1、EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEwhite paper|march 20232 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCETABLE OF CONTENTSExecutive Summary 4Introduction 5Cross-Border E-commerce in Ch

2、ina 6Market Overview 6Key Sales Channels 7Cross-Border E-commerce in the U.S.9Market Overview 9Key Sales Channels 10Logistics Models 12Business-to-Consumer/Direct Shipping 12Business-to-Business-to-Consumer 13Comparison of Logistics Models 14Cross-Border Shipping Alternatives 16Postal Service Provid

3、ers 16Express Logistics Providers 17Freight Forwarders and Consolidators 17Logistics Arms of E-commerce Platforms 18Logistics Flows 20Postal Service Providers 20Express Logistics Providers 21Freight Forwarders and Consolidators 22E-commerce Platforms:Amazon(China-to-U.S.)24E-commerce Platforms:Aliba

4、ba/Cainiao(U.S.-to-China)26Trends in CBEC Logistics 29Expansion of Service Offerings and Geographic Footprint 30Increased Reliance on Air Freight 31Investment in Technology and Digital Capabilities 32Green-Shipping Initiatives 33Selecting a Logistics Strategy 35Familiarity with Target Market 36Deman

5、d Characteristics 37Product Characteristics 38Detailed Analysis 39Conclusion 403 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEAUTHORSBarchi GillaiAssociate Director,Value Chain Innovation Initiative Stanford Graduate School of B

6、usinessEmail:barchistanford.eduHau L.Lee,Principal InvestigatorThoma Professor of Operations,Information and TechnologyFaculty Co-Director,Value Chain Innovation Initiative Stanford Graduate School of BusinessRESEARCH ASSISTANTSCaroline Yuandi LingMBA&Master of Science,Environment and ResourcesStanf

7、ord UniversityTony Lianfeng ShanMaster of Science,ManagementStanford UniversityAraya SornwaneeMaster of Science,Management Science and EngineeringStanford UniversityABOUT THE VALUE CHAIN INNOVATION INITIATIVEThe Value Chain Innovation Initiative brings together academics,industry leaders and practit

8、ioners to advance the theory and practice of global value chain innovation through research and knowledge dissemination.Housed within the Graduate School of Business at Stanford University,we seek to understand the economic and social impacts of the global dynamics and technologies that are reshapin

9、g businesses,industries and ecosystems across the value chain.Our research and professional workshops focus on addressing problems that are highly relevant to the greater global business community,and cover a broad range of topics including global supply chain design in complex trade environments,re

10、sponsible supply chains,technological innovations and their impact on value chains,and more.Learn more at gsb.stanford.edu/vcii.4 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEEXECUTIVE SUMMARYBusiness-to-consumer(B2C)cross-borde

11、r e-commerce(CBEC)is the practice of consumers purchasing goods directly from merchants located in other countries.Sound logistics services are critical for supporting CBEC,given the importance consumers place on such aspects of the shopping experience as shipping times and costs,visibility to their

12、 goods while in transit,and the availability of return services.Given the importance of CBEC logistics services and the complexity of fulfilling cross-border orders,we offer in this paper an overview of the logistics options available to cross-border merchants.We focus specifically on the logistics

13、alternatives supporting trade between China and the U.S.two dominant players in the global CBEC market.At a high level,merchants can consider two logistics models:business-to-consumer(B2C),also known as direct-shipping,and business-to-business-to-consumer(B2B2C).Merchants should also decide whether

14、to fulfill customer orders from their home country,or from a fulfillment center located closer to their customers.Each alternative offers a different set of trade-offs between cost,risk,speed of delivery,and overall customer satisfaction.As for selecting the logistics provider(s)to partner with for

15、cross-border shipping,key alternatives include postal service providers,express logistics providers,freight forwarders and consolidators,as well as the logistics arms of the larger e-commerce companies.The paper offers a description of each alternative,its pros and cons,and the scenarios under which

16、 each alternative may be more relevant.We also offer a detailed description of the logistics flows associated with each of these shipping alternatives.Finally,we also highlight in this paper some of the ways in which the logistics landscape has evolved in recent years and discuss how these trends ar

17、e helping to address some of the main challenges sellers and buyers engaged in CBEC have traditionally faced.The last part of the paper lays out our recommendations for how merchants should approach the task of determining the right logistics strategy for their specific business needs.Merchants shou

18、ld base their decisions on a detailed analysis that compares the expected costs,revenues,and risk factors associated with each logistics alternative.They should conduct this analysis while taking into consideration such factors as their internal expertise and familiarity with the target market,expec

19、ted demand patterns,and the characteristics of the products that they sell.5 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEINTRODUCTIONBusiness-to-consumer(B2C)cross-border e-commerce(CBEC)is the practice of consumers purchasing

20、goods directly from merchants located in other countries.Common ways for consumers to engage in cross-border shopping is by ordering goods directly from merchants own websites or through online marketplaces.In recent years online shoppers have become more comfortable with cross-border shopping,leadi

21、ng to a steady growth of the global CBEC market.Most experts expect this trend to continue in the coming years.According to one market report,the global CBEC market is expected to expand at a compound annual growth rate(CAGR)of 17.4%,from$578.57 billion in 2019 to$2,248.57 billion by 2026.1 Wed like

22、 to caution,though,that with the world potentially edging toward a global recession in 2023,2 and with the worlds largest economies already experiencing a sharp slowdown,the global CBEC market may end up expanding at a slower pace than initially anticipated.As for the impact of COVID-19 on the marke

23、t,while early on the pandemic led to a significant increase in online shopping,cross-border e-commerce experienced slower growth compared to domestic e-commerce markets.This can potentially be attributed to a combination of growing support for local retailers and disruptions to global supply chains.

24、Many cross-border orders are relatively small and inexpensive,as is illustrated by the results of a global cross-border shopper survey by the International Post Corporation(IPC),3 where 43%of orders weighed up to 0.5 kg(1.1 lb)and a third of ordered items were valued below 25(about US$24.6 4).Some o

25、f the key reasons for shoppers to order goods from other countries are the easy access to products and brands that may not be available at their home country,as well as the ability to purchase items at a lower total cost compared to the prices charged at local stores.At the same time,shipping and de

26、livery are important aspects of the shopping experience and may impact the willingness of online shoppers to purchase goods from foreign websites.The results of a global survey by solution provider ESW illustrate this point,with 27%of participants selecting long shipping times and high shipping cost

27、s as the main reasons for them to avoid buying cross-border.5 In another global survey,about two thirds of respondents wanted the option of free standard shipping and identified delivery tracking and a clear delivery time frame as motivators to buy more.6Given the importance and complexity of cross-

28、border shipping and delivery,we offer in this paper an overview of the logistics options available to merchants engaged in CBEC.We specifically focus on the logistics solutions available to small and medium-size companies,which represent a large share of the CBEC market.We further offer our observat

29、ions of the evolution of the logistics landscape in recent years and the way these changes are alleviating some of the hurdles traditionally faced by merchants and shoppers engaged in CBEC.China and the U.S.are the two leading countries in terms of the dollar value of their B2C cross-border e-commer

30、ce exports.7 Furthermore,a 1 “Global Cross-Border E-commerce Market-Segment Analysis,Opportunity Assessment,Competitive Intelligence,Industry Outlook 2016-2026,”All the Research,Feb.2021.2 “Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes,”The World Bank,Sept.15,2022.3 “Cross Bord

31、er E-Commerce Shopper Survey 2021:Key Findings,”IPC,Jan.2022.4 Based on Oct.17,2022 exchange rate.5 “Global Voices 2022,”ESW,accessed Oct.17,2022.6 “Global Voices Pre-Peak Pulse 2021,”ESW,Sept.17,2021.7 “Estimates of Global E-Commerce 2019 And Preliminary Assessment of Covid-19 Impact on Online Reta

32、il 2020,”UNCTAD,accessed Oct.19,2021.6 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEsignificant portion of this global trade takes place between these two countries,as indicated by several consumer surveys.They point to China as

33、 the foreign country most U.S.online consumers shop from,and to the U.S.as one of the top three countries Chinese shoppers buy from.8,9 Due to the high CBEC trade volume between the U.S.and China,the paper focuses on the logistics flows between these two countries.CROSS-BORDER E-COMMERCE IN CHINAKEY

34、 POINTS Retail cross-border e-commerce has become increasingly popular in China.Many of Chinas CBEC shoppers are relatively young,well educated,with medium to high income.Only products on the“Positive List”can be imported into China through this channel.Domestic and foreign e-commerce platforms are

35、the most popular sales channels for CBEC.The use of social platforms for CBEC has also been gaining momentum.MARKET OVERVIEWChina is the worlds largest e-commerce market,accounting in 2021 for more than a half(52.1%)of total worldwide retail e-commerce sales.10 China also has the highest e-commerce

36、penetration rate,with 46.3%of the countrys retail sales taking place online.11 The market comprises two key segments,domestic and cross-border e-commerce,with the latter being the focus of this paper.Retail CBEC has become increasingly popular in China in recent years.This is due in part to the wide

37、 selection of imported goods available,attractive pricing,and the convenience of online shopping.Another potential contributor is the rapid growth of Chinas express delivery industry and its expansion to smaller towns and more rural areas.According to some estimates,the market reached a total of 483

38、.74 billion Yuan($76 billion 12)in 2021,13 with 280 million buyers expected to make cross-border e-commerce purchases in 2023.14 We caution though that such estimates vary widely across sources.B2C cross-border e-commerce is viewed in China as an important force that stabilizes the countrys foreign

39、trade.15 Because of that,China has implemented over the years a series of policies designed to improve the regulation of CBEC retail imports and promote the development of this 8 “Cross Border E-Commerce Shopper Survey 2021,”IPC,Jan.2022.9 “The Great Pivot in Global eCommerce:Borderless Commerce Rep

40、ort 2021,”PayPal,accessed Oct.17,2022.10 “Top 10 Countries,Ranked by Retail Ecommerce Sales Share,2021,”Insider Intelligence,May 2021.11 “Top 10 Countries,Ranked by Retail Ecommerce Share of Total Retail Sales,2022,”Insider Intelligence,Jan.2022.12 Based on the Chinese Yuan to US Dollar spot exchang

41、e rates on Dec.31,2021,ExchangeRates.org.uk,accessed Feb.1,2023.13 “Market Size of Cross-Border E-Commerce Retail Imports in China from 2016 to 2021,”Statista,March 2022.14 “Cross-Border Retail eCommerce Buyers,by Country,”Insider Intelligence,Jan.2023.15 “China Remains Worlds Largest B2C Cross-Bord

42、er E-Commerce Market,”Peoples Daily Online,July 13,2021.7 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEsector.16 At the same time,calls by Beijing to promote“common prosperity”and curb excess may serve to tone down the hype Chin

43、as big e-commerce platforms have been building around cross-border shopping.17 Several other external forces may also put a dent on the growth of Chinas CBEC market,at least in the short term.They include the slowing of the Chinese economy due to COVID-zero policies and strict lockdowns,the countrys

