The world of cross-border e-commerce is witnessing turbulent changes as businesses react to shifting tax policies and consumer sentimentChen Ping, a cross-border seller, has been busy meeting with industry peers to gather insights on effective strategies to navigate the evolving landscapeSince the start of the new year, his company has been adjusting its strategies to respond to these challenges.

From Chen's perspective, the implications of tax policies are particularly concerning for the all-encompassing managed model of e-commerce, which has proven to be cost-effective but is now feeling the strain of changing regulations.

The managed model has recently faced significant upheavalReports indicate that major players like SHEIN saw a dramatic decline in sales—down between 16% to 41%—in just five days starting February 5. Similarly, the emerging platform Temu experienced a staggering 32% drop in sales during the same periodSuch figures underline a worrying trend that reflects wider challenges in the retail sector.

U.S. consumer confidence has also taken a hit, with the University of Michigan's consumer confidence index recording around a 5% decline in February, marking the lowest levels since July 2024. Director Joanne Hsu pointed out that conditions for purchasing durable goods have worsened by approximately 12%. Many consumers seem to believe that mitigating the effects of new tariffs may be too late, leading to a more cautious approach to spendingConcerns about resurging inflation have further compounded these fears.

In the managed model, sellers are primarily responsible for production, while the platform handles logistics, pricing, and salesThis setup has generated efficiencies across the supply chain, allowing for economies of scale that benefit inventory management and shipping.

Temu has rapidly expanded using this model over the past two yearsAccording to the "2025 Mobile Status" report by Sensor Tower, Temu topped the global download charts for mobile apps in 2024, ahead of SHEIN and several others

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The report highlighted how Chinese electronic retailers have leveraged their supply chain advantages to offer free shipping and low prices—strategies that resonated with consumers grappling with inflation and geopolitical uncertainties.

However, the managed model comes with its own set of challengesAs the model gained traction in 2023, sellers like Wang Jie noted the relative simplicity it offered—merely supplying products to platforms ensured order fulfillment with minimal hassleNevertheless, as platforms grew, sellers faced a shifting environmentTo win orders, they found themselves lowering prices, further squeezing profit marginsAdditionally, penalties from platforms concerning quality and consumer returns became issues, while the inability to communicate directly with consumers hampered sellers' ability to adapt and improve their offerings.

In response to the new tariffs introduced in the U.S., managed model platforms are seeking ways to alleviate the negative impactsFor example, Temu is shifting towards a semi-managed model, signaling to sellers that those willing to sign a new framework will be given priorityIn this semi-managed model, sellers take on the responsibility of shipping goods to local warehouses overseas, incurring both shipping costs and tariffs, while forfeiting the significant benefits of the platform's scale.

Some industry players believe that Temu's pivot towards semi-management has been in the making for some timeFor instance, Peng Jing, a representative for a motorcycle brand, observed that the platform had recently tightened its management processesPreviously, a single entity could operate up to 20 stores; now they are limited to one fully managed and one semi-managed store.

Amid these shifts, businesses are urgently seeking to adaptAlthough the U.S. has paused its policy to eliminate trade exemptions for low-value goods (under $800), sellers remain acutely aware of the threat posed by potential future regulations.

For Peng, the proposed 10% tariff increase, coupled with the elimination of the T86 customs clearance policy, would not only escalate direct tariff costs but also raise logistics expenses and create uncertainties in clearance times

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Following the tax announcement, logistics providers swiftly revised their charges; one operator revealed it would now charge 35% on textiles and garments based on declared package value and 25% on non-textile items, potentially including service fees for duties paid on behalf of sellersAlthough these changes may be temporarily suspended, sellers feel compelled to strategize for an uncertain future where costs could increase significantly, especially for low-value items.

To navigate this precarious situation, some sellers are collaborating to leverage localized inventory or considering opening brick-and-mortar stores in the U.SEven amidst the expected shock to the managed model, sellers believe that platforms will devise their adaptationsSellers have started to note an uptick in orders from the European market, with Peng reporting over 40% of his sales now stemming from there.

Strategically, diversifying platforms has become a key tactic for many sellersOne seller mentioned expanding operations beyond Amazon and AliExpress to include as many as nine platforms in 2023. By focusing efforts on platforms like Amazon, which are more conducive to their business model, they hope to mitigate risks associated with over-reliance on a single channel.

Another seller emphasized a wait-and-see approach, intending to explore overseas warehouse deliveries if the regulatory climate worsensThey highlighted the existence of various fulfillment solutions available domestically in the U.S, including local postal services for shipping.

According to Zhang Zhouping, Executive Director of Bai Se Think Tank, U.S. tax regulations, particularly those regarding low-value exemptions, have significant ramifications for platforms grounded in managed business models, as they will directly escalate operational costsYet, because these platforms possess robust brand recognition and financial resources, they may weather policy changes more effectively than smaller enterprises

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