Taking stock of the steady pace of cross-border e-commerce development in 2024, opportunities and challenges coexist

Why talk about cross-border e-commerce? In today’s wave of globalization, the importance of cross-border e-commerce has become increasingly prominent, and it has accelerated to become an important kinetic energy of China’s foreign trade and a new engine for high-quality development. The data shows that in 2023, the total import and export volume of cross-border e-commerce in China was 2.38 trillion yuan, of which the export volume reached 1.83 trillion yuan, a year-on-year increase of 19.6%, far exceeding the overall foreign trade growth level, fully demonstrating the powerful role of "cross-border new kinetic energy". The cross-border e-commerce business of Chinese enterprises has spread all over the world, and it has gradually grown into an important force for China’s foreign trade growth, and its strength and development potential should not be underestimated.

Steady pace of development

In 2024, the cross-border e-commerce market showed a strong growth trend.

With the gradual formation of global consumption habits, global consumers are increasingly keen to buy goods from different countries through online channels. This trend has not only greatly expanded the market coverage of cross-border e-commerce, but also continuously promoted the steady growth of cross-border e-commerce transaction volume.

The rapid rise of emerging markets has become a new bright spot in the development of cross-border e-commerce. In addition to the traditional European and American markets, the demand for online shopping in Southeast Asia, Latin America, Africa and other regions is growing rapidly.

Take Southeast Asia as an example, the region has a large population and a large base of young people, and the penetration rate of Internet and mobile devices has been rising for many years. According to the 2024 Southeast Asia Digital Economy Report jointly released by Google, Temasek and Bain, it is estimated that the total transaction volume (GMV) will reach 263 billion US dollars this year, up 15% year-on-year; The total revenue of the digital economy is expected to increase to $89 billion, with an annual growth rate of 14%, and the profit will also rise to $11 billion, with an increase of 24%. In Latin America, the cross-border e-commerce market in Brazil, Mexico and other countries is also expanding rapidly, with an annual growth rate of around 20%. As another emerging market, although the e-commerce infrastructure in Africa still needs to be improved, the rapid growth of Internet users and the consumption demand of young people make its cross-border e-commerce potential not to be underestimated. According to a report released by TechCabal Insights, a digital economy consulting company, it is estimated that the scale of the e-commerce market in Africa will increase from 55 billion US dollars in 2024 to 112.73 billion US dollars in 2029, with an increase of 105% in five years. The e-commerce protocol of African Continental Free Trade Area (AfCFTA) adopted in August 2023 will unify the regulatory framework of e-commerce and create a single and unified market for digital goods and services, thus opening up new growth paths for participants in this industry.

The upgrading of supply chain and logistics has also provided strong support for the development of cross-border e-commerce. With the development of technology and the optimization of supply chain management, the logistics speed and service quality of cross-border e-commerce have been significantly improved. For example, the construction and development of overseas warehouses has the characteristics of "fast customs clearance, fast distribution, fast turnover, fast service and low cost", which greatly improves the operational efficiency and customer satisfaction of cross-border e-commerce. At the same time, the progress of technology has also enabled large commodities to be stocked in advance, expanding the categories of commodities.

The favorable policies provide a strong guarantee for the development of cross-border e-commerce. China has introduced policies to support the development of cross-border e-commerce, lowered the threshold of market access, and formulated a series of tax incentives and subsidies. For example, the General Administration of Customs of the People’s Republic of China recently announced a number of regulatory measures to optimize the export of cross-border e-commerce, which took effect on December 15, including canceling the filing of cross-border e-commerce export overseas warehouse enterprises, simplifying the declaration procedures of export documents, expanding the pilot of "inspection before shipment" of export LCL goods, and promoting the cross-border customs return supervision mode of cross-border e-commerce retail exports.

In addition, the Ministry of Commerce and other nine departments jointly issued the "Opinions on Expanding Cross-border E-commerce Exports and Promoting the Construction of Overseas Warehouses", which deployed 15 measures from five aspects: actively cultivating cross-border e-commerce business entities, increasing financial support, strengthening the construction of related infrastructure and logistics systems, optimizing supervision and services, and actively developing standard rules and international cooperation.

Technology empowerment enables cross-border e-commerce companies to understand consumer needs more accurately, improve operational efficiency and reduce operating costs. The application of new technologies such as AI, big data and blockchain enables enterprises to reduce operating costs and improve service quality by optimizing supply chain and logistics management.

