Debunking 10 Myths About Shipping Small Parcels from China

00:00 – Simon de Raadt: Welcome to another episode of The EcommOps Podcast. I’m here with Daryu and myself, Simon, with a new episode: this one about the top ten beliefs about shipping small parcels from China to the rest of the world, basically our core business. And we’re gonna help you fine-tune what these beliefs should be, because maybe you’ve been thinking all wrong. Tune into this episode and enjoy. Well, another episode. Dayu! Happy to have you on again.

And we’re going to go through these ten beliefs on China shipping. So, let’s just kick this off. Like, is it complicated to start utilizing China fulfillment?

00:36 – Dayu Yang: Yeah, so I get that asked a lot. I’ve been in this business for probably seven years. I’ve experienced starting with dropshipping back in the day and also running ecomm and working with hundreds of clients, and especially for newer brands or brands that are newer to China fulfillment, especially if they already have established local fulfillment centers, there’s always this question of “that sounds complicated. Is it too complicated? Is it too difficult to then set up a whole different operation in China, regardless of the perceived benefits?”

The simple answer is no. Because, quite literally, if you’re already a brand that is using a local 3PL local warehouse, practically speaking, there’s nothing different, at least for ecommerce, and a lot of pure fulfillment centers based in China, they’re fulfilling orders the same way that us three Pl, your local EU three Pl, is going to be doing the same. Now, that being said, it is important that you’re actually working with a fulfillment center that is actually replicating a lot of the processes of a traditional 3PL. 

Especially if you’re coming from the dropshipping space you are going to experience a lot of dropshipping agents or fulfillment centers that really are more used to that traditional way of dropshipping and not really handling the orders in that more complex warehousing way. There’s a very big difference, right? Because typically, when you’re a dropshipping agent, you’re working with less clients and you have a more intimate knowledge of that specific client’s products, which seems like a good thing. However, it’s hard to scale that across different types of clients, different types of product types, and typically, they lack the scale in order to access a wide variety of shipping lines. We’ll talk about later as well. But, you know, one of the more important things, too, is they lack the ability to actually integrate and within your systems in the exact same way that your local 3PL might actually integrate.

So, for example, we work with a lot of clients who actually use multiple 3PLs. We make sure that we actually follow the exact same back integrations that they’re actually used to. We’re using the same softwares that they’re used to. We connect with ShipStation, for example. If you fulfill in the US, you probably know about ShipStation. So if you’re working with the right processes, working the right integrations, and actually working with a real fulfillment center, literally there should be no difference than actually just expanding another warehouse along with your local three.

03:11 – Simon de Raadt: So, the question is pretty much, “why not,” right? If you’re already buying from China, why not leverage making use of a warehouse? Myself, I’ve worked at a dropshipping agent for three years, and it’s hard to make it efficient because it’s already-sold items that are coming to the warehouse that you want to have in and out as soon as possible. It’s not so much about optimization of running a warehouse; it’s much about how can I get that order that has been ordered out as soon as possible?

It’s not based on having stock and having your stock lying around in an efficient manner, thinking about branding, customization, packaging. But also, where should I place the stock in the warehouse? It’s a very different concept, which is not a bad concept. It’s just, it is more nuanced to running a fulfillment warehouse itself versus running a dropshipping agency. And some need to have more clients—some have a selective group of clients​​—but that’s definitely something that I’ve seen myself as well.

The question I would always ask is, why not? Why not use China fulfillment and why not utilize it? Because it’s not that complicated as long as you already buy from a source and then how we can help them optimize and streamline that process itself. Because that’s kind of like the concept, right? Shipping from China, it’s almost linked very closely to dropshipping. Well, dropshipping is a general concept. It doesn’t have to come from China per se. So it actually can also be from a local U.S. or Europe warehouse. But is, then, this shipping from China only for dropshipping, or is there a difference itself?

04:42 – Dayu Yang: Yes, Simon, it’s actually funny because even some of our own clients, and if you’re listening, you probably know who you are, they incorrectly call their own shipping from China dropshipping. And I’m like, it’s your own product. You’re dropshipping your own product? And they’re like, oh, yeah, but I’m so used to connecting shipping from China with dropshipping. And to Simon alluded to, you don’t have to dropship from China. There’s plenty of services where you can dropship even within the U.S. or within the EU, and especially as we’re thinking about the more traditional sense of dropshipping from China—so I’m talking about dropshipping using AliExpress, for example, or something, a platform that’s similar to AliExpress— there’s obvious problems with that model of dropshipping. You don’t control your product at all. You don’t have to customize your brand to at least have some control over the quality of your product. And you have no control, and you have no control over your stock. That kind of model is really outdated these days. As more and more of the marketplace is adapting, customers are adapting. The customer experience is so much more important.

And especially these days, it’s becoming more and more common for companies to shift from China that are actually are moving beyond that dropshipping model. If you consider even like Shein or Temu, for example, are they dropshipping in the traditional sense? No, actually, they’re actually not because they source directly from factories, and they, even though it’s not necessarily branded all the time, they control their own supply chain. They control their own quality, and that’s exactly how they can achieve that efficiency while avoiding all of the traditional issues of, let’s just say, dropshipping from AliExpress.

