The annual race of cross border e commerce has changed from a sprint to a long distance run

Text|Xiaguang Society Feng Ye.

Edit|Liu Jingfeng.

The day before, Pinduoduo released its Q3 financial report. According to the financial report, Pinduoduo achieved revenue of 688 in the quarter400 million yuan, a year-on-year increase of 94%, much higher than the market expectation of 5487.2 billion yuan.

Although the high-profile Temu was not directly "named" in the financial report, and its revenue, costs, marketing investment and other data were not disclosed, the industry consensus is that Temu is the biggest contributor to Pinduoduo's outstanding third-quarter financial report. According to LatePost, Temu has set a GMV target of $30 billion for 2024, more than double the 2023 target.

SHEIN, TikTok Shop, and AliExpress (Ali International Digital Commerce), which are known as the "Four Dragons of E-commerce Going to Sea" together with Temu, are also constantly in the news:

Reuters said on the 28th that SHEIN has secretly applied for listing in the United States and may launch an IPO in 2024

Although TikTok Shop suspended its business in October due to Indonesian policy pressure, it is still actively seeking a turnaround in Southeast Asia, and according to Indonesia's ** Deputy Minister Jerry Sambuaga on the 28th, TikTok can freely cooperate with any e-commerce platform as long as it complies with Indonesia's applicable regulations and procedures;

In Alibaba Group's financial report for the second quarter of fiscal year 2024 released on November 16, Alibaba International Digital Commerce and Cainiao Group's revenue growth was %, respectively, and the two strongest growth groups were the two largest groups.

Although during the "Black Friday" and "Net One" promotions, the "Four Little Dragons Who Go to Sea" showed their housekeeping skills, and discounts, subsidies, and war reports were one after another. But from a macro point of view, this seems to be no longer a scuffle, but each has its own direction. This also indicates the development goals of each platform in 2024, and it can be seen that its strategic level is being opened.

Temu's biggest goal is still growth, and compared with Temu's aggressive ** war in North America, SHEIN, which is regarded as the largest competitor, puts profits first, and shifts its goal to deepening the ** chain and brand effect, and this year it is the first ** stock Forever21 parent company, holding a platform investment conference, and accelerating the platform strategy;TikTok Shop has grown by leaps and bounds with its social e-commerce model, but has never been able to get rid of the compliance curse, this year it is trying to keep the Southeast Asian market, while cautiously testing the waters in North America, and next year may continue to focus on the United States and Southeast Asian marketsAliExpress has focused on service this year, launching the "Global 5-Day Delivery" with Cainiao, and the upgraded logistics experience has allowed it to continue to grow in Europe and South Korea. Next year, AliExpress will most likely adhere to this strategy and continue to cultivate the European market.

The battle of cross-border e-commerce is turning over the most fierce battle. Next, it is the time for the "Four Little Dragons to Go to Sea" to gradually find out the positioning. If the previous battle was a 100-meter dash with all your might, now it has been converted to a full marathon, and patience is a contest.

01 **War, no longer the only strategy, just past the "Black Friday" overseas shopping festival, the "e-commerce to the sea four tigers" to show their talents:

temu hung a banner on the homepage with a "90% price reduction" and extended the campaign period to 47 daysTikTok Shop, the campaign lasts for 35 days;SHEIN's big promotion campaign starts on November 6 and lasts for about 26 days. Under the "out-volume" offensive of China's cross-border e-commerce, Amazon extended the Black Friday promotion time to 11 days for the first time.

Breaking through at a low price is still temu's forte. In this Black Friday, Temu issued $100 and $200 coupons to users. The high cost performance has attracted a large number of users, and previously, temu was once called a "starting artifact" by international students. During the big promotion, some merchants posted a record of explosive orders, saying, "Thanks to the blessing of Black Friday, 1,700 orders were broken today." ”

In the more than a year since it was launched, Temu has always adhered to the low-price strategy, and the main concepts such as "cutting a knife" and "joining a group" have been implanted in the minds of American users. "Shop Like a Billionaire" is Temu's Super Bowl ad at the beginning of the year, which is intended to tell viewers bluntly that because it's low enough, you can ignore numbers like a billionaire when you swipe your card.

temu was placed in a Super Bowl ad. Source: temu official website.

