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The smoke of cross-border e-commerce has spread to overseas warehouses. On July 2nd, Business Matters learned from multiple cross-border merchants and logistics providers that with Amazon's recent implementation of "low-priced stores" imitating full custody, multiple platforms including TEMU and AliExpress have joined the custody team. The increase in logistics costs has further compressed merchant profits, and the delivery fees for some medium to large-sized packages can exceed 40% of the selling price.

The game of discourse power between platforms and merchants is mainly focused on profits and traffic. In order to achieve overall prosperity for merchants, the platform intends to relinquish logistics control, which has led to the popularity of more cost-effective overseas warehouse models. At the same time, overseas warehouse operators also need to increase their revenue in value-added services such as return reverse logistics and secondary packaging.

Logistics costs are nearly half of the selling price
After seeing the news of "Amazon's internal testing of full custody", Zhang Lu (pseudonym), a home goods seller from Foshan, Guangdong, exclaimed, "Has Amazon gone offline to do full custody. It is reported that Amazon recently held a closed door meeting in Shenzhen and announced the call for sellers to conduct internal testing of "low-priced stores". In the eyes of some sellers, this model is similar to the full custody of some domestic cross-border e-commerce platforms.

Jennie (pseudonym), a cross-border seller from Shenzhen, was surprised to hear the news. According to her understanding, Amazon will open a separate channel for fully managed merchants this time, with the main order value concentrated below $20. Merchants can directly deliver from Amazon's domestic warehouse, with Amazon responsible for logistics, and the delivery time is around 11 days.

The editor learned during the visit that in order to attract more merchants, not only Amazon, but also platforms such as TEMU and AliExpress are making efforts in the logistics link of the hosting model, and the competition for logistics resources is becoming increasingly fierce. As a result, logistics costs have skyrocketed and merchant profits have also been compressed. After seeing the details of the first leg logistics fee, overseas warehousing fee, and backend delivery fee provided by some e-commerce platforms, Zhang Lu couldn't sit still: "If the delivery fee for medium and large-sized packages is close to 50% of the sales price, then I would rather not do this cross-border business


Zhang Lu has been engaged in the furniture industry in Foshan for six years, and this year is the first year of doing cross-border business. The domestic e-commerce delivery chain is already very mature, but when it comes to going global, the long logistics chain is indeed the biggest obstacle. "Zhang Lu admitted that for medium and large-sized goods, the complex process and high transportation costs from front-end collection, transportation and sorting to customs clearance, destination situation and overseas warehouse distribution make it difficult for them to adapt." Generally speaking, for medium and large-sized furniture packages, the delivery cost should be around 30% -40% of the selling price of the goods, but the actual overseas logistics cost often exceeds this proportion.

Amazon wants to enter the TEMU white label market hinterland with "low-priced stores", but for merchants, the attractiveness of Amazon's above hosting model on the logistics side is not enough. Amazon's logistics and delivery costs are quite high, and it is not the only option for low order products with limited profit margins. Jennie said that since the beginning of this year, Amazon's overseas warehouse system has added multiple fees such as storage configuration fees and low inventory fees, and the delivery fees for medium and large-sized packages have increased by 30-40% compared to last year.