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Crossborder

eCommerce
Jim Serstad Tompkins International

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015

Tompkins Supply Chain Leadership


Forum
| August 31 September 2, 2015
Copyright
2015

Your Supply Chain.


The Right Way.

Session Agenda

China Crossborder Size


Drivers of Crossborder eCommerce
Delivery Times
Logistics Models
Crossborder eCommerce Pilot Cities
Customs Declaration Direct Mail
Customs Declaration Bonded
Service Providers
Further Discussion
Tompkins Supply Chain Leadership Forum | August 31September 2, 2015
Copyright 2015

China Crossborder eCommerce Size

Other Key Numbers for China cross-border eCommerce in year 2014


Total

655 million express/postal parcels (inbound & outbound)


More than 200,000 cross-border eCommerce enterprises, over 5000 of them take
marketplace roles
Data Source: National Bureau of Commerce
Tompkins Supply Chain Leadership Forum | August 31September 2, 2015
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China Crossborder eCommerce Size


Growth Rate Comparison for Normal Trade and
Crossborder eCommerce in past 5 years
45,0%

41,0%

40,0%

40,0%

35,0% 34,0%

32,0%

31,3%

30,6%

30,0%
25,0%

22,0%

Normal Trade

20,0%

Cross-Border Ecommerce

15,0%
10,0%

6,2%

7,6%

5,0%

2,3%

0,0%

2010

2011

2012

2013

2014

Data Source: iResearch

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Drivers Of Crossborder eCommerce

Increasing Disposable Income in China


Product Authenticity
Hard-to-find Items
Low Purchase Price
Government Incentives
Improved Logistics

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Drivers of Cross-border Ecommerce

Updated to August 31, 2015.

Increasing Disposable Income in China

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Drivers of Cross-border Ecommerce


Product Authenticity
Especially in

Childrens goods
Food and nutrition
Cosmetics
Luxury

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Drivers of Cross-border Ecommerce


Tmall VS. Tmall Global Product Categories

Data Source: Tmall, 2014


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Drivers of Cross-border Ecommerce


Hard-to-find Items
Unique fashion apparel or accessories
Niche food products
Other

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Drivers of Cross-border Ecommerce


Purchase Price
The base purchase price is typically low enough to offset the cost of tax and
duty.

Data Source: BPH, 2015

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Drivers of Cross-border Ecommerce


Example of a can of milk powder:

Purchase
RMB100

Oversea
Freight
RMB 10

Duty&VAT
RMB26

Retailor
Channel cost
RBM40

Domestic
Delivery Fee
RBM10

Consumer
Pays

RMB186

Traditional Cross-border Trade

Purchase
RMB100

Direct Mail
Cost
RMB 70

Personal
Parcel Tax Free
(if <RMB50)

Domestic
Delivery Fee
(Included)

Consumer
Pays

RMB170

XBorder

Purchase
RMB100

Oversea
Freight
RMB 10

Personal
Parcel Tax Free
(if <RMB50)

XBorder via Bonded Zone


Tompkins Supply Chain Leadership Forum | August 31September 2, 2015
Copyright 2015

Domestic
Delivery Fee
RBM10

Consumer
Pays

RMB120

Drivers of Cross-border Ecommerce


Government Incentives

Pilot cross-border zones


Reduced or no duty on small orders
What is in it for the government?
Is cross-border here to stay?

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Delivery Times
What is Acceptable?
A consumer behavior story
Willing to wait for
A niche product
An authentic product
A lower cost
Tax and Duty avoidance
Foreign versus local price
Few items are urgent
All else equal, consumers will chose the fastest option
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Delivery Times

Delivery Times for Different Areas


From Bonded

From US or Europe

From Japan or Korea

1-7 Days

7-30 Days

3-10 Days

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Vendor

1.
2.
3.

Inventory &
Fulfillment

Parcel Carriers
Postal
Dedicated Line
Logistics

CIQ

Logistics Models
Consumer
Order

Inventory owned by Vendor

CIQ

Container of
Inventory (sea)
Vendor
Inventory &
Fulfillment

Owned by vendor or retailer

Consumer

Order

Cross-border
Bonded Zone
Vendor

Inventory &
Fulfillment

Consolidation
Hub

CIQ

Container of Orders
(sea or air)

Consumer

Parcel Dispatch

Order

Normally owned by retailer


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Logistics Models
Inventory
Owner

Delivery
Time

Direct

Vendor

Bonded

Inventory

Margin

Management
Effort

Medium
Minimal (shares
(assuming US inventory)
air)

High

Low

Vendor

Fast

High, obsolesce
risk

High

High

Retailer

Fast

Medium (owned
during ocean
transit)

Low

Medium

Consolidation Vendor

Slow

High

High

High

Retailer

Slow

Low (retail takes Low


ownership in
US)

Low

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Cross-Border Pilot Cities and FTZs

Cross-Border Pilot City


Free Trade Zone

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Crossborder eCommerce Pilot Cities


Crossborder eCommerce Pilot Cities Comparison
Cities

Business model

Link to Customs Service


Platform

Shanghai

Direct Post/ Bonded Storage

KJT()

Chongqing

Direct Post/ Bonded Storage

EDJC(E)

Hangzhou

Ningbo

Direct Post/ Bonded Storage

Bonded Storage

eCommerce park ?
Y, Where Amazons in
Y

KJYBD()

Y, 1st two models existing


cross-border ecommerce
park nationally

KJB2C(
)

Zhengzhou

Boned Storage

Etrade(E)

Y, 6 ecommerce
Demonstration pilot
projects and 2 park.

