What is the business model of Quanzhou’s cross-border e-commerce?

Development characteristics: Outstanding agglomeration effect

The report shows that in recent years, with the improvement of the cross-border e-commerce industry chain and the support of policies, cross-border e-commerce in Quanzhou has developed rapidly, showing the characteristics of "gradually increasing volume, gradually gathering development, gradually improving policy support system, gradually maturing industry chain supporting facilities, and a good atmosphere". Specifically: First, the market scale has steadily expanded. In the "Amazon Global Selling Chinese Export E-commerce City Development Trend Report" released this year, Quanzhou ranked among the "Top 20 Amazon Global Selling Chinese Export E-commerce City Development", demonstrating its strength and potential among the major cross-border export cities in the country. Second, the development shows a trend of agglomeration, including industrial agglomeration, regional agglomeration, and capital agglomeration. Third, the policy support system is gradually improving, clarifying the overall development ideas, main tasks and guarantee measures of e-commerce, and optimizing the development environment of cross-border e-commerce. Fourth, the service industry chain supporting facilities are gradually maturing, especially in the past year, Quanzhou's cross-border e-commerce has reaped many benefits - the construction of the Donghai Cross-border E-commerce Ecosystem, the opening of China Southern Airlines (Jinjiang) City Cargo Terminal, and the approval of Quanzhou International Mail Exchange Bureau.

According to Ding Feng, director of the Quanzhou Municipal Bureau of Commerce, this year, the city will further promote the construction of the e-commerce ecological system, improve the cross-border communication platform, build the East China Sea cross-border e-commerce ecosystem, establish a cross-border e-commerce full industry chain with deep integration of upstream and downstream supply chains, demonstrate and lead the city's e-commerce clusters to improve quality and efficiency, and encourage vertical e-commerce platforms to become bigger and stronger.

Business Model

B2B accounts for a large proportion and B2C grows fast

In 2017, Quanzhou's total foreign trade exports amounted to US$15.45 billion. The report shows that according to incomplete statistics, in the past year, Quanzhou's cross-border e-commerce exports amounted to US$6.953 billion (including all export transactions concluded through the Internet), equivalent to 45% of Quanzhou's total exports.

It is worth noting that, as an export-oriented city, Quanzhou's traditional industrial and trade enterprises, especially traditional factory-based foreign trade enterprises, have significantly accelerated their pace of transformation into cross-border e-commerce. The report pointed out that in 2017, the volume of Quanzhou's cross-border e-commerce B2B (business-to-business) export was 38.52 billion yuan, with a compound growth rate of about 25%, accounting for 82% of the city's overall cross-border e-commerce business; the volume of cross-border e-commerce B2C (business-to-consumer) export was 8.49 billion yuan, with a compound growth rate of 38%, accounting for 12%. The overall business model of cross-border e-commerce export shows the characteristics of a large proportion of B2B and a fast growth of B2C.

Due to the large volume of B2B transactions and stable orders, it will remain the most important way for Quanzhou companies to expand overseas markets in the foreseeable future; by applying active marketing strategies of cross-border e-commerce, the B2C share is expected to be further increased in the future.

Channel Distribution

The utilization rate of third-party platforms reached 95%

From the perspective of channel distribution, sales on third-party cross-border e-commerce platforms are the main sales channel for cross-border e-commerce in Quanzhou, accounting for about 95% of all sales. Third-party platforms include cross-border e-commerce B2B platforms, such as Alibaba, Global Sources, Made-in-China, Dunhuang.com, etc., of which Alibaba accounts for more than 50%; and cross-border e-commerce B2C platforms, such as Amazon, AliExpress, eBay, Wish, etc., of which Amazon accounts for more than 50%. This shows that Quanzhou's cross-border e-commerce export enterprises are highly concentrated on large platforms and face great competition.

Another part of Quanzhou enterprises are also trying to conduct cross-border sales through self-built platforms (independent websites), but the sales proportion of this channel is only about 5%. The report also pointed out that whether it is B2B or B2C independent websites, the proportion of Quanzhou export cross-border e-commerce sellers using independent websites is relatively low compared with sellers in first-tier cities and foreign local markets. Looking at the country, 50% of the total sales of export cross-border e-commerce in the first half of 2017 came from independent websites, while Quanzhou's share was less than 5%. Analyzing the online shopping habits of overseas consumers, search is still the mainstream.

In addition, independent websites can bring merchants more strategic pricing initiative, thereby increasing profits; through stable traffic, they can establish brand effects and increase repurchase rates; more importantly, they can obtain first-hand user data from the backend. The report predicts that with the support of mature technology and professional operations, independent websites will become the mainstream of the overall operation of cross-border e-commerce, and will also be a sector that platform sellers can fully expand in the future.