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Fully Mananged Model Prevails in Cross-border E-commerce

Author:XTransfer2024-06-28

As early as September last year, Temu took the lead in implementing the fully managed model in cross-border e-commerce, followed by AliExpress in December of the same year. Subsequently, several domestic and overseas e-commerce platforms such as TikTok Shop, Lazada, Shopee, and others have followed suit, contributing to the prevalence of the fully managed model. Covering store operations, warehousing, distribution, and other key parts that the seller is responsible for, this change sets off an unprecedented revolution in the cross-border e-commerce.

 

Recently, the industry has once again rumored that Amazon is about to enter the field of the fully managed model, competing with Temu, Shein and others. According to sellers' revelations on social platforms, many big sellers have already received invitations from Amazon, signaling that the giant is about to enter this market. In the face of this news, the industry and sellers have expressed different views and concerns.

 

It's widely known that there are two main account types on the Amazon platform:

- SC (Amazon Seller Account): Seller Central. It is the account for third-party sellers who open a store on the Amazon platform and sell products directly to consumers.

- VC (Amazon Vendor Account): Vendor Central. These invited vendors supply Amazon in bulk through a B2B model and do not have direct access to consumers. Almost all of the in-house merchandise on Amazon comes from these vendors.

 

 

For years, Amazon's self-service business has been controversial. One of its most criticized aspects lies in its predation of seller traffic by virtue of its inherent advantages, which has led to numerous antitrust lawsuits against Amazon.

 

If Amazon implements a fully managed model, its biggest challenge will be balancing the relationship between its own and third-party seller businesses. At the same time, its advertising revenue may also be hit to a certain extent. Amazon's advertising revenue has grown recently, reaching $31 billion in February last year. Therefore, in deciding whether to launch a fully managed model, Amazon will need to carefully consider how to maintain its eco-balance and deal with potential antitrust pressure.

 

However, the prevalence of the fully-hosted model has not been smooth.

 

In Southeast Asia, despite the remarkable success of TikTok Shop in Indonesia, the Indonesian government has expressed concern about the launch of the model. Reuters reported on July 27 that Indonesia "snipes" at the fully-hosted model. Teten Masduki, Indonesia's Minister of Cooperatives and Small and Medium Enterprises, told local media on July 27 that he had met with TikTok and expressed concern for the fully managed model in Indonesia as it could hurt local micro and small businesses. He also claimed that TikTok had promised not to launch a fully managed hosting model.

 

Anggini Setiawan, TikTok's head of communications for Indonesia, confirmed that TikTok Shop's Project S program will not be launched in Indonesia. TikTok Shop has decided to operate only on a homegrown model in Indonesia, where merchants are required to be Indonesian-registered business entities to ensure that they work with local MSMEs. In addition, TikTok has also pledged not to produce its own products or become a wholesaler competing with local sellers in Indonesia, demonstrating its commitment to supporting the development of local businesses.

 

Similarly, India has become the first country to openly oppose the fully managed model, showing that the promotion of the fully managed model globally still faces many challenges and controversies. For Amazon, how to maintain its market position while balancing the interests of all parties and dealing with potential antitrust pressure will be an important issue to consider when it launches the fully managed model.

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