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In China, the cross-border e-commerce industry was born in Cities such as Guangzhou, Shenzhen and other cities that first contacted overseas markets. Under the advantage of information, relying on the way of heavy selection and heavy operation, many cross-border sales have occupied a place in overseas markets. In 2020, due to the opportunities brought by the epidemic, they have entered an unprecedented dividend period in the cross-border e-commerce industry.
However, a crisis ensued. Huge profits in 2020 have attracted many capital and enterprises to join, under the fierce competition, the cross-border e-commerce industry in 2021 suddenly entered a difficult mode, coupled with the disappearance of overseas traffic dividends superimposed on the rising shipping costs, relying on the delivery and logistics to export goods overseas cross-border e-commerce operating costs remain high, and then the arrival of Amazon's banning tide has made third-party sellers everyone endanger themselves, and the companies that have been banned have instantly fallen into a trough, not only the income is cut off, the funds are temporarily frozen by Amazon.
Under multiple challenges, the cross-border e-commerce industry, which was once envied by the outside world, has had a difficult year. According to the "2021 Cross-border E-commerce Development Report" released by Ebang Think Tank, 35% of cross-border sellers are currently facing negative growth, and 36% of cross-border e-commerce companies are in a low-speed growth state of less than 20%, that is to say, more than 70% of cross-border e-commerce companies in 2021 will not make money.
Under the downturn in the market, companies such as SHEIN and Anker Innovation that have completed brand accumulation overseas are still standing. Therefore, the keywords in 2021 belong to the overseas brands that pay more attention to long-termism. After the two, a group of latecomers have also emerged in this track, eager to try on the road of the brand going to sea.
Therefore, it is obvious that on the way to sea, cross-border e-commerce has shown a new look.
From OEM to brand
Since January 2021, the puppy vacuum cleaner that has been deeply cultivating the field of vacuum cleaners for more than 20 years has completely cut off the OEM business and concentrated on taking the road of brand going to sea.
The company's international senior director Cai Jun once told the media that the puppy vacuum cleaner has always had a layout overseas, but it is basically a trade model, part of which is OEM (OEM) orders, customer procurement is basically based on negotiating prices, and the puppy brand has not been deeply cultivated and developed overseas, so it is determined to do its own brand.
After the transformation, one of the pains faced by puppy vacuum cleaners is that the turnover will suffer a certain loss in the short term. The early accumulation of the brand is difficult to bring the previous business scale of the puppy vacuum cleaner.
The way out of the sea for puppy vacuum cleaners is exactly the direction explored by a large part of the factories in China.
Xu Ruicheng, a veteran of the brand overseas and the chief representative of Daguan Capital North America, once introduced that the early manufacturing industry could not avoid the three advanced models of OEM, ODM and OBM. From OEM, that is, independent production, the brand side to do their own design, orders, Chinese factory production, commissioned OEM, to ODM, that is, the manufacturer independently designed and produced a product or the corresponding important module, and then further, the factory found itself capable of designing excellent products, so the OBM, that is, the model of independent brand.
Factories that have long been oem for foreign brands have won the reputation of "world factory" for China, but the factories have not been able to obtain the maximum profit margins. Huge profits are occupied by overseas brands and distributors. From this, it is not difficult to understand the logic behind the dog vacuum cleaner abandoning OEM and transforming to a brand.
If the DTC model is adopted, Chinese brands can maximize profits. CICC's research report pointed out that under the traditional trade model, the value of dealers accounts for about 36%, while in the cross-border e-commerce direct mail model, the platform commission rate is about 8% to 17%, far lower than the mark-up rate of traditional dealers, and the value of Chinese brand owners has nearly 8% room for improvement in the cross-border e-commerce value chain, and these profits are often obtained by dealers in the traditional model.
Profit comparison of cross-border e-commerce under different models / CICC Research Report
After cutting off the foundry business, although the company needs to endure the pain of a sharp decline in revenue in the short term, the premium brought by the future brand is enough to bring a longer-term development path.
Now, the balance of opportunity is also shifting towards brand players. CICC released a research report saying that it is expected that in 5 to 10 years, Chinese home appliance brands (including private brands and foreign brands acquired by mergers and acquisitions) are expected to become mainstream in the world. Enterprises are actively upgrading and transforming digitally to enhance their competitiveness in the global market.