SHEIN, which is regarded as a competitive product of Temu, was previously known as the "North American version of Pinduoduo", which won by relying on low-cost clothing categories, and gradually expanded the full range of products, but from a strategic point of view, it did not blindly join the ** war.

According to "Late LatePost", SHEIN requires that some of the same products this year cannot be higher than Temu, and once it is high, it will change the merchant, or provide subsidies for the goods, but "SHEIN's subsidies are limited, and for the same product with an absolutely low price on the TEMU platform, SHEIN will choose to remove it directly." ”

SHEIN's conservatism stems from its previous profits**. In 2022, SHEIN's total revenue and GMV will continue to grow, but the profit will be $700 million, the first decline in the decade since its founding. On the one hand, SHEIN needs to keep its books good this year;On the other hand, Shein is facing the encirclement and suppression of Temu and TikTok Shop, and has a sense of "internal and external troubles", and this IPO in the United States may also be able to explore a new way out to a certain extent.

Compared with SHEIN, which has developed to a mature stage, TikTok Shop, a "novice" in the United States, is more cautious in its attempts. Although TikTok Shop has carried out double-end subsidies for users and merchants during the big promotion, there seems to be a trend of fighting a first-class war. But in the long run, TikTok Shop may not want to rely solely on low prices to win. Related to the offline of the Indonesian station in October, TikTok Shop is still most concerned about compliance risks.

"Low price" used to be one of the most distinctive features of China's cross-border e-commerce platforms. Now, although this label has not been taken off completely, it can be seen that in addition to Temu, which is more aggressive in terms of strategy, Shein and TikTok Shop are not staring at it, but are using their own advantages to build a moat unique to the platform. In addition, the playing style of each platform also indicates that their market positioning has been different.

The reason why temu adheres to the low-price strategy is because its primary target is the sinking market. The audience in the sinking market is wide, which is very suitable for playing a "mass base". With a user base, temu can better implant the concept of "cost-effective" in the minds of consumers. And, temu's full-category positioning means that sooner or later it will be "just" with the "big brother" Amazon, but Amazon's positioning is more high-end, temu first uses ** to open the gap and circle specific groups of people, so as to better face challenges in the future.

Shein no longer fights hard with temu** because the advantages of the **chain are obvious enough.

Shein has been developing for ten years, and the key to success is "small orders and quick returns". Compared with the traditional mass production and hoarding model, "small order quick return" is more flexible. SHEIN will require factories to produce goods in small batches first, and after market verification, increase the amount of orders for high-selling goods, and quickly "cut" low-performing goods. According to Shein employees, SHEIN will continue to deepen the construction of Guangdong's ** chain network.

Relying on the advantages of the first chain, SHEIN began to explore the platform strategy. After reaching a long-term strategic cooperation with SPARC Group's brand Forever 21, SHEIN acquired the British fast fashion brand Missguided. These moves mean that SHEIN is gradually penetrating offline brands, accelerating the platform-based operation model while going global.

Forever21 has been officially launched on SHEIN's official website. Source: shein official website.

In the long run, TikTok Shop will not focus on "** battles" either. TikTok Shop didn't open in the U.S. until September this year, and it has been extremely strict with merchants' entry audits. It wants to explore the possibility of integrating hobby e-commerce and shelf e-commerce under the premise of compliance. The interest e-commerce model of "goods looking for people" is suitable for white-label goods, and the shelf e-commerce model of "people looking for goods" is conducive to building the overall ecology of the first world, which is beneficial to merchants who want to be branded.

AliExpress, a veteran player who goes to sea, has also passed the stage of fighting at low prices. At the end of September, AliExpress and Cainiao launched the "Global 5-Day Delivery" service, and took the lead in launching it in the United Kingdom, Spain, the Netherlands, Belgium, and South Korea. Ali International said that consumers in Saudi Arabia and the United Arab Emirates are expected to receive orders within 10 working days during this "Black Friday". Backed by rookies, AliExpress's logistics advantages have been "rolled out" to the extreme.

