Home appliances go to sea, how to leverage cross-border e-commerce?

When it comes to cross-border e-commerce, many people will feel that there are always people on the right track and making steady profits, but more people come and go, and eventually "exit" for various reasons.

Cross-border e-commerce was considered as a new outlet after the domestic e-commerce track was engulfed. In fact, in the early years, cross-border e-commerce had a wave of rapid development, but due to the causes of the epidemic and the uncertainties in international exchange rates, tariffs and logistics, cross-border e-commerce is facing challenges. According to the data in the Report on Investment and Financing of Cross-border E-commerce in China in 2022 released by Net Economic Society, the total cross-border e-commerce financing in China in 2022 was 6.2 billion yuan, down 70.15% year-on-year. Some relevant industry media analysts believe that cross-border e-commerce is bidding farewell to the period of "barbaric growth" and returning to the rational period.

Zhang Yi, CEO and chief analyst of Ai Media Consulting, told China Power Grid: "In the case that the China market is relatively saturated, more than 70% of the energy of home appliance brands should be put into the expansion of overseas brands." Although cross-border e-commerce is putting forward higher requirements for merchants, Zhang Yi believes that the optimistic factors in overseas markets are far greater than the unstable and uncertain factors. Then, for the home appliance industry, what are the opportunities for cross-border e-commerce?

Cross-border e-commerce helps brands to go to sea independently

From the perspective of consumption channel selection, in recent years, the global online sales scale has increased significantly. According to eMarketer's estimation, the global retail e-commerce sales in 2022 will be $570 million, and it is expected to reach about $8.1 trillion by 2026. At the 2023 China E-Commerce Conference-Cross-border E-commerce Special Session held simultaneously during this service trade fair, Yu Chao, senior director of strategic expansion and regional market of Amazon's global store in China, said: "Overseas consumers choose online shopping methods more, especially in North America, with a large cross-border volume, and the growth rate of e-commerce exceeds 25% of the overall retail growth rate."

In terms of cross-border e-commerce, although the bubble disappeared and the tide receded, in general, the overall scale of cross-border e-commerce continued to expand. At this e-commerce conference in China, Xiao Lu, deputy director of the Foreign Trade Department of the Ministry of Commerce, said: "The import and export scale of cross-border e-commerce has increased tenfold in five years, reaching 2.11 trillion yuan in 2022. At present, the trend of integration of trade in goods and services, trade and industry, and online and offline integration is increasingly apparent. The development of cross-border e-commerce is driving the digitalization of the whole process and all links of trade. " According to the forecast of WTO, global cross-border e-commerce will maintain a growth rate of 27% before 2026. Among them, according to the analysis of cross-border logistics companies, the orders of large and medium-sized items have increased significantly this year. From January to May this year, the furniture category was the most sold category among large and medium-sized items.

At present, the home appliance industry is in a critical period from "products" to "brands". Jiang Feng, chairman of China Household Electrical Appliances Association, once said: "At present, the competition in the world home appliance market is still brand competition. Without brands, there is no right to speak in the global market." In the past ten years, China's home appliance industry has started from accepting overseas orders, to OEM with fixed brands, to acquiring overseas enterprises and building their own factories, and finally created its own brands. The "brand era" has arrived.

Previously, the overseas offline sales of domestic mainstream home appliance brands were mainly based on the dealer system and home appliance stores, such as Saturn in Europe, MediaMark and Walmart and Sam's Club in North America, while the online sales platform was mainly based on Amazon. In recent years, with the development and maturity of cross-border e-commerce, home appliance brands have new choices to go out to sea. Zhang Yi also said: "It is obvious that China products no longer rely on the system in which dealers have the right to speak in the global market, but gradually seek profit breakthroughs in cross-border e-commerce and direct sales. Next, it will be the key years for products to go to sea."

In recent years, the state is also vigorously encouraging brands to go to sea, supporting enterprises and related industries to open up cross-border e-commerce business and build their own brands. At the end of last year, the State Council agreed to add the seventh batch of cross-border electronic commerce Comprehensive Experimental Zone. Since the establishment of the first cross-border e-commerce comprehensive demonstration zone in Hangzhou in 2015, the number of comprehensive experimental zones in cross-border electronic commerce, China has reached 165. Since the beginning of this year, all newly-added regions have successively implemented action plans to help build a complete system from the aspects of information sharing, financial services, intelligent logistics, talent cultivation, credit evaluation, statistical monitoring, risk prevention and control, etc., which also covers the problem of enterprises going to sea to some extent.

Relevant cross-border experts in China (Hangzhou) cross-border electronic commerce Comprehensive Demonstration Zone told China State Grid that the Hangzhou Comprehensive Test Zone covers all cross-border products, and enterprises can consult the corresponding cross-border parks according to the location of the company and provide corresponding preferential services. In addition, according to a recent report by the Hangzhou Municipal People's Government, it takes only 30 seconds to successfully complete the tax payment related to cross-border e-commerce retail import through the customs electronic payment system at the "China International Trade Single Window".

