Based on the increase in disposable income in developed countries and the convenience of online shopping, furniture and home furnishings products are expected to become the fastest-growing category in the global B2C e-commerce market.
According to the latest report released by Haitong Securities, China's cross-border e-commerce scale continues to expand, entering a new stage of standardized development. Referencing Frost & Sullivan data cited in the Aoji Technology prospectus, furniture and home furnishings, clothing and footwear, beauty and daily necessities, and technology consumer goods are the main categories in the global B2C e-commerce market, accounting for 6.8%, 26.4%, 16.6%, and 16.8% respectively in 2023. Based on the increase in disposable income in developed countries and the convenience of online shopping, furniture and home furnishings products are expected to become the fastest-growing category in the global B2C e-commerce market.
The main points of Haitong Securities are as follows:
The penetration rate of global e-commerce is increasing, and cross-border e-commerce is embracing a new era of development.
According to the Zhongshang Industry Research Institute, the global cross-border e-commerce transaction volume in 2023 was approximately $2.8 trillion, a year-on-year increase of 16.7%, and is expected to reach $3.3 trillion in 2024. The global penetration rate of cross-border e-commerce is steadily increasing, rising from 5.2% in 2019 to 8.0% in 2023, and is projected to reach 8.6% in 2024. The continued increase in the penetration rate of e-commerce in overseas countries and regions will create good opportunities and growth space for the development of China's cross-border e-commerce industry. According to data from the Chinese General Administration of Customs cited by the official Chinese government website and People's Daily, China's cross-border e-commerce export value in 2023 was 1.83 trillion yuan, a year-on-year increase of 19.6%; in Q1 of 2024, China's cross-border e-commerce export value was 448 billion yuan, a 14% increase from the previous year. China's cross-border e-commerce scale continues to expand and has entered a new stage of standardized development.
China's cross-border e-commerce is moving towards high-quality development, showing significant results in going global.
The main participants in the cross-border e-commerce industry include suppliers, cross-border platforms and service providers, and end consumers. In terms of transaction models, cross-border B2B e-commerce is the mainstay of China's cross-border e-commerce, accounting for 70.2% of cross-border B2B transactions in 2023. The B2C model is developing rapidly, with the proportion of B2C transactions increasing from 14% to over 25% from 2013 to 2021. At the same time, Chinese cross-border e-commerce platforms are rapidly rising. E-commerce platforms such as Temu, SHEIN, AliExpress, and TikTokShop continue to capture market share and attract overseas users.
With the rapid development of cross-border e-commerce, the demand and importance of cross-border logistics services are gradually increasing. According to Zhuoshi Consulting, the market size of cross-border e-commerce export logistics in 2023 is 0.6 trillion yuan, with a CAGR of 18.8% from 2023 to 2027. The main modes of cross-border e-commerce logistics include direct mail and overseas warehouses. Overseas warehouses, as the basis for the integrated warehousing, distribution, and return services in the 'last mile' of cross-border e-commerce, have become the infrastructure supporting a new round of growth in cross-border e-commerce.
The furniture and household products in the B2C e-commerce market have performed well, with a large scale of Chinese export sellers.
According to the IPO prospectus of ProudTech citing Frost & Sullivan data, furniture and household products, clothing and footwear, beauty and personal care products, and technology consumer goods are the main categories in the global B2C e-commerce market, accounting for 6.8%, 26.4%, 16.6%, and 16.8% respectively in 2023. With the increase in disposable income in developed countries and the convenience of online shopping, furniture and household products are expected to become the fastest-growing category in the global B2C e-commerce market. Chinese sellers are the largest group of export sellers for furniture and household products globally. Based on the market size of B2C overseas e-commerce for furniture and household products of Chinese sellers reaching 773.8 billion yuan in 2023, with a CAGR of 37.4% from 2018 to 2023.
Export-oriented light industry companies are vying for prominence, transitioning from manufacturing and OEM to branding and expanding overseas. The following symbols are highly recommended:
Henglin Home Furnishings (603661.SH): The company has production bases in China, Vietnam, Switzerland, and other locations. In the first half of 2024, the cross-border e-commerce business revenue reached 1.686 billion yuan, a year-on-year increase of 241%. The effects of the manufacturing expansion and brand internationalization operation plan are gradually emerging.
UE Furniture (603600.SH): Most of the company's operations in the United States are currently fulfilled through production and shipments in Vietnam. The construction of the first batch of factory buildings for the third phase of the Vietnam production base is underway. In addition, the Romania base achieved production and shipments in the first half of 2023, establishing long-term strategic cooperation with numerous well-known purchasers, retailers, and brands.
Zhiou Technology (301376.SZ): The company's products have entered more than 70 countries and regions in Europe, North America, and beyond, serving over 20 million global households. They have established an overseas warehousing layout of 'self-operated warehouses + platform warehouses + third-party cooperative warehouses,' ensuring efficient last-mile delivery.
Gigacloud Technology (GCT.US): By virtue of an innovative supply chain fronting model, technology-leading trading systems, and self-operated global warehousing and logistics, the company has established a 'global home furnishings circulation backbone network,' achieving total GMV of 542 million, 636 million, and 999 million US dollars in 2021, 2022, and 2023 respectively.
Loctek Ergonomic Technology Corp. (300729.SZ): As of the end of 24H1, the company's overseas warehouse has already served over 778 overseas enterprises, handling over 4 million packages in the first half of the year, an increase of over 120%. With the increase in the number of serviced customers and annual parcel volume, the scale advantage continues to be highlighted. By increasing the proportion of self-built overseas warehouses, the profit potential is expected to increase.
Risk Warning: Global trade risks, lower-than-expected end demand, substantial fluctuations in raw material prices, exchange rate risks, intensified industry competition, and significant fluctuations in marine transportation fees.