The short-term competition during the promotion period may release the smoke bomb of the "best war", but through the smoke of gunpowder, it can be seen that behind the low price, how to retain users, overcome logistics and chain obstacles, and build brand influence are more important. The "Four Little Dragons at Sea" have their own strengths, and their positioning is gradually becoming clear.

02 Full custody: "poison" or "antidote"?The current full-custody model of the cross-border e-commerce track is not new.

Amazon gave birth to the VC (Vendor Central) account type in the early days, for this kind of ** merchants, Amazon will directly purchase products, and be responsible for sales, back-end logistics, etc., this process is very similar to full custody. But it is clear that Amazon does not focus on the development of VC, and user perception has also faded.

The "Four Little Dragons of E-commerce Going to Sea" has brought the full custody model back to the industry vision

Since Temu was launched in the United States on September 1, 2022, it has been implementing the full custody model, and the seller is only responsible for supply and delivery to the warehouse, and the platform is responsible for pricing, sales, logistics, after-sales and other links

SHEIN, which has been concentrating on self-management, also opened up third-party sellers to settle in at the beginning of this year and implemented a full custody model

TikTok Shop opened the investment invitation of the full custody model of cross-border e-commerce between Saudi Arabia and the United Kingdom in May this year, and launched the full custody model in the United States in August

AliExpress began to internally test the fully managed model at the end of last year, and promoted the "choice" channel in all categories in April this year.

AliExpress "choice" channel. Source: AliExpress official website.

Full custody has been a major trend in the cross-border e-commerce track, but the playing methods and considerations of each platform are different.

For temu, the full custody model can centralize the transaction process, and the platform will have more control over the operation, logistics, after-sales and other processes, which is suitable for rapid volume in the initial stage and occupy the sinking market. And because the goods will be handled by the platform, the violations of empty packages and false transactions will also be reduced, and standardized operations are more conducive to user retention.

SHEIN needs to access more high-quality merchants and expand its categories through the full custody model. Xiaguang Club contacted a fully managed seller who operates both SHEIN and TEMU, and the other party said, "The threshold for SHEIN is higher, and you need a business license and other documents." And compared with Temu, SHEIN pays more attention to the intellectual property rights of the product ** when uploading, and the price control is not as serious as Temu. This also shows SHEIN's determination to grasp growth with one hand and brand with the other.

The "control" brought to the platform by the full custody model is also conducive to avoiding compliance risks when entering overseas markets, and reducing the learning and Xi costs of merchants. An industry insider told Xiaguang Agency, "Europe and the United States are not very friendly to TikTok, and the full custody model also has policy considerations." If you let the merchant operate, ship, etc., there may be a situation where you don't know the rules. It is best to be mastered by the platform in the early stage. ”

In addition, TikTok Shop also seems to have found that the development of interest e-commerce still takes time, and the "interest + shelf" e-commerce model will be more conducive to GMV growth. The market competition is still fierce, and the fully managed model is more like a "must" choice for shelf e-commerce companies that have just begun to lay out.

AliExpress is more cautious about its attempt at full custody, although AliExpress has pushed the "choice" channel this year, but then, it has launched a "semi-custody model" - the platform will still be responsible for warehouse distribution and after-sales, but merchants have more independent management rights. There are two reasons for this:

On the one hand, after Jiang Fan took over Ali International Digital Commerce, he wanted to make achievements, and the advantage of the full custody model is that it can attract more small and micro businesses to settle in, and the platform can increase the number of orders with low-cost small goods

On the other hand, AliExpress seems to see the hidden dangers in the fully managed model: when merchants turn to a single "supplier" role and do not involve operational links at all, they may be farther and farther away from the real market, and their sensitivity to products and perception of consumers will also decline. Only by balancing the three modes of self-operation, full custody and semi-custody can the platform ecology develop better.

Returning to the topic of why Amazon has not vigorously developed the VC model, you will find that AliExpress's consideration is not unreasonable. "Daily Economic News" once commented, "Full custody basically saves most of the cost of educating sellers on the platform, and this happens to be the construction that Amazon has spent a lot of effort on." One of the priorities of Peng Jiaqi, vice president of Amazon China, is "product and seller education". With the help of the platform, sellers can learn Xi how to select and price products, cultivate brand thinking, and maintain brand resilience in the face of fierce competition in the e-commerce track. In the long run, the anti-risk ability of merchants is not strong, and the development of autonomy and brand capabilities is relatively limited.