Diversified platform support provides businesses with more sales channels and marketing tools. In 2024, more emerging cross-border e-commerce platforms emerged. In addition to traditional platforms such as Amazon and eBay, social e-commerce platforms such as TikTok and Temu also provided businesses with more choices. Through different modes and advantages, these platforms have attracted many merchants and consumers with "menu-style" customized sea-going programs.

Internal and external challenges coexist.

In 2024, cross-border e-commerce sellers will face huge cost and competitive pressure.

On the one hand, the decline in revenue has become a common phenomenon. According to relevant research, nearly 60% of sellers said that their revenue has decreased compared with the previous year, and 18% of them have fallen by more than 50%. The profit margin has also been severely squeezed. Only 27% of sellers said that their profits were higher than the same period of last year, and 17% of sellers’ profits fell by more than 50%.

On the other hand, the cost is on the rise. As Amazon adjusts its supply chain services in 2025, sellers will face the cost changes of several key projects, and many expenses of Amazon will rise, including distribution fees, storage fees, long-term storage fees, removal fees and advertising fees. For example, "holiday peak performance fee" requires sellers to pay extra fees to cope with seasonal demand; Multi-channel performance (MCF) cost adjustment, the average cost increased by 3.5%, etc.

In addition, the cross-border e-commerce industry faces severe external environmental challenges. With the continuous development of the global e-commerce market, governments all over the world have increased their supervision in the field of cross-border e-commerce. On the one hand, tax compliance requirements are becoming stricter. Many countries and regions require cross-border e-commerce enterprises to accurately declare and pay all kinds of taxes, including customs duties, value-added tax, consumption tax, etc., and the penalties for tax violations are more severe.

For example, on August 1 this year, the Brazilian Federal Taxation Bureau announced that the new tax regulations for "small exemption termination" came into effect. Import duty of 20% is levied on cross-border parcels below $50, and import duty of 60% is levied on parcels between $50 and $3,000. Under the new regulations, cross-border products have increased costs for both consumers and businesses. According to the calculation of relevant Brazilian institutions, the final tax burden of consumers will reach 44.5%. From the perspective of industrial chain, Guilherme Jung, an economist of Alta Vista Research Company, believes that high taxes and fees will lead to price increase, product variety decrease, delivery time extension and even complicate the supply chain.

On the other hand, product compliance has become a key link. Different countries and regions have different standards for product quality, safety and environmental protection, so cross-border e-commerce enterprises must ensure that the products they sell meet the standards of the target market. For example, in the EU, products need to meet a series of strict requirements such as CE certification; The United States has specific safety standards for electronic products, toys and other categories. If an enterprise’s products are not compliant, it may encounter risks such as product removal and recall, which will damage the brand image and lead to the loss of consumer trust.

Where is the road to the future?

In the increasingly competitive cross-border e-commerce field, many platforms and sellers stand out in the market through innovation and differentiated competition. Taking fashion brand SHEIN as an example, it has built a "flexible on-demand" supply chain model through technological innovation, which not only provides all-round support for suppliers to achieve win-win cooperation, but also continuously expands product categories, digs deep into special processes and fabrics, and establishes core advantages through differentiated competition.

Obviously, in the future, cross-border e-commerce enterprises need to constantly innovate and keep up with market changes in order to be invincible in the fierce competition. In terms of product innovation, we can open a new product track according to the new consumption scene, integrate sustainable development elements into product planning, and fully consider consumers’ emotional demands. Technological innovation is also indispensable, using digital intelligence technologies such as big data and generative AI to accurately select products, optimize drainage, strengthen transformation, scientifically manage logistics and warehousing, and simplify workflow. At the same time, enterprises should dare to expand emerging markets, exert their strength from the market, identify vertical tracks, select fine products for development, and enhance the differentiated competitiveness of products.

The rapid growth of online shopping demand in emerging markets has brought new growth points to cross-border e-commerce enterprises. Emerging markets, represented by Southeast Asia, Latin America and Africa, are expected to become the fastest growing regions of cross-border e-commerce in the world in the next few years.

Looking forward to 2025, under the background of global economic integration, the future of cross-border e-commerce lies in the combination of technology and market, as well as the deep integration of business flow and logistics. As the core battlefield, the changes in European and American markets will directly affect the global trade pattern. Faced with the rise of emerging markets, cross-border e-commerce enterprises should actively seize the opportunities brought by the growth of business flow and realize the sustainable development of their business through continuous innovation and optimization of services.