acquired about one-third of the shares of Forever 21's parent company SPARC Group and fully acquired the Missguided brand. Through the acquisition of leading fashion brands in the United States and the United Kingdom, it further expanded its localization layout and better met the needs of local consumers.

TikTok, which returned to Indonesia, chose to reach an e-commerce strategic cooperation with the local GoTo Group in Indonesia, and stated that it would work with the GoTo Group to provide a series of support in marketing, branding and internationalization to help local small and medium-sized businesses develop. On the day of resuming online, TikTok and Tokopedia will also jointly launch the "Buy Local Products" (Beli Lokal) event to help the development of local Indonesian companies. On the Alibaba side, in addition to Cainiao's announcement of in-depth strategic cooperation with Brazil Post, it has invested US$2 billion in Turkey through its Turkish e-commerce platform Trendyol.

While these companies are expanding in the global market, they are also accelerating their local operations to become more sophisticated. This is not only a major trend in the development of globalization, but also a reflection of the growing influence of global companies that have grown up in China in the world.

This is the best era for cross-border e-commerce. E-commerce platforms, fashion brands and platforms, low-priced department store e-commerce and various types of merchants are flourishing and have their own place. Of course, any industry that grows rapidly must be accompanied by huge changes. Today, cross-border e-commerce has gone through the previous era of extensive development and entered a more high-quality development stage. With the influx of powerful players, cross-border e-commerce brands, platforms and sellers need to further improve their comprehensive competitiveness in many aspects such as products, services, brands and compliance. After all, companies that have achieved sustained success in the cross-border field have fully demonstrated with their own cases: haste makes waste, and adhering to long-termism and deepening differentiated advantages are the only secret to being invincible.

SHEIN