44、 real estate crisis and other factors,which are motivating consumers to cut back debt and increase savings.18 Many of Chinas CBEC shoppers are relatively young,well educated,with medium to high income.19 Driven by a desire for high quality and authentic goods,some of the key product categories impor

45、ted through B2C cross-border e-commerce include cosmetics,maternity and baby products and healthcare products.20 Not all types of products can be imported to China through this channel.In 2016 the Chinese government introduced the Positive List,which lists the product categories that can be imported

46、 into China through a CBEC model.When first introduced,the Positive List contained 1,293 categories,of which about 360 were food or agricultural products.21 Since then the list has been updated several times,bringing the total number to 1,476 categories by February 2022.22 KEY SALES CHANNELSWhen sho

47、pping cross-border,Chinese consumers are most concerned about the authenticity of the products that they buy,the reputation of the shopping website,product variety,price,and ease of shopping.23 Given these concerns,it is no surprise that most Chinese consumers prefer to shop cross-border on domestic

48、 platforms,with which they are familiar and that have a reputation for offering authentic products at competitive prices.According to an iResearch report,in 2020 58.3%of shoppers used domestic e-commerce platforms for cross-border shopping.An additional 19.1%shopped through foreign platforms.Only 12

49、.7%shopped on official websites of foreign brands,and the rest shopped in duty-free stores or used the services of shopping agents(Daigou).24 This distribution represents a significant shift from several years ago when,based on a 2015 survey,only 46%of shoppers used e-commerce platforms while 29%sho

50、pped directly on foreign-brand websites.25 Interestingly,the introduction of the Positive List in 2016 renewed interest in the services of Daigou agents,since as a C2C channel,Daigou agents can bypass the Positive List which only applies to B2B2C or B2C trade.26 The most popular domestic platforms f

51、or cross-border imports include Tmall Global(39.6%of total volume),JD Worldwide(25%),Kaola(20.1%),and VIP International(8.6%).27 Some of the other players,16 C.H.Poon,“China Updates Cross-Border Retail Import Policy,”HKTDC,July 22,2019.17 Josh Horowitz and Brenda Goh,“From Splurge to Common Prosperi

52、ty:Alibaba Tones Down Singles Day,”Reuters,Nov.1,2021.18 Yujing Liu and Tom Hancock,“The Perils of Chinese Thrift,”Bloomberg BusinessWeek,Aug.22,2022.19 “2021 Cross-border Online Shopping Report,”iResearch,2021.20 Forging Ahead Against Headwinds:Chinas Imported Goods Market Research 2020,Tmall Globa

53、l and Deloitte China,Nov.3,2020.21 “Chinese Government Policies Change for Cross-Border e-Commerce,”USDA,Dec.7,2016.22 “China Cross-Border eCommerce:“Positive List”Helper,”TMO Group,accessed Oct.19,2022.23 “Online Shopping Report,”iResearch,2021.24 “Online Shopping Report,”iResearch,2021.25 Hau L.Le

54、e et al.,“U.S.-to-China B2C E-Commerce:Improving Logistics to Grow Trade,”Stanford VCII,Aug.2016.26 “Cross-border E-commerce Positive List Published(And Its Expansion),”EIBENS,accessed Oct.19,2022.27 “Market Share of Import Cross-Border B2C E-Commerce Retailers in China in 3rd Quarter of 2022,”Stati

55、sta,Nov.2022.8 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEeach with less than 3%of the market,include Amazon Global,Little Red Book,Suning Global,and Xiaomi Youpin Global.Below is a brief description for each of the key player

56、s in this field.Tmall Global:Launched in 2014 by Alibaba,Tmall Global is Chinas largest cross-border B2C online marketplace.As of early 2022,the platform is in use by over 100 million active consumers and 30,000 international brands.28Kaola:Founded in 2015 by NetEase,the company was acquired by Alib

57、aba in 2019.It has become an important CBEC unit of Alibaba and maintains its independent operations.As of August 2022 it had over 30 million active users.29JD Worldwide:Launched by JD.com in 2015,JD Worldwide offers over 10 million SKUs(stock keeping units)of products imported from 20,000 brands al

58、l over the world.30 JD.com has over 580 million active users,all of whom have access to JD Worldwide.31 VIP International:Launched in 2014 by VIPShop,which is an online discount retailer platform.32 In 2021 VIPShop had 93.9 million active customers,33 with all of them having access to VIP Internatio

59、nal.SOCIAL COMMERCESocial commerce,which is the process of buying and selling goods through a social platform,is a huge industry in China.According to one estimate,in 2021 the Gross Merchandise Value(GMV)of social commerce in China reached 2,532 billion yuan($398 billion 34).35 Pre-pandemic the indu

60、stry has been rapidly growing,almost doubling in size every year.But the COVID-19 pandemic dramatically slowed down this expansion,with 2020 and 2021 seeing a growth rate of 11.62%and 10.09%respectively.36 While much of the growth has been related to domestic shopping,social commerce has also penetr

61、ated CBEC.E-commerce platform Little Red Book has been a social commerce pioneer,gaining a reputation for reliable,authentic product reviews and successfully integrating between social media and retail.37 JD Worldwide has also taken advantage of social commerce through a partnership with Little Red

62、Book.Under this partnership,overseas merchants can operate a storefront embedded in JD Worldwides homepage on Little Red Book and then use JDs logistics network for order fulfillment.38 Other examples include Tmall Global,which among other initiatives has expanded its Global Influencers program to s

63、upport overseas brands,39 and social media platform WeChat,which offers overseas brands a way to sell cross-border through a branded WeChat shop.4028 “How to Sell in China With Tmall Global,”TMO Group,March 9,2022.29 Complete Guide to Selling on Kaola for China Cross-border E-Commerce,GMA,Aug.17,202

64、2.30 Rachel Liu,“In-depth Report:JD Worldwide Six Years and Going:Bridging Brands and Customers,”JD.com,April 16,2021.31 Doris Liu,“JD Worldwide Sales Jump as 618 Grand Promotion Kicks Off,”JD.com,June 3,2022.32 “Selling on Vipshop and VIP International in China:The Ultimate Guide,”Export2Asia,Oct.1

65、9,2020.33 “VIPShop Reports Unaudited Fourth Quarter and Full Year 2021 Financial Results,”VIP,Feb.23,2022.34 Chinese Yuan to US Dollar spot exchange rates on Dec.31,2021,ExchangeRates.org.uk.35 “2021 Chinas social commerce market statistical report,”,March 23,2022.36 “Chinas social commerce,”.37 Dav

66、id Henriques,“Guide to Social Commerce in China 2022,”Sekkei Studio,Nov.17,2021.38 “JD Worldwide Lands on Xiaohongshu,Unlocking Chinas E-commerce for 20 Global Brands,”DAO Insights,May 24,2022.39 Cecilia Li,“Tmall Global Expands Its Global Influencers Program To Support Overseas Brands,”Alizila,Nov.

67、11,2020.40 “How to sell in China from outside via WeChat,”WeChat Wiki,accessed Oct.20,2022.9 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCECROSS-BORDER E-COMMERCE IN THE U.S.KEY POINTS A growing number of U.S.online shoppers feel

68、 comfortable making cross-border purchases.Popular product categories include clothing,toys,consumer electronics,media products,accessories,and eyewear.Several rules and regulations make retail CBEC from China to the U.S.more attractive financially.E-commerce platforms are the most popular sales cha

69、nnel for CBEC.MARKET OVERVIEWU.S.consumers feel comfortable making more and more of their purchases online.While in 2010 e-commerce represented only 4.3%of all retail sales,41 by the third quarter of 2022 this percentage went up to 14.8%.42 E-commerce market share is expected to continue growing,rea

70、ching 23.6%of all retail sales by 2025.43 Moreover,the market is expected to surpass$1 trillion for the first time in 2022,growing by 9.4%over 2021 numbers.44 Amazon is by far the leading e-retailer in the U.S.,accounting for 37.8%of the e-commerce market as of June 2022,followed by Walmart at 6.3%,

71、Apple at 3.9%,eBay at 3.5%,and Target at 2.1%.45 Shopify,which is not an e-retailer but rather an e-commerce platform that merchants can use to set up their online stores,is also an important player in this market.In terms of GMV,Shopify had a 10.3%market share in the U.S.in 2021,second only to Amaz

72、on(41.0%)and ahead of Walmart(6.6%)and eBay(4.2%).46As for cross-border shopping,a growing number of U.S.online shoppers are comfortable with making such purchases.In a 2022 PayPal survey 41%of respondents made an international online purchase,which is a sizable increase from the 33%polled the previ

73、ous year.47 Overall,the U.S.is expected to have 69.8 million cross-border retail e-commerce buyers(24.8%of the population)in 2023.48 Some of the product categories cross-border shoppers frequently buy include clothing,toys and hobbies,consumer electronics,media products,accessories and eyewear.49,50

74、 Popular reasons for shopping cross-border include better prices,access to items not available locally,and the discovery of new and interesting products.51 At the same time,difficulty of returning unwanted items is 41 “E-commerce as Percentage of Total Retail Sales in the United States from 2000 to

75、2020,”Statista,Jan.2022.42 “Quarterly Retail E-Commerce Sales,3rd quarter 2022,”U.S.Census Bureau News,Nov.18,2022,accessed Feb.2,2023.43 Suzy Davidkhanian,“US Ecommerce Forecast 2021,”eMarketer,July 8,2021.44 Rachel Hasson,“US Retail&Ecommerce Snapshot,”Insider Intelligence,June 21,2022.45 “Market

76、share of Leading Retail E-commerce Companies in the United States as of June 2022,”Statista,Aug.2022.46 “Shopify Market Share and Usage Statistics in 2022,”Kinsta,accessed Nov.7,2022.47 “Turn Shifting Values Into Cross-Border Opportunities:Borderless Commerce Report 2022,”PayPal,page 93,accessed Oct

77、.21,2022.48 “Cross-Border Retail eCommerce Buyers:US,2020-2024,”Insider Intelligence,Jan.2023.49 Selling via E-Commerce in the United States,Government of Canada,March 2018.50 “Borderless Commerce Report 2022,”PayPal,page 94.51 “Borderless Commerce Report 2022,”PayPal,page 94.10 STANFORD GRADUATE SC

78、HOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEoften seen as a barrier to cross-border shopping.The top countries U.S.consumers buy from are China,Canada,and the UK.52,53Several rules and regulations make B2C e-commerce from China to the U.S.more att

79、ractive financially.They include Chinas decision in 2018 to waive export taxes for direct-to-consumer companies,54 as well as the U.S.decision in 2016 to raise the value of imported goods that are exempt from duties and taxes from$200 to$800.55 This means that many of the items ordered by U.S consum

80、ers directly from China can be imported free of duties and taxes.It is important to note that new legislation introduced in the U.S.congress in early 2022 aims to close this loophole.56 If passed,e-commerce companies selling into the U.S.may no longer be able to avoid paying taxes and tariffs on the