Under the trend of brand going to sea, not only in the field of home appliances, but also in other industries similar to puppy vacuum cleaners, cases are also emerging. YesWelder, a brand focusing on welding products such as welding machines and welding caps, has also undergone the process of transformation from foreign trade business to independent brands.
The founder of YesWelder has more than ten years of OEM experience in welding categories, long-term product processing services for foreign welding machine brands, although the sales volume of B2B foreign trade industry has maintained growth, but due to overseas wholesalers gradually understanding the Chinese market, foreign trade business is difficult to rely on increasing prices to make profits.
As a result, the YesWelder team gradually realized the importance of establishing an independent brand, insisted on establishing a brand in 2018, transformed from the earliest OEM to the Amazon B2C model, and began to focus on brand building in the past two years to try the DTC model.
If you say that brands such as puppy vacuum cleaners and YesWelder have been engaged in the field of foreign trade for a long time, they are born with the gene of going to sea. In 2021, many domestic traditional brands, as well as a number of new consumer brands such as Huaxizi and Perfect Diary, have also embarked on the road to the sea.
An investor who has long been concerned about the field of consumption and cross-border e-commerce has even found that expanding overseas markets has become a hard recommendation for many investors to invest in new consumer brands.
Big sale of dusk
In fact, the cross-border e-commerce companies that have gone to sea before are not without brand awareness.
Amazon has fully implemented the Brand Registry policy since 2017. The policy is designed to help brand owners combat counterfeit products and regulate the overall image of their brands on Amazon's website. As a result, most Amazon sellers will complete brand registration in order to enjoy the policy and product support provided by the subsequent platform. Data from Amazon shows that the scale of Chinese brand sellers completing brand registrations at Amazon increased 10-fold between 2017 and 2019.
According to the United States Patent and Trademark Office (USPTO), as of June 17, 2021, trademark applications increased by approximately 63% over the previous year, which means an increase of approximately 210,000 applications. In July 2021, the BACKLOG of pending trademarks at the USPTO exceeded 900,000 for the first time. The vast majority of these applications come from Amazon sellers.
However, the Amazon banning wave that occurred in 2021 shows that although many sellers hold the "brand", the brand construction method is still in the stage of focusing on sales, and has not been able to form a longer-term brand accumulation.
From April to September 2021, Amazon closed the sales rights of about 600 Chinese brands, involving about 3,000 seller accounts, including some of china's top seller brands, such as Mpow, Aukey, VicTsing, Tacklife, Austor, Vtin, Seneo, Homasy, Homitt, LITOM, TopElek, OMORC, TRODEEM, Atmoko, HOMTECH, OKMEE, Fairywill, etc.
The reason is that in Amazon, relying on product ranking and search position can bring huge sales to products, so sellers choose to brush praise and other ways to improve search rankings.
Sellers who rely on years of brand awareness will proceed with caution. Therefore, in the crisis of cross-border e-commerce, Anker Innovation, which has always been regarded as a superior student by the industry, is safe. Investor Hu Lan (pseudonym) once told Zhixiang Network that the difference between the above-mentioned sealed companies and enterprises such as Anker Innovation lies in the difference between sales-oriented and R&D-oriented and brand-oriented enterprises.
However, Marketplace Pulse's survey of Amazon's headphone category found that despite the large number of headphone brands on Amazon, the real brand power is still in the minority. 1800 different products from 666 brands have made it into the top 100 best-seller lists over the past 24 months. Nearly three new products from almost one new brand replace existing products on the bestseller list every day. More than half of these brands, such as NUBBYO, LAFITEAR, NANMING, AIWONS or HWCONA, have been on the list for five days or less, with only Apple, Samsung, Sony, Soundcore and Tozo making the entire 24-month headphone best-seller list, while the remaining hundreds of brands are floating in the inner volume of the headphone market.
