Wen Jide edited Midnight
At the beginning of 2024, there are new changes in the cross-border e-commerce market.
On January 4, AliExpress, a cross-border e-commerce platform under Alibaba, took the lead in announcing the launch of the semi-custodian model, and issued many announcements to attract more sellers to settle in with a number of welfare measures such as commission exemption and cash subsidies.
In the same month, Temu, a cross-border e-commerce platform owned by Pinduoduo, also opened a recruitment channel for semi-managed merchants, and plans to launch semi-managed merchants in the United States first.
Following last year's major platforms to promote the "full custody" model, "semi-custody" is becoming a new outlet for cross-border e-commerce. Compared with the former, the key to the semi-custodial model is that the platform reduces control and merchants can operate flexibly.
All of this is the trend of the times. For a long time, full custody has been the main model of cross-border e-commerce "Four Little Dragons" AliExpress, Temu, Shein, and TikTok Shop.
However, with the development of the market, this model can no longer meet the new needs generated by the growth process of merchants, and has derived many problems such as limited business autonomy and insufficient brand capabilities.
This is not only a gap that e-commerce platforms urgently need to fill at this stage, but also a necessary measure to compete for merchants in the fierce competition overseas.
Since the e-commerce track in Southeast Asia has become a red ocean, the United States, Europe, and the Middle East have become key markets for e-commerce platforms: temu appeared on the stage of the "Super Bowl" again during the Spring Festival, and the carousel ads attracted a large number of American users** applications; AliExpress continues to cultivate the European market, and according to Netrica data, it became the second most visited e-commerce platform in Spain in December last year. Overall, 2024 will see more intense competition among players in key markets.
Through the new attempt of semi-managed mode, it can be seen that after early exploration, players have a clearer understanding of their own strengths and weaknessesIn order to cope with the next competition, in terms of merchant autonomy, category expansion, logistics capacity improvement, etc., we began to check and fill in the gaps, and the focus of the force was also different.
Not long ago, Alibaba's latest financial report showed that in the third quarter of fiscal year 2024, AliExpress orders increased by 60%, and Alibaba's international e-commerce revenue increased by 44%, exceeding market expectations for 6 consecutive quarters.
However, as the cross-border e-commerce market becomes increasingly fierce, Alibaba hopes to continue to support the growth of international e-commerce business in the coming year through the new model of AliExpress.
After the rapid development of the past few years, the cross-border e-commerce market will begin to slow down its growth trend in 2023, but the market competition will continue unabated.
AliExpress is fully betting on "semi-custodial", and the growth target for the next year is clearly pointed to the development of POP merchants.
Previously, AliExpress's main business methods were divided into two types: POP (merchant self-operation) and full custody. Under the fully managed mode, the platform plays the role of "agent operation", responsible for operation and logistics fulfillment, and merchants only need to provide products and negotiate pricing with the platform. Under the POP model, operations, pricing, logistics, and marketing are all operated by the merchants.
In 2023, the "Four Little Dragons" have implemented the full custody model, and for a while, this model in which merchants concentrate on the best products and platforms is responsible for the operation is sought after by a large number of merchants due to the traffic bonus and fast logistics timeliness.
As a result, it is difficult for POP merchants to compete with fully managed merchants in terms of logistics capacity, and store traffic has also declined.
However, under the semi-managed model, merchants still have great freedom to be responsible for operations, pricing, and marketingAt the same time, the logistics performance is entrusted to the platform, which can not only ensure the timeliness, but also reduce the risk of hindering the whole process of performance during festivals, special periods, or uncontrollable factors such as workers' strikes.
According to the data provided by AliExpress, the logistics fulfillment time of POP (merchant self-operation) merchants is about 16-24 days, and after the platform is responsible, the rookie logistics behind AliExpress provides infrastructure support for it, and the arrival time will be faster, with an average increase of about 9 days.
After joining semi-hosting, merchants' products can be added to the Choice channel. On the user side, the channel not only provides free shipping, free shipping returns and other services, but also selects a large number of low-priced products. For sellers, it is easier to achieve sales growth after the product is marked with the choice label.
In January 2024, orders for the Choice channel already accounted for half of the platform's overall order volume. In the financial report, Ali International Digital Business Group said that from the current data, the user experience and retention of the choice business are better than before, and there will be better returns in the long cycle, and the next will be the first priority for growth.
AliExpress implements a semi-managed model, which opens up logistics capacity and traffic resources for this **op merchant, and also supplements the platform POP business mode.
For the platform, after the merchant chooses the semi-managed and fully managed models, the platform is responsible for the logistics, which can try to ensure the user's logistics fulfillment experience and provide a better purchase experience.
Merchants can focus on their own product development and product operation, and spend more energy on building product competitiveness and brand influence.
It is precisely because of these characteristics that Ali's investment in semi-custody is increasing. In addition to AliExpress, Ali International Station has also launched a semi-managed model, which has begun to attract investment, it is mainly aimed at merchants who have spot on hand, and it also attracts new customers such as retailers who want to purchase spot goods simply and conveniently overseas, providing them with more certain services such as on-time delivery, fixed price, and after-sales guarantee.
From the perspective of model change, cross-border e-commerce players are now focusing more on the construction of core barriers.
Since AliExpress announced the opening of semi-custodianship, temu has also stepped into this river, but the semi-custodial model of the two is not the same.
Temu releases the autonomy of logistics and after-sales to merchants, and the platform is responsible for store operation, including operation, pricing, and listing sites.
