Top Tips for Setting up Proper Supply Chain and Shipping Logistics for Cross-border E-commerce in China
If someone asks you which is the most important component of your cross-border e-commerce business in China, you may impulsively reply advertising, marketing, partnership, taxes, online protection and of course sales and conversions. However, the fact is that none of these is immaterial unless you have a proper supply chain setup and shipping logistics.
If you are thinking of opening a cross-border e-commerce store for China, you will have to first find out from where you would get your supplies and next, how you would set up an efficient supply chain. For excellent guidance on such a business, see top article about cross-border e-commerce in China. Here are a few tips to set up your supply chain successfully.
If you are thinking of retailing various SKUs to China, looking for distributors for various brands may be a good idea for your first supply chain. This option has only one drawback that the cost will be higher while taking help from distributors or agents as compared to buying directly from manufacturers. However, it has a major benefit that most distributors may hold various brands and SKUs and will often let you buy smaller quantities as compared to manufacturers.
Brands that sell their own products on JD Global or TMall Global often have their own production supply chain. Read more about Tmall Global. The advantage of contacting manufacturers directly is that the price will be the lowest per product because of elimination of middleman to mark-up the product and you can normally scale your supply in the event of an increased demand.
The obvious drawback of this option is that you are often restricted to only a small quantity of SKUs and will need to buy in large amounts.
Westerners may find this weird and they might think why on earth departmental stores participate in the supply chain. However, it really works with cross-border e-commerce in China. Dealers on cross-border platforms will usually be individuals living overseas and because they don’t actually have any buying power or linkage to distributors, they will usually buy their supplies straight from big department stores and resell those products to Chinese customers in China with a little mock-up.
Typically this is at a very early stage of cross-border e-commerce business that has a very small buying power. It is not recommended because its disadvantage is obvious and it’s that you are not getting any price advantage because you are buying straight from departmental stores. There is also no guarantee that the product will be in stock and of course, all the legal issues you may have to face due to faulty products.
Daigou – International Buyer
You might have come across the term “Daigou” which means “buy from me”. These are actually just individual Chinese living overseas. They generally buy products from department stores or sometimes from distributors and resell them to Chinese customers in China. They are typically family and friends. However, some daigou have created a big network of buyers on WeChat and are succeeding.
Choosing Cross-border E-commerce Logistics for China
Only through 2 methods, you can deliver products to Chinese customers – direct shipping or pre-ship a lot of your products to a place like a bonded warehouse. Both these have their own pros and cons.
Here you will ship products straight to your Chinese customers upon purchase. This enables you to sell more products as you are only shipping upon the customers’ orders. Its downside is that you can hardly compete with a local business on the speed of shipping.
Pre-shipping to a Bonded Warehouse
Bonded warehouses are typically hired by government employees and sometimes by private businesses and allow dutiable products to undergo production operation, storage and manipulation without the need of paying duty upfront. It offers benefits like low cost and better customer experience because the products can be shipped locally.
With this information, you can take informed decisions while starting your cross-border e-commerce venture in China, and increase the chances of being successful.