Before the Lunar New Year, Ali released its 2023Q4 financial report, and the performance of several major business segments is remarkable.
Among them, Ali International's data is particularly eye-catching.
According to the financial report, the revenue of international business increased by 44% year-on-year to 2851.6 billion yuan, which has surpassed Alibaba Cloud and become the second largest business group under Alibaba.
Specifically, the loss per order of LA Z A DA continued to narrow year-on-year, TR E N D Y OL achieved double-digit order growth, while AliExpress (AL I E X P R E SS) orders increased by up to 60%, which is the main force of growth.
It can be said that Ali restarts growth, and AliExpress may have to take the lead.
For the rapid growth of AliExpress, the financial report is attributed to the CIO I CE program (i.e., managed service) for merchants.
But after all, the number of words in the financial report is limited, and if you disassemble AliExpress's global performance, you will find that the business behind it is not so simple.
For example, Europe and the United States no longer roll up at low prices, but mobilize the "quality parity" supply of POP merchants and dig the gold mine of middle-class consumption; In South Korea, a "big country of online shopping", it has achieved the ultimate in logistics and cost performance, and attracted users who have downgraded consumption.
In other words, in different markets, AliExpress has taken the initiative to cater to local mainstream consumer groups to continuously leverage the wealth cake.
1. Aim at the middle class in Europe and the United States and guide the supply of "quality parity".
AliExpress will focus on the U.S. market this year, with semi-custody as the key development direction. ”
This is the answer of the person in charge of AliExpress's territorial merchant operation when talking about the "AliExpress regional focus" at an event in January this year.
In fact, when the United States was proposed as one of its key development markets last year, it still took full custody as the core growth point.
The latest financial report shows that more than 60% of AliExpress's orders increased year-on-year, mainly driven by CH O I CE.
In less than a year, the style of play has been upgraded and evolved, because this move can stimulate the growth of the US market.
It can be seen that the top retail companies in Europe and the United States have a commonality: the proportion of private brands is extremely high - for example, the proportion of its own brands in Al Di (ALDI) is 90%, and the proportion of CO S T CO is also 20%.
In contrast, the proportion of private label brands in China's retail industry (in 2022) is less than 5%.
Behind the big difference in retail formats is that under the olive-shaped social structure of the United States, the main consumer force is the vast middle class, and their consumption characteristics are generally "both quality and parity".
And these high proportion of private brands, which are generally about 20% off the brands of similar manufacturers, are tailor-made for "quality parity" consumption.
In fact, SH E IN was able to successfully enter the US market at the beginning, aiming at this route: by recruiting troops at the factory end, it made a self-operated clothing brand that is both fashionable and cheap enough.
As far as AliExpress's move to further launch semi-custody on the basis of full custody is concerned, it seems that this is also the intention.
AliExpress has been making announcements for a week, and each announcement is throwing money and subsidies, and the main force is semi-custodian.
Not long ago, at the Yiwu Merchants Conference, a local AliExpress seller said to **.
The reason why merchants are so "eager" is that the core of semi-custody is equivalent to further "decentralization", so that the development space of merchants from white label to brand creation can be released.
It can be seen that the full custody model focuses on the lowering of the threshold for merchant operation - the platform covers all key processes such as price verification, marketing, drainage, sales, cross-border logistics, overseas distribution and even after-sales customer service.
Under this model, those factory-type and industry-trade integrated businesses that focus on production but are not good at operating also have the opportunity to get a piece of the pie.
According to the data, in March last year, AliExpress, based on the fully managed CIO I CE, brought significant traffic improvement and order conversion to merchants by improving the shopping experience, and the platform orders increased by 50% year-on-year.
Under the current semi-managed model, merchants can continue the original mode of operation, including pricing power, listing rights, etc.
A higher degree of freedom has a lot of power for pop merchants (third-party merchants) who already have business experience.
For example, a seller of industrial machinery tools said that the products in their own category usually need technical support, "we do the pre-sales ourselves, and the platform helps us do the rest, customer satisfaction is obviously improving, and the speed of new product billing is much faster than before."
In addition, many foreign trade bosses have a "dream" of creating a brand in their hearts. In the words of the owner of a furniture factory in Huzhou, "The factory was in the 90s, I took it from my father, and I have been doing it for so many years, we always want to leave a brand for our children, and we can't still be a factory."
The "semi-custodial" model means that the pursuit of brand, quality rather than blindly rolling low-priced goods, can also stand out on the platform.
In this way, the product categories of the platform can be further expanded to quality and branding on the basis of the original white label, so as to better fit the mainstream consumption characteristics of the above-mentioned US market.
Of course, the same is true for the European market. According to AliExpress's official introduction, the United Kingdom, Germany and France are also in the first batch of open lists of semi-managed models. According to statistics, 57% of consumers in the UK, 63% in Germany and 59% in France all say they pay for premium shopping services.
In addition, while delegating power, the semi-custodian model will also give support at the performance and marketing levels to mobilize the enthusiasm of merchants.
Taking fulfillment as an example, POP merchants who have not been included in the full custody system in the past must not only pay attention to business flow, but also have to keep an eye on the delivery situation in the warehouse, and even many bosses go to the warehouse to pack by themselves.
In addition, the commonly used surface mail logistics has a logistics time of up to 16-24 days, which greatly affects the user experience. A person close to AliExpress said that if users wait a long time to receive the goods, they will definitely not buy it next time.