Entire businesses have scaled or scaled beyond their local markets from being able to ship from China. And nothing to do with dropshipping at all.

06:34 – Simon de Raadt: Yeah. So, technically actually dropshipping is that you’re selling someone else’s stocks. In our case, that’s not the case because the stock is our clients. It’s just put in our warehouse and then we fulfill the orders from there. So that’s why we always say we take care of China fulfillment. But some still really much link it to actually the dropshipping concept, which is actually selling someone else’s stock.

And then you’re more a traffic generator that creates conversion, that helps you generate an order that is then shipped out of a stock position, but that the stock has never been owned by you. That’s at least for us, the big differentiation, why we say we do China fulfillment and not dropshipping from China. But either way, it doesn’t really matter how you call it for us, as long as we’re clear on what’s the service that you want from us. What we see, and what I saw in the past years, is that two main issues, probably 80% of the issues with dropshipping come because of quality issues. It’s so hard to control the quality of every different item. There’s not one item. It’s hundreds and thousands of items coming in every day that need to be checked. It’s not possible for me. It’s not possible for any specialized QC. It would not be possible because it’s too diverse.

And the other one is the availability. It’s very important to remind everyone if somebody’s selling a product and that’s selling well, it will come up in spy tools. Other people will start selling the exact same product. The availability will become less than the demand, and therefore you have a shortage. And then you end up with orders that you cannot fulfill or need to fulfill. With the delay, you have refunds, you have complaints, you have bad reviews.

It just adds up. So that model for us is how to solve it even in smaller quantities. But putting stock in a warehouse so that you resolve quality because it can be checked. If there is a sample size check, it’s no longer a single unit check. And you can work with the availability because you actually time, you know, when you’re running out, and you can order more, and you can streamline that supply chain. And that’s, I think for us, a key difference on dropshipping and the fulfillment model that we see for D2C brands.

08:35 – Dayu Yang: And yeah, by the way, the market has changed. If you asked me five years ago, I would tell you probably that dropshipping is fine to start with. You can test with it. A lot of people scaled up starting with dropshipping, but that was five years ago, maybe three, four years ago. After these big guys like Shein and Temu, really, I mean, you can’t compete with Temu, especially, depending on what you sell.

And you shouldn’t be trying to sell cheap fashion against Shein as well. The market has changed. Consumers are getting smarter as well. And those guys can do it better. If you’re talking about generic, cheap products, you could just source directly from a factory, honestly, like a traditional dropshipper, these days you just can’t compete. And back in the day when we first started EcommOps, we were really serving dropshippers who wanted a better supply chain experience and wanted to actually hold their own products. But now, these days, we very, very rarely get dropshippers who have large businesses who then want to transition to this kind of stockholding or, you know, having your own private brand. These days, most of our clients, they already have their brands ready. They’re investing in brands. So it’s—we see it as well. It’s very uncommon that a dropshipper will scale up the same way very quickly, like they did back five, seven years ago. You know, there’s some said to be maybe about the low risk of dropshipping, but then if you really want low risk and you want to market these days, then maybe just drive traffic, be an affiliate marketer or something, because dropshipping is not really the same kind of low-risk, high-potential-reward trade-off that it was before.

10:08 – Simon de Raadt: Yeah, that brings us actually to the third one, because what we also see, even though Temu and Shein are huge, they’re also trying to look for setting up an overseas warehouse. I think they have one in Poland now; they have one in the U.S. They’re probably going to have more. But then it’s like, okay, I was actually competing with them because I had a U.S. warehouse. I was able to ship out faster, but now I see they’re very strong and have a lot of flexibility from China.

What should I do? Should I actually—how can I compete, or how can I leverage? Should I be focused on having a local warehouse, or should I focus on having a China warehouse? Is that even a choice?

10:44 – Dayu Yang: So, look, for those who don’t know, my experience is in China fulfillment. So the obvious answer for me to say is, hey, everyone should get involved in China fulfillment. Ship your orders from China. But that’s not the case. For my deeper, and more, and longer supply chain experience, I know, pretty much for a fact, that the optimal solution for most types of brands, for most types of products, as long as they’re shippable from both China and local fulfillment, is a hybrid model. That is what Shein is actually starting to invest in. So, by the way, if you, right now, have a local warehouse and you think you’re completely safe from the likes of Temu or Shein because they don’t have, well, they are already investing heavily in local warehousing, and they see from their data as well that that is the right move, ultimately, having a hybrid fulfillment model. And our biggest clients, they have China fulfillment, they have U.S. fulfillment, they have EU fulfillment, they have Australian fulfillment, all the big markets and utilizing that mix. And why is that, right?

Especially if you’re a successful brand and you’re scaling up, but maybe you dominate one single market—let’s just say you’re in the U.S.—how much does it cost for you to ship from the U.S. to the UK? I mean, just think about it. And either you don’t do it because it’s too expensive, or do you know it’s too expensive and too slow, right? So, a lot of our clients, they come to us when they have U.S. warehousing, however they want to enter international markets, the UK, Australia, the EU. They’re all going to be significantly cheaper and more efficient and generally faster at the same cost comparison to actually deliver to your customers versus freight plus local shipping, the complexities of opening or partnering with a local 3PL in a whole different market.

