Cross-border online shopping heating up

Competition in the fast-growing cross-border online shopping sector has intensified as a string of Chinese online retailers ratchet up efforts to expand their presence overseas amid a broader drive to cultivate new users and diversify revenue sources, industry experts said.

They said that Chinese cross-border e-commerce platforms should step up localization efforts in overseas markets, establish their own supply chain systems, and comply with local laws and regulations to ensure their brands are reputable.

Online discounter PDD Holdings, parent company of Chinese e-commerce platform Pinduoduo, recently rolled out its cross-border e-commerce platform Temu in South Korea and Japan by offering deep discounts and coupons as part of its strategy to serve price-conscious consumers.

Temu, first launched in the United States in September, has gained popularity among consumers there as it offers a wide selection of merchandise, including apparel, consumer electronics, jewelry, shoes, bags, cosmetics, baby products and pet supplies at competitive prices. So far, it has entered more than 20 countries in North America, Europe and Asia, as well as Australia and New Zealand.

Experts said Temu's business model removes middlemen from the equation, allowing Chinese suppliers to sell directly to US consumers and ship directly from China, instead of building a network of US warehouses.

Chinese fast-fashion online retailer Shein is expanding from selling its own branded apparel to commodities from international third-party vendors, in a bid to meet demand from consumers for a much wider variety of products and categories, and a quicker fulfillment time.

The company has announced that it will officially launch an integrated market place in Mexico, following Brazil and the US, that offers products from third-party sellers alongside Shein's own products, while launches in Germany, Spain, France and Italy will soon follow suit. It also continues to expand its product categories beyond fashion and apparel to other sectors, including home appliances and smart home products.

Zhang Zhouping, a senior analyst on business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy, said: "Chinese e-commerce platforms are accelerating their layout in overseas markets to seek new sources of revenue, as growth in the domestic e-commerce sector is slowing. Looking ahead, competition among cross-border e-commerce enterprises will be concentrated on supply chains. For Temu and Shein, one of their core competitiveness factors lies in products with competitive prices and fast delivery, which are highly dependent on the establishment of supply chains."

Zhang said Chinese online retailers making forays into overseas markets should grasp the demand and preferences among local consumers, learn more about relevant laws, regulations and quality standards in these countries, and seek differentiated development strategies.

In addition, short-video app TikTok, which is owned by Chinese tech company ByteDance, is planning to roll out a new e-commerce program to sell Chinese goods to US consumers, according to The Wall Street Journal.

"Price, quality and service are the most important factors consumers consider when buying products, and cost-effective goods have shown some obvious advantages amid global economic downward pressure," said Chen Tao, an analyst at internet consultancy Analysys in Beijing.

"However, Temu, Shein and TikTok will face intense competition from established players in overseas markets such as Amazon and AliExpress — a cross-border online retail platform owned by Alibaba. Platforms that can provide good shopping experiences and services will gain an upper hand in the competition," Zhang added.