81、ir imported goods.KEY SALES CHANNELSE-commerce platforms are the most popular channel for cross-border e-commerce in the U.S.In a 2022 PayPal survey,75%of respondents reported using online marketplaces for shopping cross-border,45%shopped on a store/retailer website,while 37%shopped on a social medi

82、a marketplace.57 Following is a brief overview of these sales channels.Domestic platforms:Unlike in China,where e-commerce companies operate dedicated marketplaces for cross-border e-commerce,in the U.S.the same platforms are used for domestic and cross-border shopping.Among them Amazon is the most

83、dominant platform.Not only is it the leading e-retailer in the U.S.,but more than 50%of its top 100k sellers are based in China.58 As for eBay,while the total number of international traders on the platform is relatively small,over half of them are based in China and Hong Kong.59 Walmart,which in th

84、e past only allowed U.S.-based merchants to sell on the Walmart Marketplace,expanded it in March 2021 to allow foreign sellers as well.60 By mid-2022,the platform added over 10,000 new sellers from China.61Foreign platforms:AliExpress,62 owned by the Alibaba Group,is probably the most well-known Chi

85、nese marketplace that sells to the U.S.market.AliExpress sellers are predominantly based in China,though they also include vendors in other South-East Asian countries.63 Other relevant China-based marketplaces include Banggood,64 GearBest,65 DHgate,66 and more.52 “Borderless Commerce Report 2022,”Pa

86、yPal,page 94.53 “Cross-Border E-Commerce Shopper Survey 2021,”IPC,Jan.2022.54 “How Trumps Trade War Built Shein,Chinas First Global Fashion Giant,”Bloomberg BusinessWeek,June 13,2021.55 “De Minimis Value Increases to$800,”U.S.Customs and Border Protection,March 11,2016.56 Deborah Belgum,“$800 Gorill

87、a In The Room:De Minimis A Tale of Unintended Consequences,Congressman Says,”Sourcing Journal,March 10,2022.57 “Borderless Commerce Report 2022,”PayPal,page 94.58 “Chinese Sellers Dont Want to Rely on Amazon,”Marketplace Pulse,April 20,2022.59 “The Worlds Top eBay Sellers 2021,”Webretailer,accessed

88、Oct.25,2022.60 “Chinese Sellers Join Walmart Marketplace,”Marketplace Pulse,March 26,2021.61 “Chinese Sellers Dont Want to Rely on Amazon,”Marketplace Pulse,April 20,2022.62 www.aliexpress.us,accessed Oct.25,2022.63 Dan Price,“The 10 Best Chinese Shopping Sites That Ship To The US,”MakeUseOf,July 27

89、,2022.64 ,accessed Oct.25,2022.65 ,accessed Oct.25,2022.66 ,accessed Oct.25,2022.11 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCERetailer websites:Several large Chinese brands,such as fast fashion retailer Shein and electronics

90、manufacturer Anker,operate their own web stores.Increasingly though,smaller Chinese merchants are also turning to building their own direct-to-consumer(DTC)channels as a way to reduce their reliance on third-party e-commerce platforms.Some of the reasons for moving away particularly from Amazon incl

91、ude high fees charged by the e-commerce giant,the freezing of thousands of Chinese seller accounts,67 and the blocking of merchants access to customer data.68 Building their own brands and operating their own web stores offer merchants an opportunity to improve their profitability,develop closer rel

92、ationships with their customers,and also experiment with more innovative marketing and sales tactics.Many of these Chinese sellers turn to e-commerce platform Shopify to build their DTC channel,as the platform offers an easy way for merchants to create their online stores.The strategic partnership b

93、etween JD.com and Shopify,announced in January 2022,may further accelerate this trend,as it promises to simplify access and compliance for Chinese brands looking to reach consumers in Western markets.69 Social commerce:Social commerce is increasing in popularity in the U.S.Market research company eM

94、arketer estimates U.S.retail social commerce sales to equal$53.1 billion in 2022,or 5.1%of total retail e-commerce sales that year,and a 34.4%increase from 2021 numbers.70 The market is expected to further grow to$130.1 billion by 2026.71 Still,the U.S.market pales in comparison to Chinas social com

95、merce market,which is about 10 times bigger.72 Facebook is the top social commerce platform in the U.S.It is estimated that in 2022 more than 60%of U.S.social media users ages 14 and older will make a purchase via Facebook,and about 40%will do so via Instagram.Other key platforms include TikTok and

96、Pinterest,which are expected to draw 23.1%and 15.5%of social buyers in that age group respectively.73E-commerce companies are taking steps to increase their presence in the social media space.For instance,a partnership between Shopify and TikTok,announced in October 2020,74 allows Shopify merchants

97、to create,run and optimize their TikTok marketing campaigns directly from the Shopify dashboard.Similarly,YouTube Shopping,launched in July 2022,offers Shopify merchants an easy way to integrate their online store with the YouTube platform and sell their products on YouTube.75 Another example is off

98、ered by eBay.The company recently announced an alliance with Snapchat,under which eBay merchants can showcase their eBay listings on Snapchat.76 And Amazon is reportedly testing a new tool called“Inspire,”which is a photo and video feed of products similar in nature to TikTok.7767 “From Prime to ban

99、:Amazons Crackdown on Chinese Sellers,”Daxue Consulting,Dec.20,2021.68 “Chinese Sellers Dont Want to Rely on Amazon,”Marketplace Pulse,April 20,2022.69 Rita Liao,“Shopify and Chinas JD.com Team Up to Capture Cross-border Sellers,”TechCrunch,Jan.18,2022.70 “Retail Social Commerce Sales:US,2022-2026,”

100、eMarketer,July 2022.71 “Retail Social Commerce Sales:US,2022-2026,”eMarketer,July 2022.72 “Social Commerce Surpasses$30 billion in the US,”Insider Intelligence,July 7,2021.73 Sara Lebow,“Facebook Will Stay Atop the US Social Commerce Ladder,”eMarketer,Sept.8,2022.74 Sarah Perez,“TikTok Partners with

101、 Shopify on Social Commerce,”TechCrunch,Oct.27,2020.75 “Hit record:Shopify Partners with YouTube to Scale the Creator Economy,”Shopify,July 19,2022.76 “eBay Made Easy with Snapchat,”Snapchat,Aug.9,2022.77 Amanda Silberling,“Amazon Is Internally Testing A TikTok-Like Feed In Its App,”TechCrunch,Aug.1

102、7,2022.12 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCELOGISTICS MODELSKEY POINTS Two key logistics models for satisfying CBEC orders are business-to-consumer(B2C)and business-to-business-to-consumer(B2B2C).Under a B2C model ord

103、ers are shipped directly from the seller to the buyer.Under a B2B2C model the merchant first ships the goods in bulk to a fulfillment center operated by a 3rd party;once customers place their orders,they are shipped from the fulfillment center.Cross-border orders can be fulfilled from a warehouse lo

104、cated in the sellers home country,or in the destination country.Sales into China can also be fulfilled from a warehouse in Hong Kong.Each of these logistics models offer a different mix of costs,shipping and delivery times,exposure to risks,and level of customer support.Fulfilling orders placed by s

105、hoppers located in a different country is quite challenging.Transportation is more expensive and shipping times are much longer.The process is also more complex as each segment of the way(domestic transportation in the sellers home country,cross-country air/ocean shipping,transportation in the buyer

106、s country,and last mile delivery)may be handled by a different entity.The multiple hand-offs of cargo between these entities may reduce visibility to the goods in transit and may lead to multiple delays.Import and export tariffs,regulations and customs clearance requirements further complicate the p

107、rocess.Merchants who own the goods that they sell can consider at a high level two logistics models for satisfying cross-border e-commerce orders:business-to-consumer(B2C),and business-to-business-to-consumer(B2B2C).Another potential option for merchants is to forego the ownership of inventory and i

108、nstead rely on drop shipping.Under a drop-shipping model,the merchants would pass the details of any orders they receive from their customers over to their own suppliers(either manufacturers or wholesalers),who would then be in charge of shipping the ordered items directly to the customers.The drop-

109、shipping model is outside the scope of this paper and will not be further discussed here.Following is a brief description of the B2C and B2B2C models.We also offer an overview of the storage location alternatives merchants should consider.BUSINESS-TO-CONSUMER/DIRECT SHIPPING Under this model sellers

110、 ship the ordered items directly from their warehouse to the buyers location.The entire shipping process takes place after customers place their orders.The seller is responsible for inventory management and for preparing the ordered items for shipment.Direct shipping may provide a low-risk way for t

111、he merchant to assess demand patterns at the target market before signing any contracts with external logistics providers.In addition,in-house storage and order fulfillment may result in lower operating costs compared to the fees charged by a third party logistics partner.Another advantage of direct

112、 shipping is that the merchant will likely be required to pay fewer customs fees,as the value of most parcels will fall under the threshold for import taxes.At the same time,with international shipping order delivery times will be long,potentially leading to lower customer satisfaction and lower dem

113、and levels.Another disadvantage of this model from 13 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEthe customers perspective is that it will be much harder for the merchant to offer free or reasonably priced return and exchange

114、services.Furthermore,language barriers and time differences may make it challenging for merchants to offer adequate customer support.Individual merchants may also lack the same level of expertise and scale enjoyed by a 3PL provider,resulting in longer order fulfillment times and higher shipping cost

115、s.BUSINESS-TO-BUSINESS-TO-CONSUMERUnder this model the seller ships the goods in bulk,and in anticipation of customer orders,to a warehouse and fulfillment center operated by a third party logistics(3PL)provider.The 3PL provider will be in charge of warehousing and order fulfillment,including proces

116、sing customer orders,picking and packing,shipping and delivery.A key advantage of having a 3PL partner in charge of storage and order fulfillment is that it frees the merchants from the need to develop these capabilities in-house,allowing them instead to dedicate more resources to sales and marketin

117、g activities.Furthermore,given their expertise,3PL providers could potentially process and ship customer orders faster.Finally,with higher shipping volumes the 3PL providers would likely be able to secure lower shipping rates the merchant may not have access to.Merchants have the option to store the

118、 goods and fulfill customer orders from a warehouse in their home country,or from one located closer to their customers.We next discuss each of these options,their benefits,and disadvantages.FULFILLMENT FROM WAREHOUSE IN SELLERS HOME COUNTRYUnder this option the 3PL provider and the merchant are loc

119、ated in the same country.In addition to storage and order fulfillment,the 3PL provider in this case will also be in charge of arranging for cross-border shipping and customs clearance of each customer order.There are a number of advantages to keeping inventories in the sellers home country.First,mer

120、chants will be exposed to a lower level of risk,as they will incur the cross-border shipping costs only for those items purchased by their customers,and only after customer orders have been placed.Moreover,if the merchant sells the same products in multiple markets,then it will be easier to divert a

121、ny unsold inventories to other markets.Using a single storage location to fulfill demand in all markets will also reduce total inventory levels.Finally,as the 3PL providers will likely have their warehouse closer to the countrys ports,such partnership may offer somewhat shorter order fulfillment tim

