In the first half of 2016, China's cross-border B2C e-commerce transactions reached a total value of US$28.26 billion dollars. It is estimated that by 2020, the value would exceed US$ 100 billion.

 “We can see the shifts from a B2B to a B2C model and we believe cross-border B2C e-commerce is the way forward,” said Dr. Guo Dongbai, CTO at AliExpress (郭冬白博士，速卖通首席技术官), speaking at the Asian Logistic and Maritime Conference (Hong Kong: November 22-23, 2016).  Ali Express is Alibaba Group’s main cross-border e-commerce platform.

“Over the years, we kept getting requests to add a B2C service. We decided to see what will happen if we enabled individual purchases, if instead of ordering 10, 000 Tshirts, we allow people to order just one,” said Dr. Guo.

“Within just 6 years, it became a US$10 billion business.  During te 2015 Singles’ Day, we had 22 million orders from 218 countries. This year, we had 36 million orders worldwide, a 63 percent year on year increase,” he explained,

B2C trade is continuing to grow with China being the focal point.

“In 2015, the size of the Japan-to-China market is ¥ 800 billion Yen (US$ 7.11 billion ), and it is estimated the market will grow to ¥ 1400 billion Yen (US$ 12.45 billion by 2018. Among which, B2C cross-border e-commerce account for ¥ 9 billion Yen (US$ 0.08 billion). By 2018, B2C market size will reach to ¥ 260 billion Yen (US$ 2.3 billion),” said Ms. Haruko Takachi, CEO, Japan Post International Logistic Co., Ltd. (高地晴子女士， 邮便（中国）国际物流有限公司董事总经理)

“In the next decade, it will become an important supplement of the tradition market and may eventually change the way we trade," said Mr. Takachi.

Logistical  Challenge

At the moment, the biggest obstacle is logistics.

“By far, there is no solution provider can provide a seamless transaction experience for overseas buyers. For individual consumers, it is either painstakingly slow or exhaustingly tedious,”said Zheng Changqing, Senior Director, eBay Inc. (郑长青先生， eBay全球高级总监).

One of the major issues is long lead-times. At the moment, it takes at least 20 days to deliver a product from China to an overseas buyer - longer during peak seasons or holidays.

"We found out that most of the time, the goods just sit in warehouses waiting to be processed," said Dr. Guo. In many countries, customs clearance is the problem as goods can be held in customs for as long as two weeks.

The cost of delivery goods to overseas buyers is another challenge for sellers. It costs somewhere between ¥ 200 -260  (US$30 – 38) to send a 2kg parcel from China to the United States via courier, yet many of the goods being sold sell for below US$20. The traditional logistic model is not viable for them.

Aside from the cost of shipping, customs clearance can be very complicated due to restrictions or duties on different products categories.

"Japanese online sellers can only sell products on a government registered list, which is decided by local officials. And there are a lot of ambiguities with that list.  The difficulties in figuring out all the rules, regulations, and complicated documentations cause many sellers to give up," said Mr. Takachi.

B2B Still Dominates

In the first half of 2016, the total transaction value of China’s cross-border e-commerce reached to ¥ 2.6 trillion (US$303.89 billion), of which export trade is about ¥ 2.09 trillion or about 80.4 percent of the total business.  Imports are only about ¥ 0.51 trillion, according to statistics from China e-Commerce Research Center (CECRC).

B2B still accounts for more than 90 percent of the transaction value of cross-border e-commerce. B2C cross-border e-commerce has grown from about 2.5 percent of the trade in 2011 to 9.3 percent in 2016.

Most of the sellers on cross-borders e-commerce platforms are base in Southern China, are focused on selling low priced products to customers all over the world.