Economics
Black Friday Becomes a Carnival for Chinese Cross-border Merchants

November 23, 2023

Black Friday Becomes a Carnival for Chinese Cross-border Merchants

Black Friday is an annual event for cross-border merchants in China, and its significance is comparable to the domestic “Double 11” shopping festival. “This year’s inventory for Black Friday is five times that of last year,” said Liu Wenhai, a hat merchant from Zhejiang. He participated in the Black Friday promotion on Pinduoduo for the second time. “September sales have quadrupled compared to last year, so our fivefold inventory for Black Friday is quite conservative.” Liu Wenhai is not the only one busy during this time. Many foreign trade factories and merchants have already prepared sufficient goods, waiting to achieve their annual key performance indicators.

In September of last year, Pinduoduo launched the “2022 Duoduo Going Abroad Support Plan”, creating a new model for cross-border e-commerce. It attracted numerous domestic regional industry clusters with high concentration, strong specialization, and distinctive features to sell their daily consumer products manufactured in China overseas. Through this new model, Temu reduces the barriers for small and medium-sized enterprises in foreign trade, expands their order channels, and helps cultivate brands. “In March this year, our monthly sales were only 40,000 yuan, but in November, it reached 1.7 million yuan,” revealed a seller who joined Temu last year.

How does Temu help small and medium-sized merchants find new business opportunities and achieve low barriers and high returns?

Old factories, new opportunities

“The unsold smoothie cups were all sold out within two weeks on Temu,” said Wang Bowen, the general manager of Zhejiang Shcups. Wang Bowen, a post-95s entrepreneur, is a second-generation factory owner. In 2000, his elders started the business of manufacturing insulated cups on an OEM basis.

Last summer, the sales of the company’s smoothie cups fell short of expectations, resulting in over 500 unsold cups. In March of this year, Wang Bowen came across Temu and decided to list the smoothie cups by taking photos. Surprisingly, the unsold inventory was quickly sold out within two weeks. “I didn’t expect off-season products to sell so well,” Wang Bowen exclaimed, and he replenished the Temu warehouse with another batch of smoothie cups.

According to data from the General Administration of Customs, China’s cross-border e-commerce imports and exports reached 1.1 trillion yuan in the first six months of this year, a year-on-year increase of 16%. In 2022, cross-border e-commerce goods will account for 5% of the overall foreign trade, compared to less than 1% five years ago. Cross-border e-commerce in China is booming, and a group of well-educated young people are taking over traditional factories, with an accelerated awakening of brand awareness. Jinhua City where Wang Bowen’s factory is located in produces over 80% of the world’s insulated cups.

With the iterative upgrade of digital information technology and the continuous improvement of cross-border logistics systems, the cross-border e-commerce industry is experiencing a reshuffle. The rise of emerging cross-border platforms has given people like Wang Bowen more opportunities and influence. In the past, traditional OEM factories were sandwiched between brand owners and sales channels. They were dominated by traditional cross-border platforms and offline foreign trade channels, with limited room for premium pricing. “Temu has a gross profit margin that is at least 5% higher than traditional foreign trade orders,” said Wang Bowen. Selling the same products, Temu operates between wholesale and retail, eliminating all intermediaries, and allowing OEM factories to obtain sufficient profits.

This year, Wang Bowen participated in the “Black Friday” on the Temu for the first time. He prepared 2-3 times the usual quantity of insulated cups and sent them to the Temu warehouse. “We are now in the preheating phase, and we can clearly see an increase in sales compared to last month,” he said.

Relying on the Temu, Wang Bowen’s insulated cup factory achieved a rapid transformation from 0 to 1 and from B2B to B2C in just six months. Currently, the Temu is helping more and more foreign trade factories and merchants go global and sell to the world, adding new impetus to the development of China’s foreign trade.

Doing complex business in a simple way

It is not easy to sell products overseas, as experienced by Liu Wenhai, a hat merchant from Zhejiang. As a second-generation factory owner, his family-owned factory primarily produces winter cotton hats. Unlike his parents’ traditional foreign trade business, he chose cross-border retail. Previously, Liu Wenhai had tried platforms like AliExpress and Wish, and then became one of the early users of Temu. “Temu is very convenient and user-friendly for merchants,” he said. The platform helps solve many pain points for merchants, such as language barriers, high logistics costs, and slow feedback. For example, on other platforms, merchants need to prepare foreign language copies themselves. “I have to find different translations for different countries when selling, which incurs high costs and complicated processes,” mentioned Liu Wenhai.