Therefore, many investors who pay attention to cross-border e-commerce and brand overseas have set their sights on brands with real brand power. Huang Qi (pseudonym), an investor who has long been concerned about the overseas brand, believes that these brands can first observe whether these brands have brand power from two aspects, "First of all, you can see whether the brand has an independent station, how the sales of the independent station are, if the independent station can rise, it means that there is brand power, and secondly, it is to see the sales of all products under the brand, whether the explosive model is the basic model or different from other Amazon products have their own unique design, if the explosive model of the product has a lot of the same model on Amazon, and this cost performance is the highest, It's hard for me to believe that consumers are buying this product because of this brand. ”
Platform Fighting Method
Under the heat of brand going overseas, cross-border e-commerce platforms such as Amazon and AliExpress are facing a common "rebel army" - independent stations.
Shopify's GMV in 2021 is about $460 billion, and the rapid rise of this Canadian enterprise not only provides new development space for cross-border e-commerce sellers, but also becomes the object of reference and learning for many domestic startups. In China, there are hundreds of products that provide website building tools, new products are emerging in an endless stream, and many third-party platform sellers and brands hope to try independent stations, outside the platform, looking for new growth space.
Although the platform and the independent station are not the exclusive choice of "two choices", the overseas brand will inevitably be more inclined to the independent station. In Huang Qi's view, the platform's extraction model and consumers' attention to DTC brands have determined that the brand's preference for independent stations is much greater than that of third-party platforms, "Long-term development on the platform, the brand is diverting the flow for the platform, the better the brand does, the more sales will be tilted to Amazon, then when the time comes, the brand will leave Amazon or not go out? ”
Therefore, in 2021, overseas third-party platforms represented by Amazon and AliExpress have put forward their own thoughts on this.
At the 2022 Amazon Global Selling Cross-border Summit, the brand proposition "laying out the next generation of trade chain" released in 2017 was upgraded to "creating a new pattern of global brands", which clearly sent a signal to Chinese cross-border merchants going overseas to brand.
Dai Zhenfei, amazon's global vice president, said, "Amazon's global store has witnessed the rapid development of China's export cross-border e-commerce from 'barbaric growth' to 'intensive farming'. Next, the industry will move towards a new stage of 'deep ploughing and long-term' and open a new era of exporting cross-border e-commerce brands to the sea. We believe that export cross-border e-commerce is still in a rapidly developing upward channel, and brand will be the strongest force leading the industry forward. Amazon Global Selling will continue to give full play to the advantages of global resources, deepen local services, uphold the concept of long-termism, and work with Chinese sellers to seize the huge opportunity of the golden decade of the brand going abroad, and promote more high-quality and innovative Chinese brands to shine on the global stage. ”
To this end, Amazon has launched a number of products and services, including brand image and display, drainage and promotion, brand analysis and insight, brand protection and other dimensions. For example, Amazon Advertising is committed to providing China's sellers and brands with basin-wide brand building solutions, helping sellers and brands grow their business and build global brands, such as "Brand Flagship Store", "Posts", "Attention", "Merchandising", "Brand Promotion", "Display Promotion", "Amazon OTT and Online Video", "Amazon DSP", etc. In view of the characteristics of different stages of development of brand sellers, Amazon Global Selling has also launched three major plans of starting, assisting and leaping to meet the needs of different sellers to build brands.
AliExpress's thinking is also consistent with Amazon's, which also increases the emphasis on brand sellers. On May 26, 2021, AliExpress released the "G100 Overseas Plan" to help China's advantageous supply chain brands go global, establish direct and in-depth supply relationships with 100 "super brands", support 10,000 cutting-edge brands, and sign on-site contracts with ten brand merchants.
Subsequently, AliExpress ushered in a larger round of organizational restructuring. Jiang Fan, former president of Taobao Tmall, was responsible for the newly established "Overseas Digital Business" section, in charge of the two overseas businesses of AliExpress and Alibaba International, as well as a number of subsidiaries facing overseas markets such as Lazada, shouldering the heavy responsibility of Alibaba's globalization strategy.
Since then, the cross-border e-commerce platform AliExpress has ushered in several rounds of policy changes. Some media pointed out that Jiang Fan hopes to change the past Taobao play method of "price is king", and by vigorously recruiting high-quality merchants to settle in, AliExpress will move towards the Tmall brand store route of "product is king + operation refinement + platform support".