And you talk about the EU, for example, you’re not talking about one 3PL; you’re talking about three, four, five 3PLs, depending on how broad of the EU do you want to access? And international is a very obvious choice in just adding incremental revenue. We’ve had clients who add 30, 40% over months just because they’re able to deliver internationally. And then even within the same market, we have a lot of clients that even though they have a U.S. warehouse, they do a hybrid model within the same country because as opposed to always overstocking, they can actually have more conservative stock estimates, especially these days in 2024, right now, interest rates are high, cost of holding goods is high, freight costs are high as well.

So a lot of ecomm brands, they don’t want to hold too much stock; they don’t want to invest in too much stock, but then the cost or the risk is selling out. And when they sell out, they can actually utilize direct from China fulfillment to fill in that gap. Or another very good use case is new product launches. We work with crowdfunding campaigns or just, just new SKU launches, new product launches in general. And they could have a container on the ocean to get to the U.S. to ready to sell in one or two months, maybe. But they can start selling now and ship directly from China and have that launch right away and start sales, start optimizing, so that by the time that container gets to their local warehouse, they can really go full steam ahead.

13:59 – Simon de Raadt: Yeah, I think maybe something that we can add to this as well is if we believe hybrid fulfillment is the right thing, why don’t we have a warehouse in the U.S. or in Europe? This is really because we want to manage the supply chain in a proper way. And once a warehouse in the U.S. and Europe is really a common good; it’s available to everyone. And for us to plug in, there’s no value. So for us, it’s actually us making sure that we have a timely supply chain from factory to our warehouse. You cannot get that with a timely supply chain from China by boat to an overseas warehouse, have full control on everything that’s being handled in another warehouse, in someone else’s warehouse, even, if it’s not your own. That’s something that, for us, has been also a very [big] driver. We believe that the concept is hybrid fulfillment, and we want to specialize in the China part, even if that means that some of the volumes might be in an overseas warehouse.

That’s been a clear choice for us.

14:53 – Dayu Yang: So, actually that’s a good point that I want to bring up too, is be careful working with an all-in-one solution that has China fulfillment, also local fulfillment, around the—be careful with any company that says they have, like, 40 warehouses around the world, or however many it is, because typically, almost always the model is they’re working with partner warehouses. We’re using a 4PL model, rather, where they really just pass on the orders to a different warehouse that they have no control overall.

Even our own couriers, like Unixpress or 4PX, they actually offer—they’ve been trying to sell us these local warehousing services that we don’t even trust, because for fulfillment, for efficient fulfillment, you really have to have control of all your fulfillment processes. And we need to be on the ground. And this is where, like, we know there’s plenty of great options out there. I would honestly suggest you probably work with boutique U.S. 3PLs, as opposed to, like, a big player to give you your right level of service for your goods. Now one thing, though, that we have been very adamant investing in is the ability to actually cooperate in this kind of model.

We have no qualms about somehow trying to compete versus your local fulfillment. As a matter of fact, a lot of our recent technology investments have been more focusing on how do we integrate with your back end the right way? How do we avoid duplication of fulfillment? How do we set up the right data so you can manage stock and make decisions on where to fulfill from, from various warehouses?

I also mentioned that we integrate directly with ShipStation. So a lot of our clients, they actually literally use ShipStation to manage orders to us, as well as manage their own shipping labels as well. So the hybrid model is definitely the optimal choice. Just make sure that you’re also managing it correctly.

16:42 – Simon de Raadt: Let’s switch gears with number four: is that only companies selling cheap products are shipping from China. What do you think about that?

16:52 – Dayu Yang: Well, I think it could be really easy to believe that, especially if you come from those AliExpress, or actually, even if you didn’t dropship from AliExpress. I mean, I think everyone at some point, maybe, bought from AliExpress before: something for, like, $4 and free shipping. And it takes, like, you know, five weeks, right? And you see Temu, and you see Shein. It can be very easy to assume that this is really just a good fit for just really cheap products.

Whether it’s good quality, just, just really cheap, low-value products. That is simply not the case. Some of my favorite brands ship directly from China. I got this Lenovo laptop shipped directly from China because they didn’t have local stock. I think it was custom-built in China. Lenovo, I mean, I guess technically it’s a Chinese company, but, hey, like, that’s not a cheap product at all. When Apple does its launches, sometimes, like, its products go directly from China, because why not? Like, it’s going to get to your hands faster.

I think probably just using Apple as an example probably just completely demystifies, you know, that this concept is a great counter to the concept of, you know, it’s only cheap products. As you and I’m sure like probably a lot of the listeners, some of your favorite D2C brands, maybe not, like, the same kind of brand you see at Walmart, but, like, I like keyboards. NuPhy is one of my favorite brands. They’re a Chinese company that ships directly from China, has some of the highest quality keyboards on the market.