122、es compared to a B2C model.FULFILLMENT FROM WAREHOUSE IN DESTINATION COUNTRYSellers who choose to store their goods in the destination country,close to customers,can offer their customers shorter order delivery times,and may be more likely to experience higher demand and improved customer satisfacti

123、on.Furthermore,with a local fulfillment center merchants can more easily offer customer support as well as a convenient and affordable(or free)return service and may be more likely to resell any returned merchandise.Beyond customer-related benefits,merchants can potentially also enjoy lower shipping

124、 costs due to bulk(ocean)shipping of the goods to the overseas warehouse.At the same time,sellers must commit a portion of their inventory to the overseas warehouse,14 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEwhich poses mor

125、e risks and may lead to losses if that inventory is not sold.In addition,with bulk shipping merchants will likely be required to pay import customs duties on all shipped items.Bonded WarehousesCustoms bonded warehouses are places where imported goods can be stored before they are processed by custom

126、s.Payment of all customs duties and charges is deferred until just before the goods leave the bonded warehouse.Some bonded warehouses also serve as fulfillment centers,offering picking,packing and shipping services.Cross-border e-commerce sellers can benefit from storing their goods in a bonded vs.u

127、nbonded warehouse in the destination country,as that way they can improve their cash flow and avoid paying customs duties on items that have not been sold yet.Merchants should keep in mind,though,that some bonded warehouses may offer more limited fulfillment services compared to those offered by ded

128、icated 3PL providers.FULFILLMENT FROM WAREHOUSE IN HONG KONGU.S.-based merchants who sell into China have the option to fulfill customer orders from a warehouse in Hong Kong.Fulfilling customer orders from a Hong Kong warehouse rather than a bonded warehouse in mainland China offers a number of adva

129、ntages.One is lower import taxes.As a free port,Hong Kong doesnt levy any customs tariffs on imports or exports.78 U.S.-based merchants can then bulk-ship their goods tax-free to a Hong Kong warehouse for storage and order fulfillment.Shipping smaller parcels from Hong Kong to China to fulfill indiv

130、idual customer orders will likely incur low or no tax,given their relatively low value.In contrast,all items stored in a bonded warehouse in mainland China will be subject to import tariffs.Moreover,storing goods in Hong Kong can also offer more flexibility.Hong Kong has a well-developed internation

131、al flight and shipping network.Merchants can then use Hong Kong as a hub for fulfilling customer orders not only from China,but from other countries in the area.At the same time,customs clearance as well as transportation and last-mile delivery will likely take longer compared to order fulfillment f

132、rom a bonded warehouse in mainland China.Storage and order fulfillment will also be more expensive,given lower labor costs and cheaper storage and transportation options in mainland China.79COMPARISON OF LOGISTICS MODELSTable 1 compares the different logistics models based on their associated costs,

133、order fulfillment and delivery times,and a few other key considerations.We use a color scheme to indicate the advantages(in green)and disadvantages(in red)of each of the logistics models.The text in orange indicates a lower level of advantage/disadvantage compared with those listed in green/red.78 “

134、Policy on Import and Export of Goods,”Trade and Industry Department,The Government of the Hong Kong Special Administrative Region,accessed Oct.3,2022.79 “Selling via Bonded Warehouses in China:A Complete Guide,”Export2Asia,Sept.11,2020.15 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGI

135、STICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCETABLE 1COMPARISON OF LOGISTICS MODELSB2C MODEL/DIRECT SHIPPINGB2B2C MODELWAREHOUSE IN SELLERS COUNTRYWAREHOUSE IN BUYERS COUNTRYWAREHOUSE IN HONG KONG(FOR SALES INTO CHINA)COSTOrder fulfillment (pick and pack)Potentially lower(in-house fulfillm

136、ent)Require investment to develop capabilities Per-order costs may be higher No need to invest in internal capabilities Per-order costs may be higher No need to invest in internal capabilities Per-order costs may be higher No need to invest in internal capabilitiesShipping High:express shipping of i

137、ndividual parcels Cross-border shipping only for ordered items High,but may be lower than in a B2C model Cross-border shipping only for ordered items Potentially lower per unit(bulk cross-border shipping)Commit inventory to overseas warehouse Storage,order fulfillment,shipping more expensive than in

138、 mainland ChinaImport tariffs Can be avoided for most orders Can be avoided for most orders Required,due to bulk shipping With bonded warehouses:can be deferred Can be avoided for most ordersTIMEOrder fulfillment Potentially longer than with 3PL Short(3PL expertise)Short(3PL expertise)Short(3PL expe

139、rtise)Shipping and delivery Long(international shipping)Long(international shipping)Short(domestic)Longer than from mainland ChinaADDITIONAL CONSIDERATIONSRisk Low-risk way to assess market demand Inventory pooling benefits Low-risk way to assess market demand Inventory pooling benefits Risk of obso

140、lescence Potentially lower risk compared to storage in mainland ChinaReturn/exchange service Hard to provide Hard to provide Easy to provide May be more expensive than from mainland ChinaCustomer support Hard to provide May be easier than B2C model Easy to provide Easy to provide16 STANFORD GRADUATE

141、 SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCECROSS-BORDER SHIPPING ALTERNATIVESKEY POINTS Commonly used alternatives for cross-border shipping include postal service providers,express logistics providers,freight forwarders and consolidators,and

142、the logistics arms of the larger e-commerce companies.Postal service providers offer more affordable but potentially slower services.Express logistics providers offer a fast and convenient service but tend to be expensive.Freight forwarders deal with larger shipment sizes.They act as intermediaries

143、between shippers and shipping companies.Some of the large e-commerce companies built a logistics network for storage,distribution,and order fulfillment that merchants can take advantage of.Beyond the selection of a logistics model,another important decision merchants who engage in cross-border e-com

144、merce need to make is what provider to partner with for cross-border shipping.Commonly used alternatives include postal service providers,express logistics providers,freight forwarders and consolidators,as well as the logistics arms of the larger e-commerce companies.Following is an overview of each

145、 of these alternatives.POSTAL SERVICE PROVIDERSMerchants who use direct shipping to fulfill overseas customer orders may choose to ship the goods with the postal service.The two postal service providers involved in shipments between China and the U.S.are China Post and the United States Postal Servi

146、ce(USPS).Since USPS and China Post are both members of the Universal Postal Union,they can take advantage of the Customs Declaration System created by the UPU to streamline customs clearance and minimize delays.80 USPS and China Post offer multiple shipping options that vary in price and speed.Their

147、 slower services are the most affordable among all the logistics options discussed in this paper.For instance,the cost to ship a small package of 0.5-2 lbs to China via USPS First Class Package International Service is$28.85 81(delivery time varies by destination).USPS will charge$42.15 for priority

148、 service of packages of up to 4 lbs,with delivery times between 6-10 business days.Shipping costs from China to the U.S.via China Post are similar,ranging between 104-314 RMB/kg($7.16/lb to$21.63/lb).82 Delivery time with China Posts more expensive service is 7-15 business days,while the cheapest op

149、tion can take 40-70 days.USPS and China Post also offer express delivery services,which are speedier but also more expensive.For instance,China Post Express Mail Service costs 240 RMB($35.35)for merchandise up to 0.5 kg(1.1 lbs)plus an additional 75 RMB($11)for every additional 0.5 kg,with a deliver

150、y time of 5 business 80 “Universal Postal Union:Customs,”accessed May 12,2022.81 “USPS Price List,”First Class Package Intl Service,price group 14,accessed Sept.27,2022.82 China Post website,accessed April 2022.17 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-

151、U.S.B2C CROSS-BORDER E-COMMERCEdays.With USPS Priority Express it will cost$69.50 to ship a small package of up to 1 lb plus$6.75 for each additional pound,with an expected delivery time of 3-5 business days to many major markets.EXPRESS LOGISTICS PROVIDERSAnother option for merchants who use direct

152、 shipping and are looking for a fast and convenient delivery service is to ship their customer orders with an express logistics provider.Such providers offer an end-to-end service with short delivery times,full tracking from pickup to delivery,and fully managed customs clearance.They may also offer

153、other value-added services,such as assistance with special customs clearance needs or allowing customers to adjust delivery time and location.At the same time,their services are likely to be the most expensive of the logistics options discussed in this paper.As an example,shipping a small package we

154、ighing 1 lb from California to Shanghai with UPS will cost about$150,with a delivery time of 3-4 business days.83 While the Chinese express logistics companies are likely to be less expensive than the international alternatives,their coverage may be more limited and their delivery times may be sligh

155、tly longer.84Some of the leading express logistics providers include U.S.-based FedEx and UPS,Germany-based DHL,and China-based SF Express.FREIGHT FORWARDERS AND CONSOLIDATORSFreight forwarders and consolidators usually deal with larger shipment sizes,so their services will be most relevant for merc

156、hants who operate under the B2B2C model or those who have higher sales volumes.The role of a consolidator is to combine several smaller shipments belonging to multiple shippers into full container loads,to reduce shipping costs.A freight forwarder specializes in organizing shipments by acting as an

157、intermediary between shippers and shipping companies.Freight forwarders do not move the goods.Rather,they help identify the best carriers for the specific needs of the shipper based on such parameters as cost,speed,and reliability,and then coordinate the shipments on behalf of shippers.These days th

158、e two terms,consolidator and freight forwarder,are often used interchangeably,as many of the companies in the field offer both consolidation and freight forwarding services.For convenience,we will only use the term“freight forwarder”for the remainder of the paper when referring to these service prov

159、iders.Smaller freight forwarders may collaborate with a correspondent agent in the destination country,who will take care of inbound document processing,deconsolidation,and collection or delivery.Some of the larger freight forwarders may offer a broader solution that covers activities at the origin

160、and destination countries.Some freight forwarders may offer additional services beyond cross-border ocean or air freight transportation.These may include organizing inland transportation to/from the international port,preparing and processing customs documentation(or managing the expert services of

161、independent customs brokers,whose role is to ensure that all documentation is prepared and filed correctly),and helping businesses identify the most cost-effective insurance providers and export packing services.83 “UPS:Calculate Time and Cost,”accessed Nov.3,2022.84 “SF-International:Rates&Transit

162、Time,”accessed Nov.3,2022.18 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCESome may also offer or help secure warehousing and order fulfillment services.Merchants can decide whether to take advantage of the wider range of service

163、s offered by some of the freight forwarders or collaborate with multiple service providers,each specializing in one aspect of the cross-border shipping process.The freight forwarding global market is extremely fragmented,with each of the leading companies holding no more than 3-6%market share.85 Som

164、e of the top freight forwarding companies for trade between the U.S.and China include DSV,Kuehne+Nagel,DB Schenker,Expeditors,C.H.Robinson,and Flexport.LOGISTICS ARMS OF E-COMMERCE PLATFORMSThe larger e-commerce companies,including China-based Alibaba and JD.com and North America companies Amazon an