Change
After completing the establishment of the brand from 0 to 1, the next question is how to continue to spread the territory more, and many brand players are trying to try more to further expand their moat.
For example, Anker Innovation has incubated three sub-brands of Nebula, Eufy and Soundcore, and Shein has also laid out its own brand matrix. SHEIN has also developed from a single women's clothing category to include plus-size women's wear, children's wear, men's wear, beauty, home, pets and other categories, with ROMWE, MOTF, CUCCOO, EMERYROSE, SHEGLAM and other sub-independent stations and sub-brands Petsin, DAZY.
In 2021, a number of DTC holding companies have emerged among overseas DTC brands to create their own brand matrix, such as Pasten Brands, formerly known as brand agency Gin Lane, which created the brands Open Spaces and Equal Parts, and recently announced that its mission is to acquire more brands in the home field.
The idea of moving to a more acquisition model came from Pattern's own consumers. "We've been shooting a lot of content over the past year," said Nick Ling, co-founder and CEO of Pattern Brands, "and we're constantly getting questions and requests from consumers asking about other products in the photos." ”
Solo Brands, a brand operations management company listed on the New York Stock Exchange on October 28, 2021, was formerly known as SOLO Stove, a DTC outdoor stove brand. In May, August and September 2021, the company acquired rowing brand Oru Kayak, paddleboard brand ISLE and casual menswear brand Chubbies, respectively, and officially established Solo Brands, a brand operation management company focused on the outdoor field.
Compared with the previous DTC brands, solo brands differ in that by acquiring complementary brands, it can not only increase the company's product categories and user groups, but also bring more marketing and supply chain advantages to the brand.
The intention of this brand matrix does not seem to be new. Cross-border Tong, which has long since fallen from the altar, once operated 189 brands, including 168 own brands. The problem is the amoeba model commonly used in the domestic cross-border e-commerce industry. Wang Yanzhi, co-founder of Amazon's third-party brand acquisition company Nebula Brands from China, once explained to Zhixiang that many of the original sellers adopted the group system from the organizational structure, each group was responsible for its own profit and loss, and 70% of the operation work was actually a selection, and there were many failures in the selection process, trial and error 10 and then developed a successful product.
The brand holding companies try to change the organizational structure and finally achieve the synergistic growth of the brand by sharing professional teams such as legal affairs and accounting. This is also the strategy of Amazon brands such as Thrsio to acquire companies. Through the construction of the middle office to integrate and operate multiple brands acquired, establish support roles including marketing promotion, design, legal affairs, etc., and replace the small workshop-style operation of the seller before the acquisition with an internal professional team. They hope that, relying on acquisitions, Amazon brand acquisition companies want to skip the process of building brands from 0 to 1 and rely on the ability of the middle office to achieve further growth of brands from 1 to 100.
In 2021, such companies are being embraced by capital. According to Marketplace Pulse, Amazon Brand Acquisition raised more than $12 billion in 2021, including equity and debt financing. In 2020, that number is only about $1 billion.
Changes in the financing situation of amazon brand acquisition companies / Marketplaice Pulse
In 2021, cross-border sellers are also aware of their long-term accumulated capabilities and use surplus operating resources to enter the operation on behalf of the bureau. Chen Zhiwei, deputy general manager of Anker's innovative e-commerce service division, told the media that compared with domestic e-commerce, which has bred leading enterprises such as Baozun and Wangchuang, cross-border e-commerce has not run out of the representative of the full-link service company. The reason is that our ability in cross-border e-commerce stays in business expansion rather than organizational precipitation. The accumulated organizational capabilities also give the organization a lot of flexibility, in the agency operation business, Anker can quickly modularize the construction of different market teams according to the customer's strategy in different markets, to help the brand side multi-line expansion.
At the end of December 2021, Aoji, which is also a cross-border e-commerce seller, also proposed a similar plan, using long-term accumulated experience and talents to join the wave of brand going overseas. Aoji proposed to set up an ecological chain project incubation center, and plans to cooperate with Amoy brand experts and product experts to jointly fund the establishment of a new company and distribute equity according to the proportion of capital contribution. In the process of project incubation, the two parties jointly run the company.