I have some workout equipment that ships directly from China. Extremely, extremely high quality. And these days, there’s more and more brands doing it. We see more and more of our clients focusing on high-end or at least good value, not cheap, good quality products, shipping more of their volume from China. So similarly to something like Temu or Shein, I mean, that’s where the market is trending. And, you know, if you’re a brand and you’re not really kind of keeping up, then your competitors are probably gonna out-compete you, especially if your product is not too differentiated from the rest of the market.

18:48 – Simon de Raadt: I think what we also tend to forget is that if you compare, why is AliExpress and Temu and Shein selling so cheap? Well, relatively cheap. Amazon actually also has been losing money, bottom line, for years. It’s a business strategy to actually get market share. The cost of shipping is definitely not representing the price that they’re selling for. Don’t get me wrong on this. They’re actually, actually subsidizing or having a business model with suppliers, vendors, and other parties.

Shipping companies that are also partially subsidizing with penalties, or with payment terms, or things that they can negotiate because they have such a strong position itself in the market. But that’s a choice. And I think from a consumer perspective, it should be a good thing that you can get that sort of stuff. But obviously, it can also be very wasteful because the quality of most of these goods are still hard to control.

Even though these big companies being able to manage a very sustainable supply chain and very affordable for the end consumer, the quality part is still an issue. And I think that kind of gives the consumers, in general, a perception that everything from China is cheap or you can only do cheap products. But every factory, because I visited hundreds of factories back in the days when I lived in China, you basically get a line of, “Okay, which kind of product do you want?” “I want this one.” “Okay, what kind of quality? We have version A, B, C and D. This is the price for A. This is the price for B. This is the price for C. This is the price for D, and these are the features, and this is the quality and all—everything, everything that comes with it.” When it comes to the type of plastic, or whether it’s the chip that’s inside, or maybe even the camera quality or anything. When it’s for your skin, what is actually inside the product? And I think these choices are there.

It’s just for a lot of people, they go to China with the mindset, “I want to buy something cheap so that I can get a higher margin.” But what is really happening more and more is that also Chinese brands want to go global. The brands that you bought products from, they’re still very high-end, high quality, and they position themselves next to western players in quality itself. And most western products are also produced in China itself. So, I think it’s very much also how we’ve trained ourselves that when it comes from China it has to be cheap. But that’s not the case anymore. I think the quality produced in China or designed in China is becoming more and more thin.

21:12 – Dayu Yang: Yeah. And, hey, you know, just one last point there is that if you want to sell cheap products from China, you can get cheap products to sell from China. But that’s on you. And that doesn’t mean anything about what the market can actually do and what the market is actually doing. So don’t sell cheap stuff from China unless that’s part of your strategy.

21:28 – Simon de Raadt: Okay, so we figured that out. So, now we have it. Number five: if you buy from China, I can basically ship it to anywhere. Is that true or false?

21:36 – Dayu Yang: Yeah, there’s a, you know, there’s sometimes this, this rose—this rosy perception that Chinese shipping is actually more efficient, more magical than it is. And I’m just being honest with you, like, that it’s not, right? There’s some fulfillment centers who say they can ship to 70 countries, 100 countries, or every single country in the world. Technically, that’s true, but in a lot of those countries, you’re gonna have no tracking. You’re gonna have, like, maybe four-week shipping—if it arrives.

It might arrive sometime, and it might be three months, right? Actually, a potential client was asking me if we could ship to Maldives. We can, but it’s not going to be fast, and not going to be cheap as well. So, we suggest our clients focus on the countries that actually have the right balance of efficient, reliable, and decently priced shipping. And roughly, that’s about 30 countries or so. I think in a later episode we’ll do a much more deep dive into how these lines work.

But essentially, they are ,what we believe, the right balance between shippability, consistency, and also cost as well. It actually makes it so that you can have enough margin to sell D2C ecomm to customers around the world at fast enough shipping speeds as well.

22:56 – Simon de Raadt: Yeah, and I think what’s also is that, besides the shipping lines itself, can also be the nature of the product. If you think about supplements or mainly things you put in your mouth or you put on your skin, is something that can be tricky, like, if it’s liquid perfume or anything, which is a big topic itself for a lot of sellers still to buy those kinds of products. But why is that such an issue itself to ship those kinds of products?

23:21 – Dayu Yang: Yeah, I mean, it really has to do with how, typically, regulations around customs work, or, for example, like a health product and the U.S. FDA. Technically, to import in bulk into the U.S., you need some kind of FDA certification or approval, depending on exactly what it is. Now, it might be easy to think that this small parcel, direct to consumer process, it technically bypasses that, but it’s not supposed to. Like, it’s not supposed to be a loophole to take advantage so we can go free [of the] FDA, like, you can just completely skip FDA. And because of that (so, supplements is a very good example of that), technically, there is going to be a chance that it goes through.

Like, especially, like, some couriers, they might just kind of hide it amongst other things as well. However, the moment one batch is discovered, or even, like, one parcel is discovered in a batch, that actually interrupts the entire batch itself, and it might be, like, hundreds or thousands of other client orders that have nothing to do with that batch. So, therefore, our couriers, rightfully so, because we only work with couriers that actually have responsibility for the efficiency of all their clients, they individually decline anything that’s too risky that might be caught in this process.