165、d Shopify,have built an in-house network of storage facilities,fulfillment centers,and distribution networks.Merchants taking advantage of these networks can enjoy a fast and seamless order fulfillment,and can in turn offer their customers fast delivery and a simple returns process.Below is a brief

166、overview of the logistics offerings of these leading e-commerce companies.Amazon:Amazon operates an extensive logistics network in the U.S.,which includes cargo planes,freight and delivery trucks,warehouses,and fulfillment centers.Third party merchants selling on A can take advantage of this logisti

167、cs infrastructure by choosing to have Amazon fulfill their customer orders through the Fulfillment By Amazon(FBA)service.Merchants located in China can combine the FBA service with the Amazon Global Logistics service,under which Amazon takes care of shipping merchants cargo from China directly to Am

168、azon fulfillment centers in the U.S.Merchants who sell to U.S.consumers on A as well as other sales channels can use Amazons fulfillment network to fulfill orders received through all the different channels.86 Cainiao:Cainiao Network,launched in 2013,is a global smart-logistics company and the logis

169、tics arm of Alibaba Group.According to company data,Cainiao delivered a daily average of 4.5 million cross-border and international packages in FY2022.Through Cainiaos full-chain logistics network spanning over 200 countries,merchants can enjoy a range of cost-and time-efficient delivery options for

170、 the goods that they sell online.U.S.merchants selling to Chinese consumers can take advantage of the end-to-end logistics services offered by Cainiao into mainland China as well as into Chinas Hainan Free Trade Port.These services support both B2C and B2B2C models and include inland transportation

171、in the U.S.,shipping to China,storage and order fulfillment,as well as inland transportation and delivery in China.Cainiao also offers end-to-end services for the China-to-U.S.route,supporting direct shipping as well as order fulfillment from a U.S.fulfillment center.These services are available to

172、all merchants,regardless of whether they sell their goods through one of Alibabas e-commerce platforms.JD.com:JD.com has one of the largest fulfillment infrastructures of any e-commerce company in the world.As of September 2022,the company 85 “DSV Annual Report 2021,”page 15,accessed Sept.19,2022.86

173、 “Multi-Channel Fulfillment,”A,accessed March 15,2022.19 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEoperated over 1,500 warehouses,87 as well as a network of logistics parks.JD also operates a number of air cargo routes and hu

174、ndreds of cross-border transportation routes by sea,rail,and trucks.88 Their logistics services from China to the U.S.include direct line shipping,international air and sea transport,and global fulfillment from six U.S.-based fulfillment centers.As for imports from the U.S.to China,JDs import logist

175、ics services consist of storage in cross-border bonded warehouses,overseas special mail,cross-border traceability,smart customs clearance,and more.89 JD offers these logistics services to all merchants,regardless of whether they sell their goods on the companys marketplace.Some of the smaller e-comm

176、erce platforms are also taking advantage of JDs global logistics network.One example is VIP International,which in 2018 entered a strategic alliance with JD Global.Under this alliance,VIP International shares its 12 overseas warehouses with JD.com,which in turn shares its logistics capabilities with

177、 VIP International.90 Shopify:The company operates multiple fulfillment centers throughout the U.S.and offers its merchants a range of services including inventory management,product storage and handling,order pick and pack,fast delivery,and returns processing.91 Shopifys acquisition of e-commerce f

178、ulfillment company Deliverr in May 2022 further enhanced its end-to-end logistics offerings.92 JD.com and Shopify Alliance:In January 2022 JD.com and Shopify announced a strategic partnership aimed at helping to solve cross-border commerce challenges for merchants in the U.S.and China.Under this par

179、tnership,U.S.-based merchants can easily list their products on JD Worldwide,with expedited onboarding.They can also take advantage of JDs global logistics network to handle end-to-end fulfillment from JDs warehouses in the U.S.directly to consumers in China.93 As for China-based merchants,those who

180、 set up their storefronts on Shopify can enjoy a simplified logistics process for order fulfillment,taking advantage of JDs global logistics network for shipping to the U.S.,in combination with the Shopify Fulfillment Network.94 87 “Our Business-JD Logistics,”JD.com,accessed Dec.7,2022.88 Vivian Yan

181、g,“JD Logistics Spotlights Air Cargo and Automated Warehouses for Global Expansion,”JD.com,Oct.18,2021.89 “JD International Logistics,”JD Worldwide,accessed Nov.7,2022.90 “A look at CBEC:VIP Global and JD Global share their overseas logistics resources,”Southern Metropolis Daily,May 25,2018.91 “Shop

182、ify Fulfillment Network:Grow Your Business with Fast,Affordable Delivery,”Shopify,accessed Feb.7,2023.92 “Shopify Completes Acquisition of Deliverr to Expand Fast and Easy Fulfillment for Merchants Across Multiple Channels,”Shopify,July 8,2022.93 “Shopify and JD.com Unlock Worlds Largest Ecommerce M

183、arket for Merchants,”Shopify,Jan.18,2022.94 Rita Liao,“Shopify and Chinas JD.com Team Up to Capture Cross-Border Sellers,”TechCrunch,Jan.18,2022.20 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCELOGISTICS FLOWSKEY POINTS The flow

184、of goods from the merchants warehouse to the end customer will differ based on the logistics model and shipping alternative selected by the merchant.This section provides an overview of the logistics flows associated with each shipping alternative and the entity in charge of each step of the process

185、.We next provide a detailed description of the logistics flows associated with each of the shipping alternatives discussed in the previous section.To avoid repetition,in those cases when the logistics flows for China-to-U.S.and U.S.-to-China shipments are similar,we offer only a detailed description

186、 of the China-to-U.S.route.POSTAL SERVICE PROVIDERSWhen shipping goods from China to the U.S.with the postal service,the typical process flow will look as follows 95(see Figure 1):First,the merchant(or a local 3PL provider the merchant partners with)will pick and pack the ordered items,label the par

187、cel,prepare the required customs documents,and bring the parcel to the post office.After verifying that all the customs declaration forms have been properly completed,China Post will ship the parcel to one of its outward offices of exchange(OE)for dispatch.Next,China Post will arrange for the parcel

188、 to be shipped to the U.S.(the parcels will likely be shipped with an airline or freight carrier China Post collaborates with).Once the parcels arrive to the U.S.,they will be processed and go through customs clearance at one of the USPS inward OEs.Finally,USPS will ship the parcel from the entry ai

189、rport all the way to the customer.When shipping goods from the U.S.to China the process will be similar,only that the roles of China Post and USPS will be reversed.95 Partly based on“WCO-UPU Postal Customs Guide,”April 2018.21 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATE

190、GY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEFIGURE 1LOGISTICS FLOW POSTAL SERVICE PROVIDERS(CHINA-TO-U.S.)Process managed by sellerProcesses managed by China PostProcesses managed by USPSSellerWarehouseCUSTOMERCustomerReceives OrderCustomerPlaces orderOrder pick,pack,label;prepare documents12Accept

191、Parcels;Verify Customs Documents3Transport parcels to airport6Process at inward Oe;Import customs clearance4Dispatch from outward oe5AIR ShippingTo theUnited States7Domestic shipping and deli?eryProd?ct flowInformation flowChinaUnited StatesEXPRESS LOGISTICS PROVIDERSMerchants who use the services o

192、f an express logistics provider to direct-ship their customer orders can expect the following process flow 96(see Figure 2):After receiving customer orders,the merchant(or a local 3PL provider the merchant partners with)will pick and pack the ordered items and prepare the required customs documents.

193、The merchant will then either drop the parcel off or arrange for a pickup by the express logistics provider.After receiving the parcel,the express logistics provider will process and label it,then consolidate all parcels into freight shipment,arrange for export customs clearance,ship the parcels to

194、the airport and from there to the U.S.,arrange for commercial import customs clearance,and deliver the parcels to the customers.The process will be very similar when shipping goods from the U.S.to China.96 Partly based on“DHL Parcel International Direct From China To United States,”DHL,accessed Sept

195、.15,2022.22 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEFIGURE 2LOGISTICS FLOW EXPRESS LOGISTICS PROVIDERS(CHINA-TO-U.S.)Process managed by sellerProcesses managed by Express Logistics providerSellerWarehouseCustomerReceives Or

196、derCustomerPlaces orderOrder pick And pack;Prepare documents12Accept Parcels;Label;Verify Customs Documents3Transport parcels to China airport6import customs clearance4Export customs clearance5Air Shipping to the United States7Domestic shipping and deli?eryCUSTO?E?Prod?ct flowInformation flowChinaUn

197、ited StatesFREIGHT FORWARDERS AND CONSOLIDATORSAs mentioned in the previous section,freight forwarders can offer a range of services.Some merchants may choose to hire a freight forwarder only to coordinate the cross-border leg of the shipping and delivery process.Others may prefer to take advantage

198、of the wider range of services offered by some of the freight forwarders.The process flow will vary depending on the services the freight forwarder performs on behalf of the seller,as well as on whether the seller uses a B2C or B2B2C model to fulfill customer orders.We offer here two examples of pos

199、sible logistics flows.The first,shown in Figure 3,is of a process flow associated with a B2B2C model with a fulfillment center in the destination country operated by a 3PL provider.For a China-to-U.S.flow,the process will start with the China-based merchant preparing the goods and the accompanying d

200、ocumentation for bulk shipment.Either the merchant or the freight forwarder will coordinate the transportation of the goods to the China port.After that,the freight forwarder will consolidate the shipment as needed,and coordinate the cross-border shipping(port-to-port).We also assume in this example

201、 that the freight forwarder will be the one to arrange for deconsolidation of the shipment at the destination port,export and import customs clearance,and transportation of the goods to the U.S.-based fulfillment center.Once customers place their orders,the 3PL provider will be in charge of order fu

202、lfillment and arranging for the goods to be shipped to customers.23 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEFIGURE 3LOGISTICS FLOW FREIGHT FORWARDERS(B2B2C MODEL;CHINA-TO-U.S.)Processes managed by 3PL providerProcesses mana

203、ged by freight forwarderProcess managed by seller or freight forwarderProcess managed by sellerSellerWarehouseCUSTOMERCustomerReceives OrderCustomerPlaces order3PL:Storage and Fulfillment CenterPrepare goods,documents for bulk shipment12Inland Transport to port8Inlan?transport7deconsolidate shipment

204、s6Impor?customsclearance4export customs clearnace3Consolidat?Shipments5ShippingTo th?United StatesDomesticShippingand delivery10Order Pick and Pack9Product flowInformation flowChinaUnited StatesU.S.merchants selling to China may consider taking advantage of Chinas excellent network of bonded warehou

205、ses,which can be found in many mainland cities.97 The process flow in this case will be similar to the one described in Figure 3,except that import customs clearance will take place after customers place their orders,just before the ordered items are shipped out of the bonded warehouse.The second ex

206、ample we offer(see Figure 4),of a B2C model,may be more relevant when the merchant enjoys a relatively large sales volume.Under this example the merchant uses“direct line”shipping,meaning that all parcels are shipped in bulk via air freight to the destination country,where local delivery companies a

