What is the current situation of self-built overseas warehouses?

As an important infrastructure for the development of cross-border e-commerce, Chinese enterprises have been constructing overseas warehouses in emerging market countries such as Europe and America. According to incomplete statistics, there are around 2300 overseas warehouses in the US market alone. This mainly includes overseas warehouses built by sellers and third-party overseas warehouses built by logistics companies. The rapid development of overseas warehouses has occurred in the last five years or so. With the continuous increase in the number of overseas warehouses, the improvement of overseas tax systems, and changes in e-commerce platform rules, the environment of overseas warehouses has also changed. Below is an overview of the current situation of self-built overseas warehouses.

1. Uncertain Tax Risks

Due to tax issues of e-commerce sellers, some overseas warehouse companies in Germany have been directly seized by local tax authorities. This is a huge loss for cross-border logistics enterprises or cross-border e-commerce sellers, with losses for some companies reaching tens of millions of yuan. Tax risks are irregular bombs tied to most overseas warehouse companies. As cross-border e-commerce sellers do not comply with regulations for overseas taxation, overseas clearance and logistics companies have to bear the tax risks of the entire industry chain. Compared with the cross-border direct small packet special line logistics model mainly for long-distance sales, overseas warehousing and distribution enterprises are basically registered as overseas entities, with more urgent demands for tax compliance and localization operations.

2. Heavy Asset Investment Model

Currently, e-commerce sellers who can independently build overseas warehouses are mainly large sellers with certain capital injections. In many e-commerce financing plans, a large part includes the layout and construction of overseas warehouses. For e-commerce sales with self-built overseas warehouses, the overseas warehouse is actually just a supporting facility in the entire business chain, and whether the overseas warehouse itself can be profitable is not its primary consideration. For all third-party overseas warehouses established by logistics enterprises, profitability is very important. Only with sustainable profitability and healthy cash flow can the entire business model continue.

Logistics warehousing is a business model that seeks the optimal allocation of scale, cost, and efficiency. Only with appropriate scale can unit operating costs be reduced, and only through continuous investment and the improvement of hardware and software facilities can efficiency be increased. Currently, more than 90% of overseas warehouse companies in the market are still in the stage of continuous investment, with little profit. Many third-party overseas warehouses are still in a shortage stage.

3. Difficulty in Local Operations

Currently, the most direct bottleneck faced by most overseas warehouse companies in localized operations is difficulty in employment. In developed countries such as Europe, America, and Japan, the basic salary of any warehouse employee is basically $2000-3000 per month. Foreign labor laws and living concepts are very different from those in China. Many local employees basically do not have the awareness and habit of overtime. Many overseas warehouse companies actually recruit a large number of personnel from both Chinese and local employees. Due to differences in language, culture, and employment environment, the problem of difficulty in employment is particularly prominent. Most Chinese people who can go abroad have good family backgrounds and economic strength. They are willing to work in warehouses every day to handle cargo and packaging. Currently, a large part of the overseas warehouse companies in the market are actually founded by some overseas Chinese. Because many people invest in business for immigration or green cards, they lack logistics and warehousing experience.

There is a huge gap in the development of overseas warehouses. From the perspective of system software and warehouse automation, many overseas warehouses are still in a relatively early stage of workshop-style development, belonging to typical labor-intensive operations. High cost and low efficiency.