At the same time, the construction of the comprehensive demonstration zone will also bring together outstanding key cross-border enterprises in various provinces and cities, coordinate regional resources, create a characteristic industrial belt, and help enterprises to hold a group to the sea. Relevant documents issued in Shandong, Guangzhou, Shenzhen and other places clearly mentioned that it will focus on smart home appliances, electronic information and other industries to build industrial belts and industrial clusters, and continuously improve cross-border e-commerce industrial agglomeration and public service capabilities.

Avoiding price wars and laying out cross-border e-commerce cannot follow the blind wind.

In addition to brand autonomy, brand high-end is also an important strategy for home appliances to go out to sea. China Household Electrical Appliances Association clearly pointed out in the "Guiding Opinions on the Development of Household Electrical Appliances Industry in China in the 14th Five-Year Plan" that deepening the global brand strategy, cultivating a number of high-end brands, comprehensively improving the reputation and competitiveness of China household electrical appliances brands, and obviously improving the global market share, reputation and user satisfaction of their own brands are one of the important goals at this stage.

In the era of "brand", China household appliances are easily subconsciously regarded as low-end products overseas. In this regard, Zhang Yi said: "In the past, China products were mainly operated by overseas dealers and agents. Objectively speaking, overseas operators and agents were relatively backward in thinking about China products. China brands want to win the market, and the pricing will be relatively low. On the other hand, dealers have to earn the difference, which also leads to lower profits of China manufacturers. "

In terms of cross-border platforms, the situation dominated by Amazon and Lazada is also changing, and major domestic e-commerce platforms have also launched overseas versions, such as JD.COM's Global Trade, Byte's Tik Tok, and Pinduoduo's Temu. This year, Temu first launched the "full custody mode", in which enterprises only need to transport their products to the nearest platform warehouse, and the subsequent customs logistics, overseas operations and sales are completed by the platform side.

This model has quickly attracted attention. Many cross-border e-commerce sellers believe that although the brand is exposed, the brand has lost the channel of direct communication with consumers and the power to operate. The platform has blocked some data, and the merchants' understanding of market changes has been greatly reduced, which is not conducive to development and product selection. The cost of platform-led logistics in full custody mode is lower, and there is no need to consider commission, so its pricing is much lower than that of self-operated merchants. In this situation, although it can help the brand to ship in large quantities, the price is getting lower and lower, and the profit of the manufacturer is meager.

After Temu, the full hosting mode was followed by major e-commerce platforms. Recently, some platforms have launched a "semi-hosting" mode between self-management and full hosting. In addition, many merchants will choose to build their own warehouses and stations or rely on third-party organizations to help manage logistics and operations and plan costs. It can be seen that brands still face many difficulties in achieving high-end approach through cross-border e-commerce. Zhang Yi said: "In fact, the construction of high-end brands can refer to the operation methods of developed countries in the China market."

In the home appliance industry, small household appliances and cleaning appliances are outstanding in cross-border e-commerce, and brands such as Bear, Cobos and Zhuimi dominate the Amazon platform all the year round. At the same time, through cross-border e-commerce, many OEM companies have also hatched excellent own brands. Although Beiding Co., Ltd., a small household appliance company from OEM, began to try overseas direct sales business in 2019, its own brand "Beiding" has topped the Amazon BSR list all the year round; Founded in 2011, after changing from a water filter supplier to a self-owned brand, Yikepuke has continuously understood the audience and optimized the brand display and promotion. At present, its own brand Waterdrop has become the head brand of high-end water purifiers in Amazon North America. Since the beginning of this year, the growth of domestic small household appliances market has been weak, and cleaning appliances and small household appliances are accelerating the opening of overseas markets.

In terms of household appliances, the overseas layout of mainstream brands is mainly based on OEM and offline sales. On the online side, in order to reduce the restrictions of cross-border e-commerce platforms, brands are starting to lay out self-built stations and self-built positions. In 2000, Haier Group established the ecological brand "gooday" of the Internet of Things supply chain scene, relying on rich experience in supply chain management services and basic transportation resources all over the world to empower the brand; Midea established the "Little Swan" cross-border e-commerce platform in 2021, and pushed the brand to overseas markets relying on the independent logistics system. In 2015, Hisense also released a TV e-commerce platform for global suppliers and smart TV users.

Generally speaking, cross-border e-commerce provides new paths and new choices for brands to go out to sea, but enterprises still need to formulate appropriate strategies for going out to sea according to the actual situation, and can't blindly follow the trend, which will lead to the impression left by brands in consumers' minds that is inconsistent with expectations. In addition, the current global trend is green and intelligent household appliances. According to the analysis of insiders, China has a good layout in this respect, which is an opportunity for China's household appliances to move towards high-end.