There are couriers out there, but again, those are the ones that always have issues, that are inconsistent. So, as you think about whether it’s a good fit for you and how and what products do you ship out of China, you really want to talk to your fulfillment center about—well, give them all the details of your brand, your products, any product lines that you plan to include eventually. And then just have an honest question: ”Hey, are there shipping issues? Can we actually use these efficient lines?” Or in situations—it’s actually very common, for example, if you sell a beauty device that’s just an electronic consumer product that has no issue shipping at all because batteries are fine, by the way, but it’s a common thought process: okay, let me add, like, a shampoo upsell to it. Never sell shampoo, like, overseas, by the way, but let’s just say some kind of skincare product as an upsell.

But that actually requires a different line. It’ll be slower, a little bit more expensive as well, if it is shippable, and there’s some requirements where it’s too large or if it’s, like, medicinal, maybe it’s not shippable. Even assuming it’s shippable, you can’t even ship in the same package. So maybe all of your economics around, like, okay, what this bundling might actually return, you might actually be completely wrong, or you’re going to face a lot of shipping issues. So, just be aware that you can’t ship everything in the same way as efficiently everywhere.

Be careful of the markets that you focus on. And then also just have very direct conversations with whoever you’re working with on what are the nuances of what shipping lines do you actually need for different types of products that you plan to ship?

26:10 – Simon de Raadt: Yeah, we had these discussions where say, “okay, Supplier A or, like, Agent A and us, they can do it. Why can you not?” I say, “well, we can, but we don’t want to because it’s going to hurt you. It’s not going to help you.” And then you say, “well, anyway, I’m going to go with A.” And then as long as it’s not scaling the product, it’s a supplement or it’s liquid, and they just give a different description. They get away with it because it’s a little bit within a bunch of other parcels. Once it starts to become successful, then suddenly it becomes obvious that these products are being shipped, and then all of them are going to be held, sent back to the warehouse, and there is no alternative. So you end up with a store that you heavily invested into, still, with stock that cannot be shipped out. And that’s something that we want to prevent everyone from because although it might be very tempting to give it a go and find someone who is willing to ship it, at some point you will run into some issues.

At least that’s our belief. And then better, there are plenty of other products to focus on. Why go through that direction in the first place? Right? We’re halfway. So, number six: shipping from China is untracked or doesn’t have any consistent tracking.

27:21 – Dayu Yang: Yeah, that was, that was true back in the day, and that’s still true now if you’re using certain lines. Don’t use those lines is the very straightforward answer that I have. I think in the early days, I’m talking maybe ten years ago, I suppose, no one knew that much about dropshipping from China, especially consumers. So, technically, you could make money by just using the absolute cheapest methods and it’ll show up maybe in a month or two months. There’s not much tracking.

Consumers were complaining, but then, like, Facebook wasn’t smart enough, or, like, Facebook stripe, PayPal, they weren’t really that critical around that because they didn’t really know what’s going on as well. So, that kind of worked. And honestly, if you’re sending, like, a postcard to your relative, just use whatever you want if you want to save money, I suppose. I mean, you know, don’t send it for the birthday where the timing actually matters.

So, yes, that is somewhat true back in the day. And if you’re purchasing on AliExpress and you’re choosing a free shipping option or a very cheap shipping option, then more likely you’re gonna, you might have tracking, but it’s gonna be inconsistent—doesn’t update very often. It might be in Chinese as well. These days, however, we at least utilize or strongly suggest you utilize services like Union Express, or 4PX, or UBI, amongst others as well, that actually have tracking, that they route their orders in a very specific way.

And all these details we’ll talk about in another episode, in a deeper dive, however, it’s no longer true if you actually know what shipping lines to use and actually are able to invest just slightly more in paying for the right shipping line so your customers have a positive experience or at least non-negative experience.

29:09 – Simon de Raadt: Ten years ago, I was involved in this non-tracked and tracked shipping lines with a postal company selling that as a service to Chinese ecommerce companies who had tons of orders and they want to get an affordable way to ship it out, it doesn’t have to be fully tracked, preferably partially tracked, otherwise untracked. And that model ten years ago was working. And then the need became to have the airway bill. So the actual flight where these untracked parcels go in, use the airway bill as a tracking mechanism to say, okay, it’s at the airport, it’s arrived at destination, it’s handed over to the last mile, and then fingers crossed. We don’t know if it’s delivered, but at least up till then, we could have more like a batch tracking. And that’s no longer the norm anymore. It is full end-to end-tracking. Preferably, at least the last mile needs to be very clearly visible as soon as possible, a pre-alert so that you know it’s traceable in the last mile. These things are all available in the market. And also, I think, very much needed for your consumer experience, for your customer service workload. Very important part.

That’s something you shouldn’t be striving for, but it’s possible. I mean, you should have that, and you should have that conversation, that tracking. Full tracking is the only way, and the quality is good. But then once you have the tracking, how does it then arrive with the consumer? Can they see somehow, somewhere that it’s coming from China? Is there something on the label? How much of a non-China shipment experience would it be for a consumer perspective?

