The cross border eCommerce market saw high growth during the pandemic and cooled down post COVID as well as after persistent logistical challenges. With the pressures of macroeconomic instability in a post-Covid world, brands are looking to expand into new markets and take on more diverse risks to enable growth. In response, new technology tools are emerging that can simplify complex supply chains and overseas marketing, making cross-border eCommerce much smoother and more scalable.
Although we see bright possibilities for the sector, businesses still face challenges such as language barriers and fragmented logistics networks, and unpredictable challenges. To address these issues, we recently held an online panel discussion with two of Cherubic’s portfolio founders, Floship CEO Joshua Tsui and GLOSKU CEO Kevin Zhao. Here we’ve organized some of the highlights:
The cross-border eCommerce industry is expanding. China’s eCommerce market is anticipated to recover by the latter half of 2023.
With the pandemic subsiding, consumers and brands are exploring opportunities beyond their domestic markets. With consumer spending power in China and Southeast Asia on the rise, the cross-border eCommerce markets in those regions in particular are also expected to see growth, albeit at a slower pace than the peak years of 2019 and 2020. China’s market, which experienced a decline from the end of 2021 until the end of 2022, is slowly recovering, with a full recovery anticipated in the second half of 2023, though the market may still face the impacts of macroeconomic instability.
Market slowly rebounds in China. SEA markets are growing rapidly.
As the unemployment rate drops in China, confidence is growing. We see a market rebound slowly starting in the travel and F&B areas. Shoppers are also increasingly interested in buying foreign brands, such as imported cosmetics, consumption and requirements.
In Southeast Asian countries, we see a growth rate of 20% to 25% in eCommerce year-on-year. While China is still the market leader, global brands are also looking to diversify their manufacturing and set up production in countries throughout the SEA region, thereby supporting the growth of these markets.
However, while Western brands are welcomed, success in their home market does not guarantee success in Asia, as foreign companies need to consider factors such as pricing, products, and advertising.
Social eCommerce trends are reducing barriers and encouraging brands to expand their reach across borders.
Trends like social eCommerce are also driving brands to sell in Asian markets, with social media platforms such as Xiaohongshu providing a way to reach a wider range of users. These platforms enable Asian users to explore overseas brands and consumer products. And with eCommerce integration on social platforms like WeChat, Asian consumers can find the best deals in one app.
Macroeconomic pressure is also requiring brands to be more conservative and cost-conscious when entering new overseas markets. That’s why solutions that help companies to reduce risk are in high demand. Finding a balance between targeting individuals and concentrating on specific markets is also pivotal.
Meanwhile, Chinese brands that are trying to establish themselves overseas are decreasing their reliance on eCommerce platforms like Amazon and are instead using their own online platforms such as Instagram or TikTok to increase their brand awareness.
Cooperating with partners is crucial to success. Partnerships can make cross-border eCommerce operations smoother, lower uncertainty, and ensure scalability.
Sometimes brands rely too heavily on online marketplaces when entering international markets because it’s the easier option – however, this approach doesn’t lead to long-term success. Thus, finding the right partners is essential for brands entering cross-border markets. Partners such as Floship and GLOSKU can simplify the work of navigating tedious and complicated supply chains and support marketing enablement in local channels.
Floship is experienced in taking other brands to international markets, specializing in helping small brands grow globally, with many growing from the crowdfunding stage to unicorns. With an understanding of supply chain duties, taxes, and customs, Floship can provide brands with transparency on how data works and how to succeed in these markets, not only in terms of fulfillment but also in terms of strategy.
GLOSKU was created to address the challenges and mistakes that brands encounter when entering China marketplaces directly without assistance. Helping companies to find an entry point that suits their brand with a step-by-step approach, GLOSKU offers businesses flexibility and support through different growth stages, enabling them to scale into the market. One of its clients went from 0 orders per day to over 1,300 orders per day within a week – GLOSKU helped them scale their services and transition from a mini retail app to their own platform.