It can be seen from thisTemu attracts a completely different kind of merchants, it prefers to join the semi-custodial system, has set up warehouses overseas, and has its own "cost-to-base" local delivery capabilities.
In the past 2023, the cross-border e-commerce market will usher in more diverse merchant types on the basis of traditional merchants, factory merchants, and brand merchants, and local delivery merchants are also one of them.
Temu has seen an opportunity to "borrow" the global first-chain system that has been established by senior merchants in the past, and the platform can provide users with more efficient logistics services.
Guo Xinxin, a merchant in the temu department store category, mentioned in an interview with ** that some senior sellers choose to set up factories in Southeast Asia for processing or assembly, and the products are directly stocked in the warehouse closest to the destination consumer. "Root-to-to-book" delivery means that the physical distance is shortened, the fulfillment ability is stronger, and the consumer experience of medium and large products will be better.
Previously, Temu lowered the threshold of cross-border e-commerce through the full custody model, attracted more merchants to settle in, improved the richness of products, and attracted a large number of users with strong cost performance.
Today, the semi-managed model also complements the existing model of the platform. First, as the number of users on the platform grows, it becomes more important to meet the needs of users for faster delivery timeliness.
Secondly, the entry of more merchants with local delivery capabilities is also conducive to TEMU to reduce logistics costs. In the fully managed mode, among all the logistics costs of Duoduo Cross-border, only the domestic first-leg freight is shared by the merchant and Duoduo Cross-border, and the others are borne by Duoduo Cross-border. Under the semi-custodial mode, merchants can deliver goods "from one to another", avoiding the freight costs generated by the two sections of domestic first-leg transportation and international trunk transportation.
In addition, in order to promote the development of all categories, at the end of last year, TEMU chose to cooperate with shipping companies or establish overseas warehouses to transport large goods, such as furniture and household goods, at a lower cost. The local delivery capability of semi-managed merchants undoubtedly provides a new solution for the transportation of large goods categories on the platform.
For Temu, the parallel combination of semi-managed and fully managed can not only solve the problem of the expansion of all categories of the platform, but also avoid the problem of excessive proportion of logistics costs commonly faced by cross-border e-commerce platforms. These two things also provide the basic conditions for TEMU's expansion in the coming year.
AliExpress and temu's attempts at the semi-custody model are both based on their own development and the innovation of the existing model, each with its own considerations, which also makes the strategies adopted by the two different.
But in any case, the key to the competition of the semi-managed model is whether the merchant buys it. In this regard, AliExpress and Temu have come up with different "olive branches".
AliExpress mainly relies on the core competitiveness of logistics, which has also become the focus of its recent investment. In order to encourage merchants to upgrade semi-hosting, during the Spring Festival this year, Cainiao increased investment in door-to-door collection, warehouse expansion, trunk transportation capacity, etc., to ensure that the timeliness of international express delivery in 23 countries is not downgraded.
A number of semi-custodial favorable measures issued by it, such as commission reduction, on-time delivery subsidies, "underwriting" warehousing early loans, exemption from a series of warehouse fees, etc., are mostly set up around the logistics link.
In addition, AliExpress has also integrated semi-custody into the POP system, so that merchants can try this new model without re-opening their stores, and provide a favorable condition for the choice channel.
Through the semi-custodial model, Temu preemptively targets merchants with local warehousing and distribution capabilities, which also affects how Temu grows and expands in the future.
In the past year, the competition in the cross-border e-commerce market has become more and more fierce, and the operating costs have made it difficult for many factory-based businesses to bear the pressure, facing the problems of inventory accumulation and declining profits.
Although under the semi-custodial model, Temu still grasps the pricing power in its own hands, and merchants cannot grasp the pricing by themselves, and the profit may be more tested, but for merchants who urgently need to deal with inventory at a low price, the semi-custodial model can help them solve the problem of unsalable goods.
For temu, on the one hand, it can consolidate the low price mentality of the platform and improve the scale of users, on the other hand, the merchant is responsible for the performance of "this to the book", and the cost of platform expansion is compressed to a very low level, and there is no need to invest a lot of money in the first chain, which is conducive to the acceleration of market expansion.
This also means that the entry of more local warehousing and distribution merchants can also help them improve their expansion speed and scale effect.
At the beginning of this year, temu announced that it would recruit merchants from the United States, Europe, Southeast Asia, Japan, South Korea, Russia and other countries as the first batch of sites, covering clothing and jewelry, furniture and home furnishings, beauty and personal care, outdoor sports, industrial equipment, etc., at the same time, it launched a support policy that does not charge commissions.
In addition to many differences, AliExpress and Temu also have similarities in their consideration of implementing a semi-custodial model, both of which are opening up more capabilities for merchants. In this regard, Temu mentioned that with the development of the platform, the ability of merchants is getting stronger and stronger, and the platform also needs to give merchants more space and freedom.
Through the semi-managed model, the two platforms not only provide more business options, but also do not set "mandatory options", allowing merchants to choose their own business methods more flexibly. The platform's proactive opening strategy for merchants actually determines the upper limit of the platform ecology.
The competition in the cross-border e-commerce market is far from final, and everyone is continuing to deepen the overseas market, whether it is to strengthen logistics performance capabilities or promote the expansion of all categories, in order to deepen the core competitiveness and form a brand effect.
The semi-managed model, which became a hot topic immediately after full custody, is just the only way for players to improve their business models in the fierce competition. In 2024, it will be more difficult to compete for the cake than before, and higher requirements will be put forward for the response speed, chain capacity and operational ability of each platform.