Guangzhou

Direct Post/ Bonded Storage

ZhuangyuanGu()

Shenzhen

Direct Post/ Bonded Storage

---

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Customs Declaration - Direct Mail

Order & Payment


Infoirmation

Ecommerce
Platform

Domestic
Consumers

Information Flow

Goods/Cargo Manifest
by order
Monthly Batch
Customs Declaration

Transportation
Information

Clearance Service
Platform

Innovation and incentives for cross-border


ecommerce from the government:
Before : Need Paper Customs Declaration
After Customs No.56 released: Only Electronic
version for Goods/Cargo Manifest via KJ3(Special
channel for cross-border ecommerce, highly efficient
and transparent) to declare within 2-26 Hours(Real
practice depends on labor resources and so on.)

Clearance
Management
Platform

Logistic Flow

Logistic
Company

Paper Customs
Declaration
Goods Manifest Cargo Manifest

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Customs Declaration Bonded


Work Flow for bonded storage of cross-border ecommerce(inbound)

Bonded Warehouse

Loading to
Domestic Express
Truck

Domestic
Consumer

By Air

Stocking Area
Pass the XRay machine
for inspection

Release
area

Deliver
to
consumer

Logistic Flow
Information Flow

Conveyor
Belt

If not, open
the parcel for
Manual
inspection

Port
Picking,
packing and
Labeling Bar
Code

Transit and deliver

By Railway

Approval Signal

Inspection area

Customs Management Platform

Release order and pay for the order

By Ocean

Cross-Border
Cross-Border Ecommerce
eCommerce Service
platform/Seller
Platform

Transfer information for


electronic customs clearance

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Transfer order & payment


information
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Service Providers
The scope of services available for Crossborder eCommerce includes
Logistics

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Importation

Customs Clearance

Commodity Inspection

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment
Marketing

Customer Management

Order Management

Store Management

eCommerce Services

Brand Site Development

Marketplace

Retailer

eCommerce
Sites

21

Marketplace

Brand Site Development

Customer Management
Marketing

Bonded
Non-bonded

Express
Freight

Transportation

Last Mile

Logistics

Consolidation

Warehousing and
Fulfillment

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Order Management

E-Commerce Services

Store Management

Customs Clearance

Importation

Commodity Inspection

Marketplace

E-Commerce
Sites

Retailer

Marketplace

Brand Site Development

Customer Management
Marketing

Bonded
Non-bonded

Express
Freight

Transportation

Last Mile

Logistics

Consolidation

Warehousing and
Fulfillment

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Order Management

E-Commerce Services

Store Management

Customs Clearance

Importation

Commodity Inspection

Marketplace

E-Commerce
Sites

Retailer

Marketplace

Brand Site Development

Customer Management
Marketing

Bonded
Non-bonded

Express
Freight

Transportation

Last Mile

Logistics

Consolidation

Warehousing and
Fulfillment

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


Copyright 2015

Order Management

E-Commerce Services

Store Management

Customs Clearance

Importation

Commodity Inspection

Retailer

E-Commerce
Sites

Retailer

Marketplace

Brand Site Development

Customer Management
Marketing

Bonded
Non-bonded

Express
Freight

Transportation

Last Mile

Logistics

Consolidation

Warehousing and
Fulfillment

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


Copyright 2015

Order Management

E-Commerce Services

Store Management

Customs Clearance

Importation

Commodity Inspection

Retailer

E-Commerce
Sites

Retailer

Marketplace

Brand Site Development

Customer Management
Marketing

Bonded
Non-bonded

Express
Freight

Transportation

Last Mile

Logistics

Consolidation

Warehousing and
Fulfillment

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


Copyright 2015

Order Management

E-Commerce Services

Store Management

Customs Clearance

Importation

Commodity Inspection

Retailer

E-Commerce
Sites

Retailer

Logistics Providers

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


Copyright 2015

Customs Clearance

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment

Importation

Commodity Inspection

Logistics

Marketing

Customer Management

Order Management

Store Management

E-Commerce Services

Brand Site Development

Marketplace

Retailer

E-Commerce
Sites

Logistics Providers

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


Copyright 2015

Customs Clearance

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment

Importation

Commodity Inspection

Logistics

Marketing

Customer Management

Order Management

Store Management

E-Commerce Services

Brand Site Development

Marketplace

Retailer

E-Commerce
Sites

Logistics Providers

Focus on cross-border ecommerce logistics,


warehousing and fulfillment integration.

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Customs Clearance

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment

Importation

Commodity Inspection

Logistics

Marketing

Customer Management

Order Management

Store Management

E-Commerce Services

Brand Site Development

Marketplace

Retailer

E-Commerce
Sites

Logistics Providers

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Customs Clearance

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment

Importation

Commodity Inspection

Logistics

Marketing

Customer Management

Order Management

Store Management

E-Commerce Services

Brand Site Development

Marketplace

Retailer

E-Commerce
Sites

Logistics Providers

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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Customs Clearance

Freight

Express

Transportation

Last Mile

Consolidation

Non-bonded

Bonded

Warehousing and
Fulfillment

Importation

Commodity Inspection

Logistics

Marketing

Customer Management

Order Management

Store Management

E-Commerce Services

Brand Site Development

Marketplace

Retailer

E-Commerce
Sites

Crossborder eCommerce

Discussion

Tompkins Supply Chain Leadership Forum | August 31September 2, 2015


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