The difference between domestic e-commerce and cross-border e-commerce
When it comes to e-commerce, we all know that the familiar e-commerce platforms include Taobao, JD.COM and Pinduoduo, all of which are domestic e-commerce, but when it comes to cross-border e-commerce, many people may not understand.
Cross-border e-commerce is an international business activity in which transaction subjects belonging to different customs reach deals, make payment and settlement through e-commerce platforms, and deliver goods and complete transactions through cross-border logistics.
From the definition, we can see such three key words: transaction subjects in different customs, payment and settlement, and cross-border logistics. The difference between cross-border e-commerce and domestic e-commerce is also reflected here.
Take B2C export e-commerce as an example:
(1) Transaction subjects in different customs: Different customs means that compared with domestic e-commerce, cross-border e-commerce will face many complicated and changeable customs procedures, trade policies and other issues in import and export trade. For example: import and export tariffs, customs declaration, inspection and quarantine and so on.
(2) Payment and settlement: the cost is high, the payment takes a long time and there is exchange rate risk.
① Domestic e-commerce: The domestic e-commerce payment and settlement system is mature, and most of them use online banking payment and third-party payment methods such as Alipay and WeChat, which are convenient and fast, with low cost and short payment cycle (mostly within 15 days).
② Cross-border e-commerce: The payment system of cross-border e-commerce is relatively immature, especially for B2B large-scale trade. Most of them are paid by international payment tools such as PayPal, and the handling fee is as high as 3%-5% of the transaction amount, which has exchange rate risk and the payment period can be as long as 1-6 months. There is a great financial pressure on cross-border e-commerce sellers.
(3) Cross-border logistics: logistics has long time limit, high cost, low service level and high packet loss rate.
The difference between cross-border e-commerce and domestic e-commerce
1. Differences in business links
Cross-border e-commerce business links are more complicated. It needs to go through customs clearance, inspection and quarantine, foreign exchange settlement, export tax rebate, import tax collection and other links.
In the transportation of goods, cross-border e-commerce leaves the country by express delivery, and it takes longer for the goods to be sold to foreign consumers. Because of the long distance, the goods are easy to be damaged, and the express delivery capacity of various countries is relatively limited, and the growing number of parcels is also easy to cause trade friction. Domestic e-commerce takes place in China, and the goods are delivered to consumers by express delivery, with short journey, fast arrival speed and low probability of goods damage.
2. Differences of transaction subjects
The subjects of e-commerce transactions are generally in China, domestic enterprises to enterprises, domestic enterprises to individuals or domestic individuals to individuals. And the theme of the cross-border electronic commerce deal must be between customs.
It may be domestic enterprises to overseas enterprises, domestic enterprises to overseas individuals or domestic individuals to overseas individuals. Trading subjects spread all over the world and have different consumption habits, cultural psychology and living habits, which requires cross-border e-commerce to have a deeper understanding of the introduction of traffic from various countries, the promotion and marketing of various countries, the behavior of foreign consumers, and the construction of international brands, and the complexity is far beyond that of domestic e-commerce.
3. Differences in transaction risks
Domestic enterprises only have a weak awareness of property rights, and a large number of brand-free and low-quality goods and counterfeit goods flood the cross-border electronic commerce market, infringing on intellectual property rights and other phenomena occur from time to time.
In countries with perfect business environment and legal system, it is easy to cause intellectual property disputes. Domestic e-commerce behavior takes place in the same country, and both parties have a unified understanding of intellectual property rights such as trademarks and brands. There are fewer disputes caused by infringement, and disputes arise in time, which is shorter and more convenient.
4. Differences in applicable rules
Cross-border e-commerce needs to adapt to more detailed and complicated rules than domestic e-commerce. The first is the platform rules. In addition to domestic platforms, cross-border e-commerce operations may also conduct transactions on foreign cross-border e-commerce platforms, and each platform has different operating rules.
Cross-border e-commerce should be based on international general trade agreements and bilateral changeable trade agreements. Cross-border e-commerce should keep abreast of changes in the international trading system, rules, import and export controls and policies, and also have a deeper understanding and analysis of import and export forms. (Source: Logistics and Supply Chain Finance)
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