In addition, when the full custody model becomes a hot spot pursued by the whole industry, this track will inevitably become more and more crowded, and the involution of merchants may intensify, and the profit margin will be further compressed. Industry insiders told Xiaguang that the platform is still squeezing sellers, full custody must be the trend, and the benefits are obvious, and the data is the best proof, but "it will definitely not be like this all the time, and it may slowly open up to self-operation."

03 The next stop of cross-border e-commerce, the Middle EastAccording to the "2023 North American E-commerce Market Research Report" released by Xiaguang Society, North America is still one of the largest e-commerce markets in the world. According to statista data, the North American e-commerce market has reached a market size of $944 billion in 2022 and is expected to reach 17 trillion US dollars, with a compound annual growth rate of 143%。

Temu and Shein's battle in North America was once deadlocked. More than three months after Temu was launched, SHEIN "couldn't sit still", accusing Temu of imitating SHEIN's style in social **, and finally inducing users to **Temu to apply and visit Temu's official website. Temu also sued SHEIN in July this year for violating U.S. antitrust laws, arguing that SHEIN forced ** merchants to sign exclusive "loyalty agreements".

It is reported that the two sides have withdrawn their lawsuits against each other in October this year, but the struggle has not stopped. A seller who just joined SHEIN full custody this year told Xiaguang Society, "SHEIN's opening of third-party entry is also to compete with Temu, and I want to do more categories, and I have opened four stores." ”

It is foreseeable that in 2024, Temu and Shein will also "fight" in the United States.

TikTok Shop's ambitions in North America are also evident. This year, there has been news that TikTok Shop is poaching people in the United States, "including the original Shein**Chain and other employees are all being poached." Some industry insiders also pointed out that TikTok Shop's ultimate opponent in the United States is not the emerging platform, but Amazon. Perhaps this is the common goal of Chinese cross-border e-commerce players in the United States.

TikTok Shop Investment**, mainly promoting Southeast Asia and the United States, source: TikTok Shop official website.

The e-commerce track in Southeast Asia has become a red ocean, but there is still room for growth. According to the 2023 Southeast Asia Internet Economy Report jointly released by Google, Temasek and Bain & Company, the GMV of Southeast Asia's e-commerce market will reach US$139 billion in 2023 and is expected to reach US$186 billion in 2025, an increase of 16%.

TikTok Shop's layout in Southeast Asia is not early, but it does rely on live broadcast to bring goods and short ** to "kill" a way. Industry insiders said that the competitive pressure of TikTok Shop in Southeast Asia is also significantly increasing, "In the past, there were many orders after a little operation, but now you have to be very careful to achieve the previous effect." After there are more users, the platform subsidy is also much less. This also shows the development trend of TikTok Shop in Southeast Asia.

It is worth mentioning that, according to various sources, TikTok Shop Indonesia is expected to return. Indonesia's Deputy Minister Jerry Sambuaga said on November 28 that TikTok had previously violated the rules of operating only as a social platform, and that "once it gets a license, it can work with anyone as long as it complies with regulations and procedures." It is also reported that TikTok is recently discussing the possibility of cooperation with Indonesian e-commerce platforms such as Tokopedia, Bukalapak and Blibli.

SHEIN's attempts in the Southeast Asian market are not bold, and in July 2021, SHEIN announced the closure of its Indonesian operations, but did not explain why. In addition to policy considerations, there is also profit measurement, compared with Shopee and TikTok Shop, SHEIN's low-price strategy does not have much advantage in the Southeast Asian market.

In July this year, SHEIN's factory in Brazil was officially put into operation, which is also SHEIN's first factory in Latin America. The epidemic has disrupted the e-commerce market in Latin America and ushered in a growth inflection point.

