Case Study:

Exploring e-Commerce
Opportunities into
Mainland China
without Borders

VCI Fashion & Luxury Supply Chain

Leaders Round Table 2017, Hong Kong
Paul Man, Regional Leader-North Asia

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APL LOGISTICS CONFIDENTIAL
Typical e-Commerce Supply Chain Flow
Cross-border Import Model Forward Logistics
Reverse Logistics
B2C Model B2B2C Model B2C Model B2B2C Model

Order Courier Inventory Order Courier

Parcel Collection Order Fulfillment Cross-docking
Fulfilment Mgmt. Mgmt. Fulfilment Mgmt.
Brand’s DC

Cross-border
e-Retailing Platforms
Brand’s Suppliers Overseas
Warehouse Bonded Warehouse/Regional DC

Consumer
Traditional FCR/ Brand’s DC
FOB Model
Cross-docking e-Retailers/
Non-bonded Warehouse/ Brand’s self-operated e-Retailing
Marketplace Platforms
Domestic DC e-Retailer’s DC
Websites/Apps

General Trade Import Model

Origin Services Freight Mgmt. Warehouse/DC Mgmt. Distribution/Delivery/Return

Functions /Services
Order Management Ocean Freight (FCL, LCL) Customs Brokerage/CIQ Last Mile Trucking
First Mile Trucking Air Freight Deconsolidation Courier Management
Origin Consolidations Air-Sea Bonded/Non-bonded Inventory Mgmt. Reverse Logistics
Offshore VAS Rail Order Fulfillment
Cross-docking Intermodal DC By-pass
Outbound Customs

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“General Trade” vs. “Cross-border Import e-Retailing”

Vs
Traditional Import Mode Trial Cross-border Import Mode

Pros:
Pros:
 Warehouse inside China Bonded Zone is
 Very mature traditional way, easy to handle considered as outside of China border, thus
 Ability to pursue both e-commerce and brick inventory can be shifted to overseas
and mortar sales channels markets
 No channel conflict with local retail dealers
 Normally lower tax (in most cases)

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Common cross-border e-Commerce modes

B2B2C B2C
VS

√ Standard products √ *Long tail products

√ Hot-sale products √ C2B products
√ Low value but large cubage products √ Market test for new products

* Long tail is when sales are made for goods not commonly sold. These goods can return a profit through reduced marketing and distribution costs.

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Case Study 1: China Import Cross-border B2B2C Mode

B2B B2C
Air Freight Deconsolidation before
deliver to bonded Outbound customs
warehouse clearance in line with
Trucking ‘3 Forms in 1’ and manifest
to Airport
Airport Zhengzhou
Airport

Customer’s
Asia RDC
FCL/LCL
Trucking Warehouse/Fulfillment Parcel delivery
to Port Ocean Freight Inbound customs center located in by Courier
declaration Zhengzhou Bonded Zone
Overseas (进境备案)
Seaport Qingdao Port Bonded Trucking
Suppliers Port to Zhengzhou ‘3 Forms in 1’：API interface with government e-port platform
for automatic data transmission
1. Order information: from e-retailer 2. Payment information:
from cross-border payment company 3. Logistics waybill
information : from courier company + 4. Consolidated order
manifest

Advantages:
 Shortened the delivery lead time to 2-4 days vs. regular inbound supply chain model (7-10 days)
 Reduced supply chain cost
 Streamlined supply chain model with enhanced visibility and control
 Managed trade compliance risk related import cross-border e-commerce in China
 Tackled parcel volume bottleneck with bonded inventory during peak season

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Case Study 2: China Import Cross-border B2C Mode +
Canton/HK Overseas Warehouse
Parcel Producing B2C
Overseas Hong Kong Foshan
Bonded Warehouse

Parcel Producing HUB Cross Dock HUB Courier

Customer’s Goods Sort & Pack &

X-Border X-Border
Asia RDC Receive Pick Labeling
Trucking Trucking

sku1 sku2 Parcel delivery

Order X-Ray Inspection
Trucking sku3 sku4 by Courier
to Port Feeder
Overseas ‘3 Forms in 1’：API interface with government e-port
HK port ‘3 Forms in 1’
Suppliers Foshan Bonded Trucking platform for automatic data transmission
Port 1. Order information: from e-retailer 2. Payment
information: from cross-border payment company 3.
Logistics waybill information : from courier company +
4. Consolidated order manifest

Advantages:

 Shortened the delivery lead time: 14-day storage at Foshan bonded warehouse vs directly shipment from overseas
 Reduced Supply Chain Cost: through moving parcel producing (pick n pack, labeling) at Foshan warehouse with lower
labor cost vs. overseas
 Optimal solution for new product market test

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Case Study 3: China General Trade Export Pre-retail VAS
Program for Asia Regional Fashion e-Retailer
Pre-retail VAS Program @South China IDC
Consolidation of cargoes from multiple suppliers to ship to various IDC/RDC

Vendor 1
CHINA
APLL Bonded
Ship out via Air/ Destinations
NBWH Vendor 2 Warehouse
Sea Freight (Singapore, Malaysia,
(Yantian)  AQL Process Philippines, Indonesia)
 Ship Mode to be
 Sorting/Piece  Destination customs
based on
Counting clearance
Philippines Vendor 3 instructions from
 Barcode Labelling Regional Logistics  Trucking to
 Barcode Scanning Team IDC/RDC
Malaysia
Singapore  Scan Pack  Sending of
Vendor 4
 Receipt Report Daily Outbound ASN and
Indonesia and final receipt shipping documents
report after closing

International DC + VAS program advantages:

 International DC deployment to support retailer on :
- speed-to-market access to emerging consumer markets;
- deferred decision on product assortment
 Full supply chain visibility and flexibility which is critical to fashion e-retailing
 Mature pre-retail services and quality inspection program
 Applicable of FTA Saving occurs at TH/VN/PH (China ASEAN FTA) for eligible item with up to 30% duty reduction

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 Q&As
Thank you!