Shipping also poses challenges. “Shipping goods overseas requires merchants to choose logistics providers, and each country has different dedicated lines with varying logistics costs. It requires a lot of calculations and effort,” recalled Liu Wenhai. The transportation time of logistics is difficult to control. “In traditional cross-border e-commerce platforms, if a customer orders a winter hat, it may not arrive until spring.”

In the new era of digital foreign trade, Temu provides one-stop services, making it easy to go global. In simple terms, the platform offers services such as website traffic, cross-border logistics, legal support, and intellectual property protection, while factories only need to focus on quality and production. “When writing copies, we can directly write in Chinese on Pinduoduo Cross-Border, and the platform will translate it into different languages,” said Liu Wenhai.

Under the fully managed model, the logistics transportation chain operates in three stages. The first leg involves merchants sending goods to Temu’s domestic warehouse. The platform takes care of shipping the goods from the domestic warehouse to overseas transit hubs through logistics service providers. Finally, the last-mile delivery to overseas customers is completed by third-party logistics partners. Throughout the process, merchants no longer bear the risks during transportation and the pressure of final delivery. Liu Wenhai’s American customer received the hats just two days after placing the order, and he praised the logistics speed as “very good.”

Temu, through its flexible supply model of small quantities, multiple times, and fast feedback, identifies and collects consumer demands from different countries’ markets. As a result, it can provide long-term and stable orders for manufacturing companies. Platform mechanisms such as zero commissions, domestic consolidation, and real-time settlement help reduce the costs of companies going global. “The profit margin can reach 40%-50%, earning more than traditional foreign trade,” happily expressed Liu Wenhai.

This new form of foreign trade simplifies the process of going global, reduces the barriers to entry, expands order channels, and supports brand cultivation. Therefore, more small and medium-sized foreign trade enterprises can easily embrace the international market. Temu has expanded to over a hundred manufacturing industrial belts in Guangdong, Zhejiang, Shandong, Anhui, and other regions, facilitating the entry of high-quality manufactured products into more than 40 countries and regions, including North America, Australia, Europe, and Asia.

Comprehensive Assistance for Enterprise Growth

This year’s “Black Friday,” Chaozhou Sunnycz Ceramic Factory focused on C-end customers. The factory primarily sells ceramics, cups, decorative vases, and other goods, with a previous emphasis on B-end cross-border wholesale business. General Manager He Jiayang believes that by entering Temu and targeting C-end customers, in addition to increasing revenue, they can also benefit their B-end business.

“Traditional cross-border e-commerce platforms like Amazon and Walmart have stable customer bases, and their products are more conservative in design. Merchants are less inclined to try new and innovative approaches,” said He Jiayang. However, on Temu, merchants can engage in retail business and directly face consumers. Through Temu, He Jiayang gained insights into niche markets behind different brands, designed unique selling point products to supply the B-end, and provided new ideas for customized products for B-end customers.

Logistics is a crucial factor that affects the cross-border consumer experience and determines the profitability of merchants. Prior to the “Black Friday” promotion, Temu collaborated with world-renowned shipping companies such as Matson, Maersk, COSCO Shipping, and Evergreen Marine to establish efficient sea freight channels, helping more small and medium-sized foreign trade enterprises embrace the international market at a low cost.

Taking Matson as an example, it has a dedicated terminal at the Port of Long Beach in the United States, as well as two off-dock yards and a fast container pickup model without appointments. It has created a “highway on the sea” for cross-border sellers between China and the United States. Through Matson’s sea freight channel, goods can be transported from Shanghai to Long Beach in the United States in as little as 11 days, which is half the time of traditional sea freight.

“The opening of sea freight channels is a significant advantage for Temu,” said Bai Ming, Deputy Director of the International Market Research Institute at the Ministry of Commerce. He believes that increasing sea freight not only greatly reduces cross-border logistics costs but also expands the range of goods. Large items that were previously inconvenient to air transport can now smoothly reach overseas markets, while reducing the risk of over-reliance on a single logistics channel. In other words, sea freight is beneficial for the circulation of large items such as furniture, machinery, and building materials, laying the foundation for merchants to develop comprehensive multi-category trading and increase sales profits. Chinese manufacturing can reach more countries and regions and help merchants find business growth.

“Black Friday” promotion is not only a shopping frenzy for overseas consumers but also a hopeful opportunity for cross-border sellers affected by industry reshuffling, upgrading of the industrial chain, and rising costs. Temu takes multiple measures to assist foreign trade factories and merchants in selling worldwide, enabling Chinese manufacturing to be loved and recognized by global consumers. It injects vitality into the global consumer market.

VIEWS BY

Wang Keke
Wang Keke is an editor of 21st Century Business Review
Share This Post