TLDR; Temu’s forward warehouse strategy is used in domestic border express delivery. If Temu’s Central Asian business can be expanded through Xinjiang in the future, it will be a great idea.

For a long time, e-commerce business in Xinjiang and Tibet has been considered an unfeasible business. The shipping fee in Xinjiang and other places generally starts at dozens of yuan per order. For many e-commerce categories, this shipping fee is even more expensive than the product itself. Naturally, such high shipping fees have also prevented many businesses from trying to provide free shipping in Xinjiang.

Moreover, you cannot cancel this high shipping fee by platform policy or administrative order, because the objective problem of the long distance is real.

Based on these realistic factors, many people believe that it is difficult to develop e-commerce business in Xinjiang.

But things have started to change in the past two years. According to data released by the State Post Bureau, in 2023, Xinjiang's express delivery volume (excluding postal parcels) totaled 305 million pieces, and the total express delivery revenue reached 6.2 billion yuan, an increase of 88.1% and 77.9% year-on-year respectively. Both growth rates ranked first in the country.

Xinjiang's e-commerce business has begun to grow at a very fast pace.

What has changed e-commerce in Xinjiang, which was originally thought to be impossible?

The first is infrastructure construction.

Led by the Xinjiang local government, Xinjiang has continued to improve its modern logistics operation system of "channel + hub + network" in recent years.

By May this year, the Xinjiang E-commerce Association was established, and 13 logistics node cities were designated as regional logistics hub carrier cities, 16 regional logistics hubs were built, and the roads to every village and express delivery to every village were vigorously promoted, which greatly strengthened the logistics infrastructure.

But this is not enough. Although strengthening logistics can reduce freight costs, there is still a long way to go before reaching free shipping areas such as Jiangsu, Zhejiang and Shanghai.

Therefore, the second thing is to strengthen Xinjiang’s local e-commerce industry and reduce empty orders.

If a large truck brings goods into Xinjiang but leaves empty, the cost will be very high. This has been a pain point that Xinjiang e-commerce has been unable to avoid in the past.

But if we can bring goods into Xinjiang and take goods out, with goods on board both ways, wouldn't the logistics costs be greatly reduced? The first thing that comes to mind in various parts of Xinjiang is the various agricultural products and specialties under the local climatic conditions. We have also actively learned from the experience of e-commerce villages in inland areas in the past few years and vigorously developed the e-commerce of agricultural products in villages and towns. By 2023, the online retail sales of local aquatic products in Xinjiang will reach 395 million yuan, a year-on-year increase of 106.26%. Among them, Xinjiang crabs have even been delivered to the tables of customers in Shanghai, Guangdong and other provinces and regions. How to sell aquatic products, how to ensure the survival of fish, shrimp and crabs during transportation, these past problems, as long as you study hard, actually have ready-made experience references.

The third is cooperation between government and enterprises to expand the e-commerce sector to spread the costs.

In 2022, Pinduoduo pioneered the transit and consolidation free shipping model, where merchants can first send the packages of Xinjiang consumers to the transit and consolidation warehouse in Xi'an. Then, the platform will ship the packages to Xinjiang through third-party logistics.

In the past, when merchants shipped goods directly from point to point, the logistics cost generally started at 15 yuan. If it was cold chain air transportation, the cost would be as high as 20-30 yuan.

Under the consolidated shipping model, logistics costs will be greatly reduced - merchants usually only need to bear the freight from the place of shipment to the consolidated shipping warehouse, as well as an additional second-stage freight of 3-5 yuan per order.

On the basis of significantly reduced logistics costs, Pinduoduo has boldly launched a free shipping service to villages, that is, the logistics transit fees incurred by merchants when delivering goods in remote areas such as Xinjiang, Tibet, Gansu, Ningxia, Inner Mongolia, etc. will be borne by the platform.

This is a very risky move because the platform needs to pay a lot of shipping costs, but the benefits are also very clear.

The platform will provide subsidies to reduce the freight costs in Xinjiang and other places, so merchants will naturally be willing to boldly ship goods to Xinjiang and other places, and users in Xinjiang and other places will have a higher enthusiasm for online shopping, driving the growth of e-commerce orders in the entire region.

The growth of e-commerce business in the entire region will in turn further reduce the shipping cost of each order.

In the past, there were few orders, and large trucks had to wait for several days to collect enough packages for centralized transportation. Now, the order volume is large, and large trucks can ship every day.

The fact is that business rules are not static and are also affected by objective factors.

The infrastructure has been strengthened, logistics costs have been reduced, a centralized delivery model has been established, and logistics costs have been further reduced. At this time, the number of e-commerce users has increased significantly, and express delivery orders have greatly increased. Under the joint effect of many factors, a certain threshold has been reached. A problem that seemed unsolvable in the past may be eliminated under the wheel of the times.