[POD Apparel Focus] Cross-border e-commerce cost analysis and optimization strategy: from procurement to logistics overview

Introduction

In the digital era, cross-border e-commerce has become an important way for many enterprises to expand the international market. However, in this highly competitive market, how to effectively control costs and improve efficiency has become a problem that every cross-border e-commerce seller must face. This article will explore the costs of cross-border e-commerce in depth, and provide practical optimization strategies, hoping to help the small partners in the POD apparel industry succeed in cross-border e-commerce business.

Understand the cost composition of cross-border e-commerce

Before starting to discuss the specific costs, we POD clothing partners need to understand the main cost components of cross-border e-commerce. These costs include procurement costs, logistics costs, platform commission costs, promotion costs, warehousing costs, and damage costs caused by returns and exchanges. Each of these costs has a direct impact on your profit margins, so it's important to properly account for and balance these costs.

What are the costs of cross-border e-commerce? How to calculate and balance?

1. Procurement cost

Purchase cost is the price at which a product is purchased from a supplier. Reducing procurement costs can be achieved by buying in bulk, finding better suppliers, or negotiating better prices. In addition, regularly evaluating the performance of suppliers and choosing more cost-effective partners are also effective ways to reduce costs. However, it should be noted that when there is no stable sales in the early stage, the amount of purchase should not be too large, in order to avoid the inventory backlog caused by slow sales, and the subsequent loss caused by the promotion and reduction of sales prices in order to clear the inventory.

2. Logistics cost

Logistics costs include international transportation costs, customs duties, customs clearance fees, etc. Choosing the right logistics service provider and reasonable transportation mode can significantly reduce logistics costs. For example, the use of sea transport instead of air transport, although the time is longer but the cost is lower; At the same time, optimizing packaging to reduce volume and weight can also save shipping costs. According to different delivery methods, it can be divided into spontaneous goods and overseas warehouse forms, among which the most classic ones are Amazon's FBM and FBA. FBM is a form of spontaneous goods, from the domestic to the consumer, the seller can contact the logistics provider by himself. Its advantage lies in flexibility and effective inventory control, while its disadvantage lies in the relatively long delivery time. It is easy for consumers to give up the purchase, while FBA sends the goods to the overseas warehouse of Amazon, and the logistics distribution is arranged by the Amazon platform after the sale. The advantage is that the timeliness and service can be guaranteed. If the volume is large, the average freight will be reduced to a certain extent, which has a good effect on reducing the cost. If there is no effective control of inventory, once the goods are unsalable, it may bring great losses, at the same time, the unsalable goods in warehousing, is also a cost, seemingly small, but if it has not been processed, it will grow like a snowball, the small partners in the POD clothing industry need to pay attention in time, and timely clearance of unsalable inventory, so as not to bring greater losses.

3. Platform commission cost

The commission ratio charged by different e-commerce platforms varies. In the sale of clothing on Amazon, the general commission rate is about 5%-17%, and the AliExpress platform is about 8%. Before entering the platform, it is very important to understand and compare the commission policy of various platforms in advance and choose the most suitable sales channel for yourself. Recommended reference blog: Cross-border e-commerce novice set sail: Amazon, Shopee, Aliexpress platform comparison and selection guide <<<

4. Promotion cost

Promotion cost is the advertising cost invested in order to increase the visibility of the product. Although promotion is essential to increase sales, over-reliance on promotion can lead to excessive costs. Therefore, the development of a reasonable marketing budget, combined with SEO optimization and other natural traffic acquisition means, can effectively control promotion costs.

5. Storage cost

Warehousing costs include storage costs, management costs, etc. The use of FBA (Fulfillment by Amazon) services can help reduce the pressure of warehousing, but there are corresponding delivery fees and storage costs. Flexibly adjust inventory levels according to actual demand to avoid long-term overstocking, which helps to reduce storage costs.

Specific cost analysis of Amazon clothing business

What is the commission of Amazon clothing business?

Selling clothing on Amazon platform, usually in accordance with the sales of about 17% commission, but this year's commission has changed, less than 15 dollars of clothing products, commission has been reduced to 5%, while 15-20 dollars of clothing products, it is reduced to 10%, more than 20 dollars, still charge 17% commission. There is also a fixed fee per item, depending on the category.

How much are the delivery and storage charges?

When using FBA services, delivery fees and storage fees will vary depending on the size, weight and other factors. Generally speaking, the delivery cost of small items is low, while large or heavy items are relatively high. Detailed fee information can be found on Amazon's official page.