207、re in charge of last-mile delivery to the end customers.The process starts with the merchant receiving customer orders,preparing all items for shipping,and consolidating all parcels into a single shipment.Either the merchant or the freight forwarder will be responsible for coordinating inland transp

208、ortation to the airport.After receiving the goods,the freight forwarder will consolidate shipments into full pallets as needed and coordinate air freight to the destination country.We assume in this example that the freight forwarder will also take care of export and import customs clearance and dec

209、onsolidation,and will arrange for the parcels to be picked up by the local delivery company.The delivery company will then be in charge of delivering the parcels to all customers.97 C.H.Poon,“Cross-border E-commerce Retail Imports Play Increasingly Bigger Role in Chinas Supply Chains,”HKTDC Research

210、,Oct.20,2020.24 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEFIGURE 4LOGISTICS FLOW FREIGHT FORWARDERS(B2C MODEL;CHINA-TO-U.S.)Process managed by delivery companyProcesses managed by freight forwarderProcess managed by selleror

211、freight forwarderProcess managed by sellerSellerWarehouseCUSTOMERCustomerReceives OrderPrepare orders and documents;consolidate parcels12Inland Transport to Airport8Hand off to local delivery company7deconsolidate shipments6Impor?custom?clearance4export customs clearnace3Consolidat?Shipments5Air shi

212、pping to the United StatesDomesticShippin?and delivery9CustomerPlaces orderProduct flowInformation flowChinaUnited StatesE-COMMERCE PLATFORMS:AMAZON(CHINA-TO-U.S.)As Amazon is the most dominant platform for cross-border e-commerce from China to the U.S,we offer here an overview of the main logistics

213、 and order fulfillment services the company offers for this route,namely Fulfillment By Amazon and Amazon Global Logistics.FULFILLMENT BY AMAZON(FBA)Under this B2B2C model,merchants send products to Amazon fulfillment centers in the U.S.in anticipation of customer orders.When a customer places an or

214、der,Amazon will handle picking,packing,and shipping of the ordered items.Amazon can also provide customer service and process customer returns.One of the key benefits to merchants is fast delivery,as products sold through FBA are eligible for Amazon Prime two-day shipping.Another key benefit is a co

215、mprehensive solution for inventory storage,shipping,returns,and customer service.Merchants will still be responsible for shipping the goods from China to Amazons U.S.-based fulfillment centers,including:98 Preparing the shipment and documentation Transporting products from the factory/warehouse to a

216、 China port Clearing customs for export Loading the shipment onto a carrier for transport to a U.S.port Clearing customs for import Transporting products from the U.S.port to Amazons fulfillment centers98 “Using Fulfillment by Amazon for International Orders,”A,accessed March 16,2022.25 STANFORD GRA

217、DUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEDepending on the size of the shipment and the speed requirements,merchants may use express,air,or ocean transportation to ship the goods from China to the FBA centers.Products shipped to an FBA c

218、enter must meet specific packaging and labeling requirements.Without such preparation the shipment may incur an additional preparation fee or be rejected.99 Sellers can conduct the FBA prep in-house,outsource the activity to an external service provider,or use Amazons FBA Prep Service.100 Many China

219、-based freight forwarders specialize in shipping goods from China to FBA centers.Their services include the coordination of international air or ocean shipping,ground transportation to/from the port as well as customs brokerage services.Some may also offer FBA prep and labeling services.Merchants wh

220、o use Amazons FBA services pay Amazon a per-unit fulfillment fee,a storage fee which is based on the average storage space they utilize,plus potentially additional fees such as for the removal of non-moving inventory.Figure 5 offers one version of the logistics flow associated with the FBA service.U

221、nder this scenario the merchant conducts the FBA prep in-house and partners with a freight forwarder for shipment consolidation and for coordinating cross-border shipping,import customs clearance and inland transportation to the Amazon fulfillment center.Either the merchant or the freight forwarder

222、are in charge of inland transportation and export customs clearance in China.FIGURE 5LOGISTICS FLOW AMAZON FBA(CHINA-TO-U.S.)Processes managed by AmazonProcesses managed byfreight forwarderProcesses managed by selleror freight forwarderProcesses managed by sellerSellerWarehouseCUSTOMERCustomerReceiv

223、es OrderCustomerPlaces orderAmazon fulfillment centerFBAPrep1Prepare shipment and documents23Inland Transport to port4Export customs c?r?c?9Inlan?transpor?to FBA Center8Impor?custom?clearance7DeConsolidateShipments5ConsolidateShipments6Shippin?To theUnited StatesDomesticShippin?and delivery11Order p

224、ick and pack10Product flowInformation flowChinaUnited States99 “Packaging and Prep Requirements,”A,accessed March 16,2022.100 “FBA Prep Service,”A,accessed March 16,2022.26 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEAMAZON GLO

225、BAL LOGISTICSRather than coordinate the shipments of goods from China to the FBA centers on their own,Chinese merchants may choose to let Amazon manage the shipment through the Amazon Global Logistics service.101 Merchants in this case will enjoy a convenient end-to-end solution,and potentially lowe

226、r landed costs.Depending on speed requirements,merchants can choose to ship their goods via standard ocean freight,which is the most cost-effective alternative,or via fast ocean freight.Amazon also offers additional value-added services including local pickup,palletization,labeling,cargo insurance,a

227、nd export and import customs clearance.Once the shipment arrives at an FBA center,the process flow associated with order fulfillment is identical to the one described in Figure 5.The process flow associated with the Amazon Global Logistics service is illustrated in Figure 6.In this example the selle

228、r is the one to prepare and label the items in-house,though alternatively FBA prep can take place by Amazon once the shipment arrives at the FBA center.FIGURE 6LOGISTICS FLOW AMAZON GLOBAL LOGISTICS(CHINA-TO-U.S.)Processes managed by seller or AmazonProcesses managed by AmazonProcesses managed by Am

229、azonProcesses managed by seller or AmazonProcess managed by sellerSellerWarehouseCUSTOMERCustomerReceives OrderCustomerPlaces orderDomesticShippingand delivery10Order pick and pack9Amazon fulfillment center4Exportcustoms c?r?c?8Inlandtransportto FBA Center7Importcustom?clearance5ConsolidateShipments

230、6shippingTo theUnited States3Inland transport?to portFBA Prep;Prepare documents1Prepare Shipment2Prod?ct flowInformation flowChinaUnited StatesE-COMMERCE PLATFORMS:ALIBABA/CAINIAO(U.S.-TO-CHINA)Domestic e-commerce platforms are the most popular channel in China for cross-border retail sales.Alibaba

231、is leading this market,through its Tmall Global and Kaola platforms.Given Alibabas leading position,we focus here on the services its logistics arm,Cainiao,offers to U.S.-based merchants 101 “Amazon Global Logistics:Discover Our Global Ocean Freight,”A,accessed Sept.21,2022.27 STANFORD GRADUATE SCHO

232、OL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEselling into China.102(Cainiao also offers logistics solutions for shipping goods from China to the U.S.,but they are not described in this paper).Cainiao supports both B2C and B2B2C models and offers end-

233、to-end solutions that cover inland transportation to a U.S.port,cross-border shipping,storage and order fulfillment,as well as inland transportation and delivery in China.The following is a more detailed description of these solutions.CAINIAO BONDED WAREHOUSE Cainiao operates a number of bonded ware

234、houses across 21 entry ports in China.U.S.-based merchants can ship their goods to one of these bonded warehouses,in anticipation of customer orders.Cainiao will take care of export customs clearance and shipping the goods from the merchants U.S.location all the way to the bonded warehouse unless th

235、e merchant chooses to use the services of other logistics providers.Once a customer places an order,Cainiao will be in charge of all order fulfillment activities,including pick and pack,import customs clearance,and delivery to the customer(see Figure 7).This is the fastest order fulfillment option f

236、rom the customers point of view,with a 2-day delivery time from the bonded warehouse to the customer.Another potential benefit for the merchant is a less expensive bulk-shipment to the bonded warehouse.At the same time,as the merchant must commit in advance to placing inventory in China this may not

237、 be the best option for products with highly uncertain demand or for slow-moving items.FIGURE 7LOGISTICS FLOW CAINIAO BONDED WAREHOUSE(U.S.-TO-CHINA)Processes managed by seller or CainiaoProcess managed by sellerProcesses managed by CainiaoCustomerReceives OrderCustomerPlaces orderPrepare goods,docu

238、ments for shipping12Inland transportto port3Exportcustoms c?r?c?6import customs clearance4Bulk shipping to bonded warehouse5Order Pick and pack7Domestic shipping and deli?er?Cainiao bondedwarehouseSellerWarehouseC?S?O?Prod?ct flowInformation flowChinaUnited States102 Based on interviews and email co

239、mmunications with Jin WU,Global Communications,Cainiao Smart Logistics Network and other Cainiao experts,Dec.2021 through Dec.2022.28 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCECAINIAO U.S.-BASED FULFILLMENT CENTER Under this

240、B2B2C model,illustrated in Figure 8,U.S.-based merchants pre-ship goods to a U.S.warehouse operated by Cainiao for storage.Once a customer places an order,Cainiao will prepare the order for shipping,and take care of export and import customs clearance,air shipping to China,as well as domestic transp

241、ortation and delivery within China.Shipping the goods to a warehouse in the U.S.gives merchants a way to assess the Chinese market at a lower risk compared to the bonded warehouse option,though order fulfillment times will be longer and total costs may be higher.FIGURE 8LOGISTICS FLOW CAINIAO U.S.FU

242、LFILLMENT CENTER(U.S.-TO-CHINA)Process managed by seller or CainiaoProcess managed by sellerProcesses managed by CainiaoCustomerReceives OrderPrepare goods,documents for shipping12Inland bulk transport to Cainiao warehouse3Order pick and pack6import customs clearance4export customs clearance5air shi

243、pping to china7Domestic shipping and deli?er?Cainiao United STates warehouseSellerWarehouseCUSTO?CustomerPlaces orderProd?ct flowInformation flowChinaUnited StatesCAINIAO CONSOLIDATED SHIPPING Under this B2C model merchants are in charge of processing customer orders and transporting the ordered goo

244、ds to a U.S.-based consolidation center,operated by one of Cainiaos partners.There,each order is packed and labeled.After consolidating orders from different merchants,Cainiao will air-ship the parcels to China and deliver them to the customers(see Figure 9).Keeping the inventory in their own wareho

245、use until after customer orders are received offers merchants an even lower level of risk compared to the previous two models discussed.At the same time,lead times will be longer(usually 7-10 days)and total costs may be higher.29 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STR

246、ATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEFIGURE 9LOGISTICS FLOW CAINIAO CONSOLIDATED SHIPPING(U.S.-TO-CHINA)Processes managed by sellerProcesses managed by sellerProcesses managed by CainiaoCustomerReceives OrderPrepareOrders12Transport goods to Cainiao3Order pac?and label7import customs clear

