The nature of FBA
FBA ( Fulfillment by Amazon), means that the seller’s products in his shop directly exist in the local warehouse of Amazon, there is a customer for the order transaction, Amazon system will help the seller to carry out the next operation, including after-sales service. Nowadays, the FBA logistics service provided by cross-border e-commerce logistics enterprises for sellers is, to be precise, only the operation of transferring a commodity from the warehouse to the warehouse, that is, FBA actually means sending the seller’s goods from the local warehouse to the warehouse of the destination sales area, not all of Amazon FBA logistics.
The evolution of FBA logistics
From 2015 onwards, the FBA headway logistics demand of Chinese sellers accelerated growth, the early big sellers are more through UPS/DHL/FedEx and another commercial express to solve, and the times for these deliveries are steady and fast.
However, with the growth in demand, a series of problems gradually come to the fore: for example, there is no foreign importer, and the processing process becomes very slow or even remote when encountering customs inspection.
Based on the strong demand for seller logistics, the market began to appear with a variety of differentiated services, such as air freight + end delivery warehouse, ocean freight + end delivery warehouse, Central European railroad, and Central European truck + end delivery warehouse and other differentiated services; and then subdivided in the air and sea transport direct flight and transfer flight, fast and slow ship trunk line difference services; end delivery warehouse subdivided in the express company to send warehouse and trucking company to send warehouse difference services; and truck delivery warehouse and subdivided into dedicated (FTL) distribution and carpool (LTL) distribution services, the entire container does not hit the trust and bulk cargo hit the trust delivery warehouse and other differentiated services, the above is only in the logistics field of service model differentiation.
With a further push from sellers on logistics cost control, logistics providers’ service innovation gradually crossed over from the logistics segment to the tax segment, and began to appear in the different services of tax inclusive (i.e. taxes such as customs duties or VAT from the importing country are included in the freight cost and are sold at one price) and non-tax inclusive; in Europe, the different services of VAT deferred and non-deferred appeared.
After the epidemic, with the significant growth of online consumption, Amazon’s library capacity can not keep up with the massive influx of goods, many sellers choose to first prepare the goods the local third-party warehouses in the consumer countries, and then send them to the Amazon warehouse in batches after the storage capacity allows, so the market has emerged again FBA forwarding warehouse (transit warehouse) supporting services. So far, the FBA headway logistics market has become a new cross-border supply chain service covering cross-border warehouse-to-warehouse international logistics transportation, tax declaration, product compliance, and warehousing distribution, and after-sales service a new cross-border supply chain service with a very high degree of compounding.
The impact of Amazon compliance on FBA logistics
2021 is the year of strengthening Amazon’s compliance strategy, the closure storm swept the cross-border circle, and many big sellers were affected by the chain reaction. As the official said, compliance management does not start in 2021, and will not end in 2021, but is an ongoing regulatory measure. Intellectual property protection and brand building to promote the upgrading of social industrial structure has become a national strategy.
Amazon wants to help “Chinese sellers build global brands”, which means that the transformation of “Chinese sellers” to “Chinese brands” is imminent. 2021 is the year when many cross-border e-commerce sellers are losing money and their profits are declining.
In 2021, in the case of many cross-border e-commerce sellers’ losses and declining profits, many manufacturing enterprises with foreign trade design and production capacity have gone online for cross-border e-commerce B2B/B2C sales business and started to try the DTC (Direct To Customer) method.
The logistics industry will also produce many changes under the adjustment of compliance, service, and demand. According to the development path of domestic e-commerce, the cross-border e-commerce industry will face many risks in tax compliance, intellectual property protection, and trade competition barriers, in addition to providing a convenient and category-rich shopping experience, and will also develop rapidly with the construction of logistics infrastructure, cross-border payments, mobile Internet, and the rise of social media, while its innovation speed is faster than the degree of regulatory perfection by governments.
The current situation of FBA logistics
On the whole, the market share of FBA logistics is scattered and it is difficult to form a head effect. Under the combined effect of multiple factors, the market competition in the industry is bound to intensify in the short term.
At present, with a large number of traditional freight forwarders, sellers, and other service providers transitioning logistics, domestic and international logistics giants, as well as new entrepreneurs into the FBA market, coupled with the rapid increase in the participation of the platform itself in the first-haul logistics, as well as shipping companies through the long contract in advance to lock the quality shippers stable cargo volume, the growth rate of practitioners is much greater than the growth rate of customer demand itself.
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Policy and rules perspective:
E-commerce platform and the compliance requirements of national governments to gradually improve the platform to receive goods into the warehouse and other regulatory systems continue to improve, so the compliance threshold of logistics products and services become increasingly high, the past differentiated services will be reduced, products and services will accelerate homogenization.
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Upstream and downstream profit perspective:
Platform policy tightening and sellers of the in-volume competition, resulting in a large number of sellers of profitability is gradually declining. The gradual normalization of the epidemic and the return of overseas supply chain efficiency, the balance of supply and demand brought about by the release of capacity, and even a new round of capacity will also dilute the profits of the industry from the perspective of capacity. The compression of upstream and downstream profits will compress the available space for logistics services, thereby increasing their overhead.
What has changed in FBA from the development phase to the maturity phase?
- Highly compliant and standardized logistics requirements.
- Focus on warehousing needs for overseas end services.
- The demand for multi-frequency and low-volume headway logistics will become the most competitive business.
- The emerging e-commerce market and regional expansion will further provide a number of market segmentation opportunities for small and medium-sized logistics providers.
- Customized demand from mature markets.
Conclusion
Logistics providers that focus on FBA headway logistics services have gone through a phase of rapid development in the past, and many companies have precipitated a certain amount of end-to-end long-chain operation and management capability, and have also developed a good team. In the future fierce competition, in addition to meeting the needs of Amazon sellers, they can also turn their attention to other groups of sellers and their logistics needs. Free up your own operational and management capabilities for new products and regions.Veeddy dropshipping is also working in this direction. Veeddy Dropshipping has a comprehensive FBA system, it offers a one-stop complete solution to help you source products, ship freight, pay customs duties, clear customs and deliver to Amazon’s logistics warehouse, you only need to be responsible for sales. If you are in need, welcome to contact us.
