Chinese e-retailers shake up cross-border sales and logistics

The dramatic cross-border growth of Chinese e-retailers Temu and Shein could force European competitors to adjust their business models while logistics providers are expanding their e-commerce services, executives from Maersk, FedEx, Amazon and German start-up Urbify said at DELIVER Europe last week.  

Fast fashion retailer Shein, which competes with a wide range of online and omnichannel retailers in Europe, works with leading delivery companies. Temu, which is rapidly becoming an alternative to other marketplaces offering a broad portfolio of consumer products, cooperates with a number of European postal and parcel operators, including Austrian Post and CTT.

Fast growth

Ben Stolze, founder and CEO of Urbify, which offers next-day express services in Germany, presented detailed figures showing how Shein had surged to more than 100 million active users in Europe, well ahead of rivals such as Zalando (50 million), About You (45 million), and with much higher total sales than European retailers such as Zalando, Zara or H&M.

In parallel, Temu’s marketplace app had the most downloads in Germany, France, Italy and Spain last year, ahead of TikTok, WhatsApp and Instagram, he pointed out. About 200,000 Temu parcels are now delivered daily in Germany just one year after its launch in the country, he noted.

Success factors and challenges

The main success factors of the Chinese retailers are cheap prices, a strong social media presence, “enormous” interactive engagement with customers, cross-selling and upselling, Stolze told an audience of European retailers and logistics providers.

But they also face a number of potential challenges, the German entrepreneur noted. On the legal front, about two billion parcels valued under €150 each entered the EU in 2023, often exempt from customs duties, but the EU is now considering changing regulations, possibly from 2028, he explained.

Faced with rising public pressure, the EU is also reviewing their business models in terms of meeting European product quality standards, their sales methods and seller transparency, he noted. In addition, their air-based imports make a sizeable loss per shipment and have a big CO2 footprint, with emissions about 50 times higher than goods transported by ocean and land.

Changes ahead

Yet the Chinese retailers “won’t stay where they are”, Stolze predicted. Temu, for example, could expand to higher-quality products and also build up a European marketplace with local retailers, low commissions and local logistics. In response, European retailers could focus on building up a loyal customer base with quality products, customer convenience and fast deliveries, he recommended.

Urbify itself offers next-day deliveries with late cutoff times from warehouses as well as local same-day deliveries from stores to more than 20 million inhabitants in 80 cities and towns across Germany and Austria, with prices between express and standard parcel levels, the company founder said. The current customer base includes Asos, Decathlon, Zara and supermarket group Rewe.

Going direct

The changing landscape for international e-commerce deliveries was also the subject of a Maersk workshop at DELIVER Europe, covering customer demand, shipping services, sustainability and other topics.

Sam Coiro, the Danish group’s Canada-based global head of e-commerce, explained how Maersk offered ‘factory2sofa’ supply chain services, including shipping from product source, fulfilment centres and stores direct to the final customer. “A lot of players want to go direct to consumers and divert past fulfilment,” he pointed out.

Big imbalance

He noted that Chinese retailers such as Shein and Temu were currently benefiting from de minimis levels in North America but “the imbalance is causing friction”, prompting regulators to react. Naud Frese, Maersk’s Europe head of e-commerce, commented that Dutch customs is currently “overwhelmed by the (volume of) parcels to clear”.

Coiro was optimistic about long-term e-commerce growth as retailers in some regions closed physical stores and moved to a “warehouse model” based around online sales.

Presenting a customer perspective, Sander van Enschot, head of digital operations at Flying Tiger Copenhagen, explained how the Danish retail chain had built up online sales in recent years and now used a multi-carrier shipping solution to deliver to different geographical markets. The company has now started with ship from store in Spain and Italy for faster deliveries.

FedEx broadens e-commerce portfolio

Meanwhile, FedEx Express has successfully broadened its portfolio of transport and delivery services beyond express with “a balance of speed and cost” in response to the dynamic growth of e-commerce in recent years, Chris Hodge, the company’s e-Commerce Marketing Manager, told retailers at a separate workshop.

These services for e-retailers are based around the International Connect Plus product, offering 2-3 day delivery by air or road using FedEx’s own network, and the International Connect service, which offers deferred delivery of lighter shipments using third-party transport and delivery providers (including local postal operators for pickups and deliveries).

Amazon Shipping adds deferred service

For its part, Amazon Shipping is steadily expanding its portfolio of services for retailers, whether Amazon customers or not, focusing on fast and reliable deliveries, Cheyney Cartwright, Head of Commercial in the UK, told a separate workshop. The business, which is now live in the UK, France, Spain, Italy and the US, launched as a next-day service but has added a 2nd day delivery option in response to customer demand, he said.

Michele Nava, head of European operations for Amazon Shipping, explained how the business was benefiting from Amazon’s investments in automation, including warehouse robotics and AI-learning.

Victoria Hills, European head of sustainability, pointed out that Amazon is expanding its micro-mobility last-mile operations with more deliveries by e-bikes and on foot but needed more sites in urban areas to expand this further.