China Insider: Ajyaguru on Cross Border Logistics
- September 1st, 2015
- in Best Practice
“Cross border” e-commerce gets confusing, fast. The grey cloud of government regulation makes the industry hazy to begin with. Then there are the endless layers of different enterprises offering solutions to cross border’s complexities.
However, cross border logistics can be as easy as getting an order from a Chinese customer, and shipping it directly to her. UPS and DHL will make the cost of doing so prohibitive, though.
An emerging class of companies, however, are dedicated to providing various cross border logistics services specifically for China. We mean REAL, vetted companies, as quasi-legal daigou (smugglers, more or less) have been around since the late 90s.
One such vetted company is Ajyaguru. Although Ajyaguru provides many services, it is notable for being willing to undertake individual order fulfillment at Amazonian, rather than DHL-esque prices. We talked to Ajyaguru’s Dino Sun to find out details, pros and cons, and more.
CDR: Is it feasible to test the China market by first sending out individual orders through a company like Ajyaguru? Do you have any case studies of companies who start out or continue to use this model?
AJG:This is what we call “direct mail/drop shipping” mode, and it’s a perfect choice for high value products, and for those who want to test the market before investing heavily. There’s no inventory risk, so the beauty of this model is “no cost until you sell.”
Most SNS (Social Networking Site) platforms that have online shopping silos, as well as luxury platforms, are using the direct mail model, as as they are selling products with thousands of SKUs (store keeping units, or separate items), many of high value, so it’s a good way to avoid inventory risk.
Some brands choose a duel approach. For fast moving product lines, they are sending pallets directly to China cross-border warehouses, while for other product lines they choose the direct mail mode.
CDR: So another scalable step could be placing a quantity of products with Ajyaguru, and letting you handle the pick and pack to last mile delivery, right? What are the pros and cons versus, say, doing a deal with a cross border site like KJT or Amazon.cn?
AJG: KJT is more like a cross-border service platform; they are not a service provider.
As for Amazon, they are doing direct mail only. So similar to an Amazon service provider, we are also an end service logistics provider of direct mail business. Based in Tianjin, we’re capable of offering the best service and most competitive prices in the market.
Aside from direct mail, we also offer “Bei Huo” service, helping clients to do pick & pack, customs clearance and last mile delivery as needed. Furthermore, we are one of the very few service providers operating our own warehouses in 4 cities, making us one of the very few service providers offering both direct mail and “Bei Huo” service.
CDR: Do you find Chinese consumers are willing to wait for overseas delivery of a product in exchange for knowing it is authentic? Or is fast delivery the deciding factor?
AJG: Normally there are 3 essential elements for the e-commerce business in China: Authenticity, Price, and Delivery Lead-time.
So we may phrase it this way: if the product is proven to be authentic, then the end customers will compare the price and delivery lead time. What we do is to help give customers the shortest delivery lead time, and provide the best purchase experience.
CDR: Let’s say I have an organic skincare product, and registering in China is not feasible, so I decide on the cross border model. Granted I’m a fully registered U.S. business, and receiving individual orders from China, can you describe Ajyaguru’s full process for getting the product from my plant to a customer in Guangzhou?
OK, let’s break this direct mail mode down step by step:
1. Customer places order.
2. Ajyaguru places order with brand.
3. Brand sends the packed product to Ajyaguru’s assigned U.S. warehouse (or sends bulk product for AG to handle the pick and pack.)
4. International delivery ships.
5. Ajyaguru handles customs clearance in Tianjin.
6. Ajyaguru provides last mile delivery to end customer in Guangzhou.
CDR: Ajyaguru also has a bonded warehouse model. What are the advantages and disadvantages versus the direct model?
– much shorter delivery lead time, better purchase experience
– much lower costs, as products are imported in bulk
– no need for scanned copy of front/back of customer’s ID
– relatively higher inventory risk compared to direct mail
– need marketing/sales in place to ensure quick turn over