AliExpress has made frequent moves in Europe this year, and it will also be deeply involved in the European market next year. Cainiao International Express data shows that before this year's Black Friday, the stock volume of AliExpress's Cainiao cross-border preferred warehouse increased by nearly 9 times compared with last year, and most of the goods will be shipped to countries covered by the "Global 5-Day Delivery" service. Spain is the focus of AliExpress's development, and on November 10, AliExpress held a ** meeting at the Wizink Center in Madrid, Spain, kicking off the Double Eleven. In December last year, Ali International Digital Commerce launched the e-commerce platform Mi**ia in Spain, and also set the goal of "becoming the top five e-commerce platforms in Spain by 2026".

At present, the Middle East market, which is very popular on the overseas track, has also attracted Temu and TikTok Shop to layout. SHEIN's layout in the Middle East is relatively early, having entered in 2015. With the advantage of the first chain, it has occupied a place in the Middle East with the positioning of "fashion e-commerce".

The Middle East has a population of nearly 500 million, a per capita GDP of more than $20,000 in the six Gulf countries, a high-quality population structure, a majority of young people, and an Internet penetration rate of 80%. The hot e-commerce markets in the Middle East are mainly concentrated in countries such as the United Arab Emirates, Saudi Arabia, Israel and Turkey, and are still incremental markets.

Temu launched its Israeli site at the end of August this year, continuing its low-price** strategy and cooperating with third-party logistics. According to Jiemian News, Temu's cooperative logistics in Israel include HFD and Exelot, and the time limit is 6-15 days. In order to improve logistics efficiency and user experience, Temu has launched a campaign to "arrive in 15 days, and consumers can earn 20 new shekel points (about RMB 38.).$5). ”

After the trial operation of the Saudi Arabia site, TikTok Shop first launched shelf e-commerce, focusing on the strategy of "people looking for goods". In fact, compared to Temu alone, TikTok Shop has more user base and content advantages. Consumers in the Middle East are keen to use social products, and the local influencer ecosystem is thriving, which is conducive to live streaming and content e-commerce. However, merchants who can do marketing may not be able to do a good job in the brand and ** chain, and TikTok Shop hopes to expand the whole category, attract more merchants to enter the game, and open up the closed loop of shelf e-commerce. This may also be based on the consideration of competing with temu in the future.

AliExpress upgraded its Saudi Arabian "worry-free consolidation" service in Cainiao in July this year, focusing on "5-day delivery" and "free shipping", and expanded the service to key countries such as the United Arab Emirates, Oman, Qatar, and Bahrain. It is reported that this logistics upgrade can increase the logistics timeliness of the four countries by half, from 30 days to 12-14 days.

Overall, Temu and TikTok Shop are likely to be more competitive in the Middle EastSHEIN's position as a "fashion e-commerce" in the Middle East is still there, and it is deepening its brand effect through offline pop-up stores and other formsAliExpress continues to expand the "longboard effect" of logistics, which is also one of the main strategies of the platform in the face of the global market.

At present, China's cross-border e-commerce platforms have run through the initial path, and all of them are exploring new ways out and new increments. The development of the "Four Little Tigers Going to Sea" has gradually matured, the fierce competition has gradually diverged, and the differences in positioning and playing styles have become more and more obvious, forming a situation of "each dividing the world", leaving few opportunities for small and medium-sized platforms.

But it's bound to be a long-distance race. Back on the evening of the 29th, an Alibaba employee posted a comment on the soaring market value of Pinduoduo on the intranet: "That inconspicuous one is about to become a big brother." ”

Ma Yun, who has not appeared for a long time, appeared in the comment area and expressed his congratulations to Pinduoduo, and said, "No one has been bullish, but those who can reform for the sake of tomorrow and tomorrow, and are willing to pay any price and sacrifice, are worthy of respect." ”

Xiaguang Society will continue to pay attention to the cross-border e-commerce market.

References: 1] "Late Exclusive Overseas E-commerce Fierce Battle: Temu GMV Goal Doubled, Shein Guaranteed Profits, TikTok Goes All Out to Attack the United States", LatePost

2] "American "Double Eleven", the volume is Chinese", Finance Eleven.

3] "SHEIN" Discovers "America", brand factory BrandFactory

4] "Temu Runs Wild for a Year: 47 Countries, 200 Million Users, US Monthly GMV Approaching SHEIN", LatePost

5] "After helping shein grow millions of users, full custody just looks beautiful Hard Krypton Analysis", Hard Krypton.