247、ance4export customs clearance5Consolidate orders6air shipping?to china8Domestic shipping and deliveryCainiao Consolidation centerCustomerPlaces orderSellerWarehouseC?STO?Prod?ct flowInformation flowChinaUnited StatesTRENDS IN CBEC LOGISTICSKEY POINTSThe logistics landscape related to B2C CBEC has ev

248、olved in recent years in several ways:Logistics providers have expanded the portfolio of their service offerings and their global reach.Demand for air freight for cross-border bulk shipping has been on the rise.Companies are increasingly turning to automation and digital solutions to address various

249、 logistics challenges.Shipping companies are increasingly looking for ways to reduce their carbon footprint.These trends help address some of the challenges sellers and buyers engaged in CBEC have traditionally faced.While exploring the logistics options associated with B2C cross-border e-commerce w

250、e observed several distinct ways in which the industry has evolved over the last few years:key players have expanded their service offerings and their geographical footprint,more goods are shipped cross-border by air rather than by sea,reliance on automation and digital solutions has increased,and m

251、ore attention is being paid to the industrys environmental footprint.We next describe each of these trends,and the ways in which they are helping to address some of the challenges sellers and buyers engaged in CBEC have traditionally faced.Table 2 summarizes these observations.30 STANFORD GRADUATE S

252、CHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEEXPANSION OF SERVICE OFFERINGS AND GEOGRAPHIC FOOTPRINTDriven by the continued growth of the global cross-border e-commerce market,many companies involved in cross-border shipping and order fulfillment

253、invested in expanding the portfolio of their service offerings and their global reach.For instance,freight forwarders no longer focus only on coordinating port-to-port ocean or air freight on behalf of their clients.In an effort to better cater to the special needs of e-commerce merchants,some of th

254、em may now also coordinate inland transportation to/from the port,help with document preparation,coordinate or offer their own warehousing and order fulfillment services,conduct FBA prep for merchants selling on Amazon,and more.Similarly,some of the large e-commerce platforms have expanded over time

255、 their logistics services.Early on,these e-commerce giants focused on developing domestic logistics networks for order fulfillment and delivery services in their home country.Gradually they increased their global reach to better support cross-border sellers.Examples include Cainiao,which offers at p

256、resent an end-to-end cross-border logistics solution between China and other countries including the U.S.,and Amazons logistics services,which include the bulk shipment of goods from China to fulfillment centers in the U.S.and other key destinations.JD.com also expanded its global logistics capabili

257、ties through strategic alliances and by building their own global fulfillment centers.The companys announcement in May 2022 of the opening of two service centers in the U.S.the first time the companys logistics business launched such centers in the overseas market is an example of the diversificatio

258、n of their service offerings beyond warehousing and order fulfillment to include aftersales and maintenance services.103This geographic expansion is not limited only to logistics providers;some of the large CBEC retailers have also taken similar steps.For example,Chinese fast-fashion company Shein d

259、ispatched all orders from a China-based warehouse in the early years of its operation.But as global demand grew,the company began operating global distribution centers in key markets to cut down delivery times and improve the shopping experience of their global customers.104These and other companies

260、 used multiple avenues to expand their service offerings and geographical reach,including in-house organic growth,mergers and acquisitions,and strategic partnerships.This expansion of service offerings and geographic footprint has been of value to both buyers and sellers.For buyers,the growing avail

261、ability of global storage and fulfillment centers have helped alleviate their frustration with long delivery times and their concerns over limited availability of free or affordable return and exchange services.Furthermore,with domestic order fulfillment it has become easier for merchants to offer t

262、heir customers more timely and accurate order tracking information.Beyond these customer-facing hurdles,merchants have traditionally been burdened with the daunting task of sorting through the myriad of logistics options and available logistics providers,and figuring out the best solution for their

263、needs.Managing separately each segment of the logistics process has also been challenging.The expansion of the portfolio of logistics services offered by the different players in the field has simplified the process for merchants,providing them with an option to rely on just one or a couple of entit

264、ies to help coordinate or manage the entire source-to-destination logistics process.Another benefit of having fewer entities involved in 103 Yuchuan Wang,“JD.com Opens First Overseas Service Centers in the US,”JD.com,May 20,2022.104 Olivia Rockeman,“Sheins US Expansion Adds Pressure for Its Fast-Fas

265、hion Competitors,”Bloomberg,Nov.1,2022.31 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEthe order fulfillment and delivery process is that it has improved visibility to goods in transit and has reduced,at least to a certain degre

266、e,total shipping time and the likelihood of unexpected delays.Finally,a B2B2C model which relies on ocean bulk-shipment of the goods to a global fulfillment center is likely to generate a lower carbon footprint compared to express shipment of each customer order from the merchants home country,thus

267、addressing environmental concerns of both buyers and sellers.INCREASED RELIANCE ON AIR FREIGHTTraditionally,cross-border e-commerce merchants either relied on postal service and express logistics providers for direct shipping of customer orders or used ocean freight for bulk shipping of goods to a f

268、ulfillment center in the destination country.More recently,however,demand for air freight for cross-border bulk shipping has been on the rise.According to the International Air Transport Association(IATA),in 2021 global air cargo volumes rose by 18.7%compared to 2020 numbers and were 3.5%above the p

269、re-pandemic 2018 peak.105 While global air cargo demand fell somewhat in 2022,it remained“relatively stable in the face of economic uncertainties and geopolitical conflicts,”according to Willie Walsh,IATAs director general.106 There are a number of drivers for this shift away from ocean to air freig

270、ht.One is the increasingly unpredictable shipping times and frequent delays associated with ocean freight.The spike in consumer demand after pandemic lockdowns have been lifted led to capacity issues and congestions at ports.Shortage of workers at ports to load and unload ships further exacerbated d

271、elays.Such ongoing supply chain disruptions have pushed a growing number of shippers to air shipping as a more reliant and much faster alternative,despite its higher costs.Moreover,soaring prices for ocean shipping narrowed the price gap between air and ocean transportation,making air freight a more

272、 competitive alternative.According to IATA and industry experts,while pre-pandemic the average price to move air cargo was about 13 to 15 times higher than ocean,by late 2021 it was only three to five times more expensive.107 Even now that ocean freight rates have gone down,air freight can still rem

273、ain an attractive alternative.This is especially true for merchants with relatively small cargo,as the price advantage of ocean shipping significantly increases with the size of the cargo.According to one source,air shipping is likely to be cheaper than ocean freight for shipments under 200 kg.108An

274、other driver is mass customization,especially in the fast fashion industry.Merchants in this sector often rely on data analytics to create new styles and produce them in small batches,which are then offered for sale for a limited time.Many of these garments are made in China.To allow for a quick tur

275、naround time,merchants often use a direct-line model(see Figure 4),which relies on bulk air shipping of cross-border customer orders.Beyond fast fashion,direct line shipping may also be a good solution for shipping small and expensive goods such as consumer electronics and pharmaceuticals.A direct-l

276、ine model offers fast delivery at a lower price compared to the cost of shipping with an express logistics provider.And while delivery times will likely 105 “Air Cargo Market Analysis:December 2021,”IATA,Dec.2021.106 Arthur Friedman,“Air Cargo Demand Showed Some Lift in August,”Sourcing Journal,Oct.

277、7,2022.107 Eric Kulisch,“Why Is Air Cargo Suddenly Affordable Relative to Ocean Shipping?”FreightWaves,Nov.14,2021.108 “All About International Ocean Sea Freight and Step-by-Step Instructions,”EcomCrew,updated Oct.9,2022.32 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY

278、FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEbe longer compared to those enjoyed by merchants using global fulfillment centers,merchants relying on direct-line delivery can avoid the risks associated with holding dedicated inventories at the destination country and can potentially respond faster to chan

279、ges in demand patterns.Another benefit of air vs.ocean freight is that it significantly lowers the likelihood of shipping delays.Data provided by global consultancy McKinsey&Company demonstrates the growing reliance on direct line shipping:in 2015 the market share of postal service providers and exp

280、ress logistics providers in the China outbound B2C market was 38%and 28%respectively.By 2020,these percentages went down to 26%and 14%respectively.In contrast,the market share of the direct line model grew over the same period from 4%to 19%.109 With a growing interest in air freight and the agility

281、and flexibility it provides,logistics companies invested in increasing capacity,adding 400 freight planes to the world fleet over the past three years.110 This trend is expected to continue in the coming years,with the global air cargo market expected to reach$284.15 billion by 2030,up from$131.74 b

282、illion in 2022.111INVESTMENT IN TECHNOLOGY AND DIGITAL CAPABILITIES The growing popularity of e-commerce,combined with consumers expectations for a seamless shopping experience that offers access to a wide variety of goods and fast and reliable delivery,put a lot of pressure on merchants and their l

283、ogistics networks.Adding to the problem is merchants growing reliance on multiple sales channels,which complicates omni-channel fulfillment.To address these and other challenges companies are increasingly turning to automation and digital solutions.A few indicators of this growing interest in techno

284、logical solutions are the surge of investment in freight tech startups,which raised close to$9 billion in 2021,112 and the expected growth of the global logistics automation market from$64.8 billion in 2022 to$137.7 billion by 2028.113 Warehouse automation solutions can help address labor shortages

285、and rising labor costs,improve operational efficiencies,ensure accurate order fulfillment and speedy delivery,and help manage customer returns.Examples of relevant solutions include autonomous mobile robots,automated storage and retrieval systems,automated sorting systems,and warehouse management sy

286、stems.Technologies such as augmented reality,which are intended to assist workers and improve the efficiency of manual operations,are also growing in popularity.114Global positioning systems(GPS),biometrics,real-time tracking and other technologies allow merchants to share up-to-date tracking inform

287、ation with their customers and can also help prevent theft and locate lost goods.The data generated by these devices can also help identify preferred transportation routes that are faster or less prone to unexpected delays.Internet of Things(IoT)sensors can be helpful not only for enhancing track-an

288、d-trace 109 Fox Chu et al.,“Five Things To Know About the Chinese Logistics Market Heading Into 2022,”McKinsey&Company,Feb.25,2022.110 Costas Paris and Benjamin Katz,“Big Ocean Shipping Lines Turn to Planes Amid Snarls,”Wall Street Journal,Sept.20,2022.111 “Air Cargo Market Intelligence Report-Globa

289、l Forecast to 2023-2030,”Research and Markets,Jan.2023.112 “A Flotilla of Startups Wants to Streamline Global Supply Chains,”Wall Street Journal,May 7,2022.113 “Logistics Automation Market:Global Industry Trends,Share,Size,Growth,Opportunity and Forecast 2023-2028,”Imarc Group,accessed Dec.22,2022.1

290、14 “5 Tech Innovations That Are Revolutionising the Logistics Industry,”Shipsta,June 3,2021.33 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEcapabilities but also for improving fleet operations,for instance by keeping track of pr

291、eventive maintenance requirements.115Digitization also plays a growing and important role in integrating global supply chains.Digital solutions are extremely useful for cross-border logistics networks given the large number of players that make up these networks and the traditionally manual nature o