30:46 – Dayu Yang: Yeah. So, again, back in the day, most of the options available literally would have Chinese on the limbic label because, very often, they utilize China Post, which is basically just China’s version of your local post office, which is USPS or, you know, Deutsche Post. And because of that process, it came from a postal office, so it needed that Chinese information. And there’s also English information, but still, like, the label would have Chinese on it, and it’d be obvious that it was from China. Very obvious it was not from your local USPS or your local courier.

So, admittedly, that’s not the best experience. And it’s not just about that necessarily that it’s from China. But the labels just were ugly. Like, they were not, like, just great. Yeah, it was just ugly. It was scribbled around. And especially if you don’t know the Chinese language, like, it just kind of looked messy, right? But, you know, more recently, there have been great advances in how the couriers work. So now what the couriers that we suggest, what they do actually is they organize bulk air freight for packages, you know, from clients like us, and then they directly inject into the local system.

So along the way, they actually slap a fully local language label on the package itself. Now, I will be clear. Technically, you can find out it’s from China. So even if you use just the local last mile number, and we’ll talk about some of the nuances in a different episode, because that’s a whole other topic, you can, in most cases, just rip off the label and then actually see, it wouldn’t be a Chinese label, but more information on like the original first mile label.

Or you can use various systems to actually identify where the originating country is actually from. So if you’re shipping from China, like, it’s, it’s probably not really possible, legitimately, to actually hide that it is from China. That being said, the entire experience to the customer is exactly the same as receiving a local package. The label on the outside looks the same. I guess it depends on how you want your fulfillment center to pack it, but usually, like, you can pack it the same way. I would just say from all of our experiences working with hundreds of clients over the years is most of our businesses, they actually just use, so, what’s called the first mile tracking.

So, for example, Union Express provides an English Union Express tracking that actually tracks all the way from Shenzhen to Hong Kong to wherever it is around the world. And you can use that for way more consistent and regular updating versus waiting for the last mile (USPS tracking, for example), and it’s a way better customer experience. And the majority of our clients actually just use that first mile tracking number, and it’s totally fine. And they’re able to scale to seven, eight, even nine figures, even just, obviously, having the packages come from China.

33:39 – Simon de Raadt: Yeah, there are other alternatives as well, like AfterShip and ParcelPanel as well, to get this kind of English kind of tracking in place. What’s interesting to mention is the technology has evolved. So, before the label, it had to have some Chinese on it because it was going through the hands of the operators in the warehouse. Nowadays, especially with the QR code, most of the labels have a QR code. That has just streamlined the process where it’s no longer needed to have anything written on the label itself. But if you ever order something from a webshop, I mean especially from China, if you look very closely, you will see two labels, actually, just like what Dayu said, there’s another label stuck over the original first mile label. And that label normally is then put by us, for example, because it determines which shipping line are we going to use, which—where are we going to inject it to, what is the last mile? Is it fast lane or a little bit slower, more economic lane? And that label is actually determining what will be the final mile label, which will then be put on in China already before it’s even flying to the country of destination. That’s the only thing you can see. You will not see any Chinese on it, but you will see that there are two labels on it because there’s a label, the last mile label has been put over on top.

Regarding the 8th one: shipping from China takes more than one to two weeks.

34:55 – Dayu Yang: Yeah. So, there are endless numbers of shipping lines out there. You can actually ship parcels by sea, by the way, like, the first leg is a truck, right? And I’m sure those of you who might have experience ordering from AliExpress, you’ll be surprised if it arrives in sooner than two weeks. Now, how fast it arrives is really a factor of what lines you’re using and how expensive that line is. However, also, you need to consider what your expectations or your customers’ expectations need to be. Anything we feel, or clients usually believe that if everything, if anything, is arriving on average of longer than two weeks, like, on average, right? So when I say on average, maybe, like, 50% arrives around fourteen days, but some arrive maybe ten days, and some arrive twenty days, right? That starts to feel too long for any kind of customer at scale. That’s hard to manage. However, depending on the country, even our regular, more economical lines, maybe not the cheapest but the right balance, depending on the country—like faster, would be, like, the UK and in Europe, you know—you might be looking at maybe five to eight days or so. And that’s kind of like the economic service.

There’s actually express lines that are still, like, pretty reasonable for, like, four to six days, sometimes three to five days, depending on the season as well. That’s the UK. Usually the U.S. is going to be a little bit longer, maybe five to eight days on the express line, but maybe seven to ten, seven to twelve days on the regular line. So to me and to most of our customers, like, if you are shipping to your, or to one of our clients, if you’re shipping to your customers in an average of seven to twelve days, even to the U.S., that is fine. Or you choose the slightly more expensive line; it’s going to be five to eight days. I actually have a lot of experience running my own brands in the U.S., and I actually utilized U.S. fulfillment back in the day. I used to use ShipBob. Unless you have, like, three warehouse locations and therefore holding stock around the U.S. and you’re using, like, the fastest expensive lines, you’re not getting two-day shipping.

You’re not getting two-day Amazon Prime shipping. If you are based in one warehouse in the U.S. and you are using, like, ShipBob’s economical line—we were averaging five to ten days, and sometimes it would actually be twelve to fourteen days. So it was actually somewhat comparable to, you know, somewhere services going directly from China anyways. So the point is you can actually access lines that, I believe, are within the reasonable shipping expectations of your customers.

