Amazon is mounting a robust counter-strategy in response to the aggressive expansion of competitors like Temu, part of China’s “Four Little Dragons” in cross-border e-commerce. The Seattle-based giant has implemented commission rate adjustments, prioritized regional inventory plans, and increased inbound service fees. This strategy aims to reinforce Amazon’s “high-efficiency, low-cost” moat and protect its dominance, particularly in large-item categories.
Impact on Cross-Border E-Commerce Logistics: Logistics service providers offering first-leg FBA services with warehouses across eight major U.S. regions stand to gain the most. Despite fierce market competition, expanding service range, complexity, and distance might pressure these providers to stabilize prices, potentially squeezing profit margins. Enhancing zonal fulfilment infrastructure and raising investment thresholds for third-party overseas warehouses are key future trends.
Development of Amazon’s Supply Chain and Logistics:
Amazon’s Growth Journey: Since its inception in 1995, Amazon has thrived through low prices, product expansion, and increasing average order value. The core of its current capabilities lies in its logistics and supply chain infrastructure. The rise of third-party sellers and a stable shipping model have recently boosted Amazon’s North American market share, shifting supply chains back to Asia.
Supply Chain Model:
– Category Perspective: Amazon has developed a suitable fulfilment model for its supply chain as it expands its categories.
– Ownership Perspective: Amazon’s supply chain now operates under three models: self-operated, FBA, and MFN, influenced by its evolving sales strategies.
Evolution of Amazon’s Logistics Network: Amazon’s logistics fulfilment network—comprising warehousing, transportation, and distribution—continues to expand. The company has invested in sorting centers, last-mile delivery stations, and air hubs, transitioning from standard-setting to self-operated logistics for profitability.
Analysis of Amazon’s FBA Model:
FBA Fundamentals: FBA integrates warehousing, transportation, and distribution, offering full-chain optimization, operational stability, and superior timeliness.
Commercial Essence of FBA: The primary goal of FBA is not logistics revenue but enhancing the core benefits of Amazon Prime. Front-end traffic and Prime memberships significantly boost FBA sellers’ sales and loyalty.
Comparison with Commercial Couriers: Amazon’s competitive edge—high efficiency, low prices, and strong customer experience—continues to capture market share from other delivery companies. The differences in cost, timeliness, and expertise stem from the various supply chain logistics stages, with FBA being the most balanced approach.
Strategic Shifts and Their Impact on Cross-Border E-Commerce Logistics:
Commission Rate Adjustments: Amazon has lowered commissions and logistics fees for core categories like clothing, impacting some cross-border direct mail routes.
Priority Inventory Regionalization: Enhancing regional fulfilment efficiency for large-item categories benefits logistics companies with nationwide large-item inventory and FBA capabilities.
Increased Inbound Service Fees: To manage overstocked inventory, Amazon focuses on cost reduction and efficiency improvement measures—controlling warehouse capital expenditure expansion and increasing inbound service fees to alleviate West Coast pressures. Efficiency improvements include exempting inbound service fees and expanding the Global Logistics Program (AGL) or Inbound Distribution (AWD) revenue.
Investment Recommendations:
Cross-Border E-Commerce Sellers on Amazon: Large sellers with financial solid capabilities and warehousing and transportation resources in the U.S. are likely to see marginally increased competitiveness. Small and medium-sized sellers, and those with a “stock-type” model, face shipment volume risks due to category adjustments.
Other Cross-Border E-Commerce Platforms and Offline Channels: Increased air and customs costs on Chinese platforms warrant attention. Offline operators with dense store networks and technological innovation are less affected.
Cross-Border E-Commerce Logistics: FBA first-leg service providers with warehouses across eight major U.S. regions will benefit the most. Despite fierce market competition, expanding service range, complexity, and distance might pressure these providers to stabilize prices, potentially squeezing profit margins. Enhancing zonal fulfilment infrastructure and raising investment thresholds for third-party overseas warehouses are key future trends.