292、f many of the associated processes.One benefit of connected logistics platforms is that they increase visibility to the cargo as it changes hands and moves from source to destination.Such platforms can offer merchants updates about certain milestones in their cargos journey,such as when it reaches t

293、he port or is loaded onto a ship.Connected logistics networks also reduce frictions and may help reduce total order fulfillment and delivery time,as well as the likelihood of stockouts at global fulfillment centers.Moreover,digitization can improve operational efficiencies and reduce costs,for insta

294、nce by automating requests for quotes and document preparation.Another benefit is a reduction in paperwork,driven by the ability to share documents digitally with all relevant parties.For merchants who outsource storage and order fulfillment,connecting their systems to those of their logistics provi

295、ders allow them to share information on customer orders and keep track of the status of these orders in real time.Finally,metrics and analytics provided by many of these platforms can offer insights and support better decision-making.Given these and other benefits,it is no surprise that all major e-

296、commerce companies that offer logistics services for cross-border e-commerce,as well as many freight forwarders and 3PL providers are increasing their reliance on digital solutions.GREEN-SHIPPING INITIATIVESCurrently,most shipping vessels use bunker fuel,a carbon-intensive petroleum byproduct of oil

297、 refinement,thus making the shipping industry a significant source of greenhouse gas emissions.According to the World Bank,the industry accounts for about 3%of global GHG emissions annually.116 But with a growing urgency to curb global CO2 emissions and increasing customer demand for sustainable sup

298、ply chains,global shipping companies are looking for ways to reduce their carbon footprint to meet the target set by the International Maritime Organization of cutting emissions by 50%by 2050 from 2008 levels.117One category of solutions that shipping companies have been exploring revolves around ha

299、rnessing the power of wind.Relevant technologies include giant kites that pull cargo ships,sails,and spinning rotors that create lift.While some companies are designing new cargo ships for this purpose,others are retrofitting existing ones with sails.One example of a company exploring the latter is

300、Cargills Ocean 115 Clint Boulton,“UPS counters A challenge with IoT,analytics,”CIO,July 30,2018.116 Jennifer Brown et al.,“Carbon Revenues From Shipping:A Game Changer For The Energy Transition,”World Bank Blogs,May 12,2022.117 “Initial IMO GHG Strategy,”International Maritime Organization,accessed

301、Oct.11,2022.34 STANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCETransportation division,which as a first step is adding high-tech sails to one of its container ships to test the effectiveness of this technology.118 Another example i

302、s Japanese shipping company Kawasaki Kisen Kaisha(“K”Line),which has purchased from French company Airseas five kite systems for its bulk carriers.119 According to the company,each of these 1,000 m2 parafoil kites can reduce fuel consumption and emissions by 10%to 40%.120 Additional companies offeri

303、ng such solutions include Yara Marine Technology and BAR Technologies,which have recently announced a partnership to design and implement wind-assisted propulsion for the global shipping industry based on solid wing sail technology;121 and UK startup Smart Green Shipping(SGS),whose FastRigs system o

304、f“smart”vertical aerofoils can reduce fuel consumption and greenhouse gas emissions by 20%or more.122 It is expected that by the end of 2022,25 commercial vessels will make use of wind-powered innovations,with this number almost doubling to 49 by the end of the following year.123 Another option that

305、 ocean carriers are exploring is a switch to alternative,cleaner fuels.For example,in 2021 A.P.Moller-Maersk announced its plans to introduce in early 2024 the first in a series of 8 large ocean-going container vessels capable of being operated on carbon neutral methanol.124 The series will replace

306、older vessels,generating annual CO2 emissions savings of about 1 million tonnes.Unfortunately,despite the promise of this solution,a key hurdle to its deployment is limited availability of clean fuels,a challenge that Maersk acknowledged in early 2022.125 Another challenge is that alternative fuels

307、are likely to be more expensive than the conventional marine fuel.The industry has also explored the use of liquified natural gas(LNG)for cargo ships,as LNG is cleaner burning compared to conventional fuel oil.But a 2020 report by the International Council on Clean Transportation(ICCT)revealed that

308、due to unintentional releases of methane from ship engines,ships powered by LNG can generate between 70%and 82%more life-cycle greenhouse gas emissions over the short-term compared to clean distillate fuels.126 Another potential solution in development is battery-electric,emission-free cargo ships,s

309、uch as the ones built by U.S.startup FleetZero.127 Beyond the environmental benefits of these electric cargo ships,given their smaller size they can also utilize smaller ports that the largest cargo ships are unable to fit in,thus avoiding delays at the more crowded ports while reducing the number o

310、f trucks on the road.To address the more limited range of battery-electric ships FleetZero plans for its ships to quickly swap batteries at several ports along the Pacific Ocean,a system that according to the company could prove cheaper than shipping with fossil fuels.128118 Mark Reily,“Cargill Will

311、 Test Wind-Powered Cargo Ships to Cut Carbon Emissions,”Minneapolis/St.Paul Business Journal,Aug.25,2022.119 “K Line Orders Airseas Kites for Three More Ships,”MarineLink,July 20,2022.120 ,accessed Oct.12,2022.121 “Yara Marine and BAR Partner for Wind Sail Technology on Cargill Vessel,”Maritime Exec

312、utive,April 19,2021.122 Oct.12,2022.123 K.Oanh Ha,“The Future of Shipping Is Sails?,”Bloomberg BusinessWeek,Aug.29,2022.124 “A.P.Moller-Maersk Accelerates Fleet Decarbonisation With 8 Large Ocean-going Vessels to Operate on Carbon Neutral Methanol,”Maersk,Aug.24,2021.125 Nicolas Rivero,“Maersk Cant

313、Find Enough Green Fuel to Power Its Carbon-Neutral Ships,”Quartz,Jan.12,2022.126 “The Climate Implications of Using LNG As A Marine Fuel,”Stand.Earth,Jan.28,2020.127 ,accessed Oct.12,2022.128 Adele Peters,“This Startup Designed An Electric Cargo Ship To Cross The Ocean,”FastCompany,April 6,2022.35 S

314、TANFORD GRADUATE SCHOOL OF BUSINESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCETABLE 2CBEC LOGISTICS TRENDS AND CHALLENGES THEY ADDRESSEXPANSION OF SERVICE OFFERINGS AND GEOGRAPHIC FOOTPRINTINCREASED RELIANCE ON AIR FREIGHTINVESTMENT IN TECHNOLOGY AND DIGITAL CAP

315、ABILITIESGREEN-SHIPPING INITIATIVESCUSTOMER-FACING CONCERNSLong delivery timeLimited return serviceLow visibility to goods in transitADDITIONAL CONCERNSComplex logistics landscapeLong,unpredictable shipping timesBalancing shipping cost and timeEnvironmental concernsSELECTING A LOGISTICS STRATEGY KEY

316、 POINTS Merchants should determine their logistics strategy based on a detailed analysis that compares the expected costs,revenues,and exposure to risk associated with each alternative under consideration.The analysis should consider multiple factors,including the merchants level of expertise and fa

317、miliarity with the target market,expected sales volume and demand patterns,and the characteristics of the products that they sell.As merchants business evolves,so may their logistics needs.Merchants should therefore reassess their logistics strategy periodically.As weve seen in the previous sections

318、,merchants have a wide range of logistics models and providers to choose from.Each offers a different set of pros and cons,which merchants should carefully weigh before choosing the option that best fits their needs.Merchants should also keep in mind that as their 36 STANFORD GRADUATE SCHOOL OF BUSI

319、NESS|EXPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEbusiness evolves,so may the logistics solution that is the best fit for their business characteristics.We next offer our views on how several key factors,including merchants familiarity with the target market,demand

320、 patterns,and the characteristics of the goods that they sell can impact their choice of logistics solutions.We also highlight the importance of conducting a cost-benefit analysis to support the process of selecting a logistics strategy.FAMILIARITY WITH TARGET MARKETWhen merchants first enter a cros

321、s-border market,they will likely face many unknowns.It may be hard to predict consumer tastes and preferences,total demand levels may be hard to estimate,and it may be unclear how demand patterns are likely to evolve over time.Merchants may also be less familiar with the ins and outs of the cross-bo

322、rder logistics landscape and may find it challenging to sort through the different alternatives.For these and other reasons,a good option for merchants who are new to the market is to keep their inventories close to home and use direct shipping to fulfill customer orders.That way they can avoid incu

323、rring shipping costs and paying customs duties on goods they may not be able to sell.For shipping and delivery of customer orders,it may be best for the merchants to partner with a logistics provider that can offer a hassle-free end-to-end solution and relatively fast delivery.This will simplify log

324、istics for the merchants while allowing them to offer their customers a reasonable delivery time.While express shipping will be expensive,these costs will likely be balanced with the savings associated with not shipping in advance goods that may not be sold.Merchants should also view the potentially

325、 higher shipping costs as part of the price of penetrating a new market.Merchants who are in favor of this alternative should also consider whether to fulfill customer orders in-house or outsource order fulfillment to a 3PL provider in their home country.Keeping order fulfillment in-house offers a l

326、ow-cost way for merchants to explore the new market before contracting with an external provider.At the same time,if the merchant doesnt have the in-house capabilities required for fast and accurate order fulfillment,it may be better to partner first with a 3PL provider.This is a convenient solution

327、 that will allow the merchant to focus on sales and marketing.Once merchants gain a better understanding of demand patterns,they can then make a more educated decision on whether to invest in building these capabilities in-house or continue working with an external 3PL provider.An alternative option

328、 for merchants who are new to the market is to sell their goods through an e-commerce platform and use the storage,order fulfillment,shipping and delivery services offered by the e-commerce company.Selling through an e-commerce platform offers access to a very large pool of potential customers.Many

329、e-commerce platforms also offer guidance and support services that can help merchants when first opening an online shop.Fulfillment of customer orders by the logistics arm of the e-commerce company will allow for fast delivery and higher customer satisfaction and will likely make it easier for the m

330、erchant to grow their business.This will especially be true if the merchants store their goods in a fulfillment center in the destination country.To minimize risks,the merchant should initially store a relatively small number of units at the fulfillment center,until they gain a better understanding

331、of demand patterns.For convenience,the merchant should either use the end-to-end logistics service offered by the e-commerce company,or partner with a freight forwarder or 3PL provider that can offer an end-to-end shipping service from the merchants location 37 STANFORD GRADUATE SCHOOL OF BUSINESS|E

332、XPLORING THE RIGHT LOGISTICS STRATEGY FOR CHINA-U.S.B2C CROSS-BORDER E-COMMERCEto the fulfillment center.This alternative may be more relevant for merchants who sell relatively low-value and small items,where the financial burden associated with shipping the goods to a fulfillment center in the dest

333、ination country prior to receiving customer orders may be lower.Later,as the merchants gain more insight into demand patterns and become more familiar with alternative logistics options,they may consider modifying their logistics strategy.For instance,they may decide to store their goods at a different location,or switch to different logistics providers and order fulfillment models that offer a be