Avoid the lines, even if you think you can manage it, that somehow it’s going to take twenty days or, like, you know, more than two weeks on average, because I think no matter how much you can manage your customers, except maybe a crowdfunding campaign, maybe, like, a pre-order type of launch, a hype kind of product, and you say it’s going to take, like, you know, some days to process, some days to ship, don’t utilize those lines, and there are plenty of cost efficient lines for you that actually are going to meet your customers’ expectations.

38:04 – Simon de Raadt: Yeah. It can be even optimization on the location. Whereas in Shenzhen, that’s where basically all the small parcels leave. If the warehouse is not in Shenzhen, then it already takes a little bit longer. So that’s something to consider after shipping location—where it shipped from. But also when Dayu mentioned five day days, it’s calendar days. It’s not business days because technically delivery is Monday to Saturday.

Some countries, Sundays, but mostly Monday to Saturday. And also our warehouse operates from Monday to Saturday. So technically calendar days. So it’s, it’s also something that’s a very important nuance when we speak about five to eight days in this case, or whatever days were mentioned. But in the market, though, the belief number nine, the opposite, I would say, is that everything shipped from China can be delivered within six days.

That’s probably the other side of the spectrum, but it is a belief that some people have is from China, everything is going to be fast shipped to the consumer. And if it’s less than six days, we’re not going to work with you.

38:59 – Dayu Yang: That’s a half-truth, I would say. I’ve seen packages get from Shenzhen to the UK in as fast as 2.5 days, but that’s like the 99.5 percentile, like the absolutely one out of 100, one out of 300 type of package. And similar to this, like, you know, well, especially the statement that you can ship under six days, like, worldwide all the time like that: that’s probably just untrue or a half-truth. What we usually say is that, yes, maybe a six-day average actually makes sense, but the range is going to be depending on your shipping line.

We usually actually overestimate a little bit. Maybe it’s going to be, like, six to ten days or six to twelve days. Maybe they’re saying under six days or talking about an express line, but we still say, like, five to ten days or five to eight days, right? So, again, the average makes sense, and the nature of the average is that you’re going to have 50% of that under the average. What we’ve seen sometimes as well is other fulfillment centers (and especially, it was a common practice with dropshipping agents), they would cherry-pick their, like, twenty fastest-ever tracking numbers. And it’s like, oh, look, we can ship in four days to the U.S. Well, yeah, like, if you pick the top 10% of your trackings, then, yes, that is obviously true. But actually, the shipping data that we provide to our clients, the public data that we provide to anyone who asks, is actually analysis based on thousands of orders of recent packages that actually have arrived and actually shows a very, very accurate range or precise range of, you know, what is that 80% range? What is the fastest 10%? What is the slowest 10%? And it’s usually going to be a wide range. It’s going to be something like five to ten days, five to twelve days, and nothing close to, like, a simple average or below six days.

40:47 – Simon de Raadt: Yeah. If you want to know what that actually is for the countries you want to sell to, feel free to reach out to us and we can send you the link you can see on country-wise based what that speed is with recent data. Like Dayu said, it’s based on thousands of parcels, so definitely ask for it. It’s interesting where the market is going to, though. The ambition of AliExpress’s logistic arm Cainiao is to have global delivery within seventy-two hours.

So, technically, three days, if I do my math right. The market actually is going to work towards that goal, and it’s not going to happen tomorrow. It’s probably going to be three to five days at some point, and slowly more and more towards an express, but it’s going to be an economic form of express. It’s not going to be the same pricing mechanism as you have with the main express players in the market. But it’s interesting that that push is happening and you can see it every year. We see the speed increasing. We also see the cost rising, though, but we see the speed increasing as well. And that’s something that is getting closer and closer to the consumer’s needs. So at this point, six days is probably roughly the average for most western developed countries.

But the market is moving towards, probably in the next three years, towards three to five days.

41:58 – Dayu Yang: And hey, by the way, like the moment that it actually moves to that, this audience will know. We are obviously motivated to actually announce to probably everyone in the world that we’re going to have—we’re going to have the ability to shave a couple of days off our shipping averages, right? And, you know, maybe my team is kind of like telling me not to, like, hey, like, why are other people saying that they can ship in under six days? But are we saying that, well, it’s longer than six days, right. And it’s, look, there’s nothing magical about China shipping.

Things do take time in the middle. The routing is very, very efficient, but even USPS, even, like, your local courier, is going to have date ranges as well. So what we want to avoid is painting too rosy of a picture of what China fulfillment actually is. And we want to make sure that, you know, this audience and our clients actually knows the nuances and actually makes the right decisions based on the nuances and not necessarily this, you know, I think, you know, just, just a half-truth number of it can get there in under six days. It’s possible, but that’s all we’ll say.

43:05 – Simon de Raadt: The last one, I believe number ten. And this one is very close to me, actually. But let’s hear from you first. Parcels can get stuck in customs and/or customers have to pay duties. So how about the clearance process?