How to reduce logistics costs?

- Choose the right logistics channel: Choose the most economical mode of transport according to the characteristics of the goods and the degree of urgency.

- Optimize packaging design: Reduce packaging volume and weight, thereby reducing shipping expenses.

- Use of overseas warehouses: Establishing overseas warehouses can reduce delivery time and reduce cross-border shipping costs.

How much does FBA head process cost?

FBA header fees cover all costs from the point of shipment to the Amazon warehouse, including shipping, insurance, customs clearance, etc. Specific costs vary by region and service provider, it is recommended to consult a professional logistics company to get an accurate quote. At present, there are two ways of FBA first journey, one is a longer time, but the cost is cheaper by sea, the other is a shorter time, but the cost is more expensive by air, to send to the United States as an example, the general price range of sea transport is 10-20 yuan per kilogram, while the price of air transport is between 30-60 yuan per kilogram, usually the larger the amount. The lower the cost of one kilogram, but it should be noted that although the offer here is based on kilograms, in fact, whether it is sea or air, it will be volume first, if the weight is only 10 kilograms, but the volume is larger, according to the conversion formula (generally cubic centimeters /6000) calculation is 20, you will calculate your freight according to 20 kilograms. Therefore, when calculating freight and packaging products, we must pay attention to the size of the volume to avoid freight calculation errors, resulting in a decline in gross profit margin.

How to reduce procurement costs?

- Bulk purchase: Discount price for large orders.

- Look for alternative suppliers: Compare the quotations of multiple suppliers and choose the partner with the highest cost performance.

- Negotiation skills: Use good communication skills to negotiate more favorable price terms.

In the absence of promotion, is there sales?

Even without large-scale promotion activities, through SEO optimization, social media interaction and other ways can still attract a certain number of customers. However, moderate advertising is still very necessary, it can help quickly increase product or brand awareness and market share. The specific promotion strategy and budget management will be determined by your marketing plan.

What is the appropriate range for gross profit margin after cost?

The ideal gross profit margin should be set according to industry standards and personal business goals. Generally speaking, the current gross profit margin of cross-border e-commerce is more reasonable between 20% and 30%. Of course, this also depends on the uniqueness of the product and its market demand, which requires specific research and specific analysis, but if a product has a low gross profit margin, it is recommended to carefully consider whether to put the product on the shelf without considering the promotion strategy.

Method of reducing cost and increasing efficiency

- Refined operations: Through in-depth analysis of data, identify the key factors affecting costs, and take targeted measures to improve.

- Technological innovation: The introduction of automation tools and technologies, such as ERP systems, AI customer service robots, etc., to improve work efficiency and reduce labor costs.

- Supply chain management: Strengthen the cooperation with suppliers to ensure the supply chain is stable and reliable, and reduce the loss caused by stock shortage or late delivery.

- Customer experience optimization: Provide quality products and services, enhance user satisfaction, thereby promoting word-of-mouth dissemination, and indirectly reduce customer acquisition costs.

- Continuous learning and innovation: keep up with market trends, constantly learn new knowledge and skills, and maintain competitiveness.

Conclusion

The success of cross-border e-commerce not only depends on high-quality products and services, but also requires fine management and optimization of costs in all aspects. Especially under the different rules of the major cross-border platforms, there are often a lot of hidden costs, such as patent applications, packaging costs, various taxes and other changes, these are the matters that we need to pay attention to POD clothing sellers, each of which may increase your cost, I hope that through this article, can help you to understand more about the cost composition of cross-border e-commerce. Carry out more refined cost control and management, stand out in the fierce market competition, and achieve sustainable development.

FAQ

1.Q: What are the costs of selling clothing on Amazon in addition to commission?

      A:  In addition to commissions, this includes a fixed handling fee per item, FBA service fee (if used), promotional fees, etc.

2.Q: How to choose the right logistics channel?

      A:  According to the nature of the goods, destination distance and emergency degree of comprehensive consideration, choose the most cost-effective logistics scheme.

3.Q: What is the FBA header fee?

      A:  FBA head charge refers to all shipping and related costs from the point of shipment to the Amazon warehouse.

4.Q: How can we effectively reduce procurement costs?

      A:  You can try bulk purchasing, find cost-effective suppliers, and negotiate better prices.

5.Q: Can you really sell without promotion?

      A:  Yes, some customers can also be attracted through SEO, social media interactions, etc., but moderate advertising is still very important.