Tompkins Supply Chain Consortium Report Globalization and Crossborder Logistics

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
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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
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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

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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

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Drivers of Cross-border Ecommerce
Updated to August 31, 2015.
Increasing Disposable Income in China

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Product Authenticity
Especially in
Childrens goods
Food and nutrition
Cosmetics
Luxury

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Tmall VS. Tmall Global Product Categories
Data Source: Tmall, 2014

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

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Purchase Price
The base purchase price is typically low enough to offset the cost of tax and
duty.
Data Source: BPH, 2015

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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

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Domestic
Delivery Fee
RBM10
Consumer
Pays
RMB120

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?

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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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13
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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14
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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15
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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16
Cross-Border Pilot Cities and FTZs
Cross-Border Pilot City

Free Trade Zone

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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
EDJC(E)
Hangzhou
Ningbo
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
ZhuangyuanGu()
Shenzhen
---

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18
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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19
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

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Transfer order & payment

information
20
Service Providers
The scope of services available for Crossborder eCommerce includes
Logistics

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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
Customer Management
Marketing
Bonded
Non-bonded
Express
Freight
Transportation
Last Mile
Logistics
Consolidation
Warehousing and
Fulfillment

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Order Management
E-Commerce Services
Store Management
Customs Clearance
Importation
Marketplace
E-Commerce
Sites
Retailer
Marketplace
Customer Management
Marketing
Bonded
Non-bonded
Express
Freight
Transportation
Last Mile
Logistics
Consolidation
Warehousing and
Fulfillment

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Order Management
E-Commerce Services
Store Management
Customs Clearance
Importation
Marketplace
E-Commerce
Sites
Retailer
Marketplace
Customer Management
Marketing
Bonded
Non-bonded
Express
Freight
Transportation
Last Mile
Logistics
Consolidation
Warehousing and
Fulfillment

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Order Management
E-Commerce Services
Store Management
Customs Clearance
Importation
Retailer
E-Commerce
Sites
Retailer
Marketplace
Customer Management
Marketing
Bonded
Non-bonded
Express
Freight
Transportation
Last Mile
Logistics
Consolidation
Warehousing and
Fulfillment

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Order Management
E-Commerce Services
Store Management
Customs Clearance
Importation
Retailer
E-Commerce
Sites
Retailer
Marketplace
Customer Management
Marketing
Bonded
Non-bonded
Express
Freight
Transportation
Last Mile
Logistics
Consolidation
Warehousing and
Fulfillment

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Order Management
E-Commerce Services
Store Management
Customs Clearance
Importation
Retailer
E-Commerce
Sites
Retailer
Logistics Providers

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Customs Clearance
Freight
Express
Transportation
Last Mile
Consolidation
Non-bonded
Bonded
Warehousing and
Fulfillment
Importation
Logistics
Marketing
Customer Management
Order Management
Store Management
E-Commerce Services
Marketplace
Retailer
E-Commerce
Sites
Logistics Providers

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Customs Clearance
Freight
Express
Transportation
Last Mile
Consolidation
Non-bonded
Bonded
Warehousing and
Fulfillment
Importation
Logistics
Marketing
Customer Management
Order Management
Store Management
E-Commerce Services
Marketplace
Retailer
E-Commerce
Sites
Logistics Providers
Focus on cross-border ecommerce logistics,

warehousing and fulfillment integration.

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Customs Clearance
Freight
Express
Transportation
Last Mile
Consolidation
Non-bonded
Bonded
Warehousing and
Fulfillment
Importation
Logistics
Marketing
Customer Management
Order Management
Store Management
E-Commerce Services
Marketplace
Retailer
E-Commerce
Sites
Logistics Providers

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Customs Clearance
Freight
Express
Transportation
Last Mile
Consolidation
Non-bonded
Bonded
Warehousing and
Fulfillment
Importation
Logistics
Marketing
Customer Management
Order Management
Store Management
E-Commerce Services
Marketplace
Retailer
E-Commerce
Sites
Logistics Providers

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Customs Clearance
Freight
Express
Transportation
Last Mile
Consolidation
Non-bonded
Bonded
Warehousing and
Fulfillment
Importation
Logistics
Marketing
Customer Management
Order Management
Store Management
E-Commerce Services
Marketplace
Retailer
E-Commerce
Sites
Crossborder eCommerce
Discussion

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32

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

Tompkins Supply Chain Leadership

Your Supply Chain.

China Crossborder Size

China Crossborder eCommerce Size

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

655 million express/postal parcels (inbound & outbound)

China Crossborder eCommerce Size

Data Source: iResearch

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

Drivers Of Crossborder eCommerce

Increasing Disposable Income in China

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

Drivers of Cross-border Ecommerce

Updated to August 31, 2015.

Increasing Disposable Income in China

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

Drivers of Cross-border Ecommerce

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

Drivers of Cross-border Ecommerce

Data Source: Tmall, 2014

Drivers of Cross-border Ecommerce

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

Drivers of Cross-border Ecommerce

Data Source: BPH, 2015

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

Drivers of Cross-border Ecommerce

Traditional Cross-border Trade

XBorder via Bonded Zone

Drivers of Cross-border Ecommerce

Pilot cross-border zones

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

Delivery Times for Different Areas

From Japan or Korea

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

Inventory owned by Vendor

Owned by vendor or retailer

Normally owned by retailer

Low (retail takes Low

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

Cross-Border Pilot Cities and FTZs

Cross-Border Pilot City

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

Crossborder eCommerce Pilot Cities

Link to Customs Service

Direct Post/ Bonded Storage

Direct Post/ Bonded Storage

Direct Post/ Bonded Storage

Y, 1st two models existing

Direct Post/ Bonded Storage

Direct Post/ Bonded Storage

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

Customs Declaration - Direct Mail

Order & Payment

Innovation and incentives for cross-border

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

Customs Declaration Bonded

Transit and deliver

Customs Management Platform

Release order and pay for the order

Transfer information for

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

Transfer order & payment