43:18 – Dayu Yang: This concern is one of the top concerns when we are considering working with a, let’s say, like U.S. based local brand that’s only experienced with their own local warehousing. Because when they have tried to ship to the EU, particularly, and use something like maybe DHL, it is very, very common that that would get stuck in customs and then they would actually require the custom payment from the customer because that U.S. company is not actually, like, VAT registered. They’re not collecting VAT, you know, through the right channels, right? And it causes a lot of issues.

So that on top of the actual cost of shipping to the EU from the U.S., which is too expensive anyways, and I think incorrectly strikes out international expansion for a lot of more local based companies. From China, it’s a very, very different process. And it really came with the evolution of the current couriers that we’re using, like Union Express, for example. They organize the initial planes in bulk. And, essentially, it’s almost like they’re just organizing at both rate and customs clearing on all the parcel basis, which means that they navigate through that process efficiently.

There are ways where either we actually—so, particularly if you’re shipping from China—there is actually an option for you to get VAT registered in the EU, and you should do that, by the way, if you’re serious about selling there. And then we would actually have what’s called the IOSS number and that essentially just fast track through customs. So that just completely ignores the customs process. And this is also one of the reasons why you should be careful about using certain, almost logical lines, like DHL Express or, like, FedEx, for example. You can ship them from China, you could ship them from the U.S., actually.

But the thing is, like, they’re not really optimized for this kind of, like, consumer type of high-volume parcels. So, they’re actually just more used to, hey, like, well, I should just collect customs because that’s how it works, right? And that’s exactly why using something like DHL Express, actually, even if you send it to your family member, like I’m sure, like, Simon, you got packages actually where you had to pay customs even just from your family member thinking that using DHL or something is actually the right approach.

45:37 – Simon de Raadt: So, for my side, actually, I’ve invested in a custom clearance company, back in 2015, and that’s been quite interesting because what—I also actually wrote a chapter in a book about innovation regarding supply chain itself. And for me this is a very passionate thing because back in 2015, we were selling Chinese mobile phones as a comparison to Apple, Samsung, Nokia. So this is Apple, this is the China alternative, Huawei, Vivo, all these brands. This is the Nokia; this is the alternative.

But we realized that selling these kinds of high-value phones and importing them into Europe, the biggest hurdle was actually the customs clearance because these are not low-value items. And back then you had the twenty-two euro rule where everything above twenty-two euro will have to have, have to pay taxes. So we said there’s a bigger problem than selling these phones. It’s actually the custom clearance. So, therefore, we developed this company where you actually have a fully automated custom clearance process based on data. And this is 2015. As a really early mover of the industry, no one was doing it. There was no IOSS rule. That came in 2021, if you remember correctly. So, this is six years before actually the EU started implementing these rules. This is also one of the reasons why I started working for companies that—no longer logistic company that touched the last mile, which was doing with postal companies—but actually logistic operators that touch the physical products in their warehouse, that know what has been put into the parcel, that actually know what’s the description, what’s the value, and be able to capture that data and pass that onwards so that you have a smooth custom clearance process.

That, for me, has been, always, the key driver. That’s why I said this one is very close to me, because already, since 2015, that’s nine years now, I’ve been trying to see how the industry can move towards, like, a green flow of fully cleared goods, clear with data injected into a last mile through customs. Because once you know what’s inside, and that was kind of the mystery for all these years, all the logistic companies in China, they’re collecting parcels from other sellers.

They’re not putting the things in the parcel. They’re just receiving parcels. And yes, they get a description, but they don’t know if the description is correct. They don’t know if the value is correct. They’re basically passing on. And then the last mile, the customer would say, “hey, you have a problem with these parcels. Stop selling that.” They will block that Chinese seller that was doing that illegally, or western seller, whoever it was, and then they would say, you cannot ship with us anymore.

Then that seller will go to another logistics company with the same parcel and then shipped from China and injected again into the last mile. And the last mile will end up with the same kind of parcels that they want to refuse. It just kept going, kept going. So, for me, one of my drivers was, if I’m going to manage the supply chain from China, I want to have a warehouse where I can actually physically touch what’s being put inside the parcel that is actually going to—that we can justify that this is the right description, this is the right value, and ship it to the final destination.

That’s, for me, something that I’m very passionate about and already for nine years trying to change the industry. And it’s moving forward, but it’s moving forward very slowly. But the end goal is a fully transparent supply chain. To be able to reach that 72 hours that we’ve been speaking about, it’s needed to have this because then there’s no confusion and everything can go through and there is no delay because it doesn’t have to be checked because everything is verified.

So, that’s definitely the direction where I hope the industry will move towards. And actually, I’m confident that we can have an important and valuable piece of it, of this puzzle, to make a difference for international brands. 

This kind of wraps it up for us. What are the ten beliefs about shipping from China? Hopefully it was useful for you. Let us know which one stood out. We were curious to know. Maybe we missed some.

If so, we’ll make sure we get it on the next episode. Do reach out. Let us know. Thank you, Dayu, for being here with us. 

49:28 – Dayu Yang: Thank you, Simon. 

49:29 – Simon de Raadt: And hope to see you on the next one. 

These were the ten beliefs about shipping from China. Hope you like it. Feel free to reach out. And please do subscribe. Like and share this podcast episode.