After the implementation of semi-custody, under the same cost, by upgrading surface mail to standard and priority express products, the cross-border logistics speed of merchants can be increased by about 9 days on average.
The same is true for marketing.
Many sellers who have joined semi-custody have mentioned AliExpress's CHO i ce channel specially built for full custody and semi-custody.
Previously, AliExpress's C O I CE products were mainly composed of fully managed store products, and after the semi-custodial was launched, the original POP sellers could also enter the C O I CE field and enjoy related rights and interests such as C O I CE marking, product recommendation, free shipping, free shipping returns, etc., to drive traffic and conversion rates.
An auto parts merchant mentioned in an interview, "The average daily sales of a maintenance tool product in the store were about 350 US dollars, and after joining the semi-escrow for 1 month, the average daily sales rose to 1,100 US dollars."
In this way, under the "decentralization and protection", it can be seen that after the semi-custody model is released to attract investment, the field is hot.
According to AliExpress information, in the past month, the number of inquiries about semi-hosting has increased by 5 times month-on-month.
36Kr data also shows that since the launch of AliExpress semi-hosting, a large number of cross-border merchants have doubled their stocking, and some merchants said that the current semi-custody has accounted for 80% of orders.
On the whole, it will no longer roll up low prices and return autonomy to merchants, attracting a large number of pop merchants to pour in, guiding the rich supply of "quality parity" goods, which fits the consumption characteristics of the European and American markets and drives the high growth rate of AliExpress.
Second, the ultimate volume logistics and cost performance, catch up with and surpass the Korean e-commerce giants.
In South Korea, AliExpress was unable to replicate the successful path of Europe and the United States.
For European and American users, as long as the product is beautiful enough, they are willing to wait a little longer, but Korean consumers will not compromise.
According to relevant surveys, 62% of Korean e-commerce consumers have been accustomed to using the local e-commerce platform CO U P A NG.
One of the reasons they chose CO U P A NG is that it is "fast" enough.
For example, the goods ordered passionately on the platform in the middle of the night can be delivered at 7 o'clock in the morning the next day at the earliest, and the real "eyes are closed and opened" express delivery will arrive.
The speed of co u p a ng is that within 12 km of 70% of Koreans, there must be a co u p a ng warehouse.
With these dense warehouses and 15,000 full-time delivery staff, CO U P A NG can achieve the fastest delivery speed in the country.
In fact, not only CO U P A NG, but also other local e-commerce companies in South Korea are also very fast. After all, South Korea has a compact land area, the population is concentrated in large and medium-sized cities, and the terrain is dominated by plains and hills.
Therefore, Korean consumers' pursuit of logistics timeliness has been raised to the point of almost "strict". For cross-border e-commerce, it is difficult to gain the favor of users if it cannot improve the logistics speed of the local-South Korean segment.
That's what AliExpress is.
It entered South Korea as early as 2018, but there were signs of an outbreak in 2020, and the turning point was that in that year, it established Weihai and other preferred warehouses in Shandong, across the sea from South Korea.
After all, the shortest distance between Weihai and South Korea is only 93 nautical miles, and the nearest distance from Weihai to Heze is 350 nautical miles, and it is faster to go abroad than out of the province.
After the completion of the warehouse, 93% of the goods can arrive in South Korea for customs clearance the next day after warehousing, and the vast majority of Korean consumers can receive their packages within 3-5 days after placing an order.
The delivery speed of some products has even reached a level comparable to that of local e-commerce in South Korea. An AliExpress merchant said: "From China to South Korea, it only takes one and a half days to send it quickly, and many Korean consumers feel incredible." ”
Not only is it faster, but it also has more advantages in terms of storage capacity management and cost compared to building a warehouse in South Korea.
As shown in the figure below, South Korea's housing prices have experienced another wave of surge after the epidemic, with the average price of each set soaring to 4 billion won (about 20 million yuan), and it is not a problem to buy a small flat in the inner ring of Beijing, Shanghai, Guangzhou and Shenzhen, let alone in the third-tier city of Weihai.
These real money** saved will be converted into postage discounts for consumers.
What's more, AliExpress will also give subsidies and support to merchants, such as more than 20% cheaper freight for goods within two kilograms, and 50% cheaper for more than two kilograms.
However, excellent logistics alone is not enough to satisfy Korean consumers.
In the past two or three years, they have been plagued by the economic downturn and high prices, and when shopping online, in addition to pursuing decency, they are also concerned about the cost performance of products.
However, the abundance of supply in the Korean domestic market is limited. Take Koreans' favorite coffee machines and fascia guns as an example, the product richness and ** on the co u p a ng are not as good as **.
The reason is well known – South Korea is relatively short of local supplies and has long relied on imports.
According to relevant data, South Korea has a total of 1,176 products that are more than 50% dependent on specific countries, for example, 99% of South Korea's imported kimchi comes from China.
Most of the local mainstream e-commerce platforms in South Korea also come from imports.
An industry source revealed: "Korean sellers who are more mature will purchase directly in 1688 or go to Yiwu to purchase." ”
In this way, imports are turned into domestic sales, so that many consumers simply go to overseas ** apps to scan goods.
According to South Korean customs data, in 2023, South Koreans in cross-border e-commerce will most like to buy goods that are necessary or loved in daily life, but have higher or fewer varieties in the domestic market.
And to solve the problem of Korean consumers, for China, which has developed or even surplus light industry, is not easy, it is not much pressure.
AliExpress has seen this and has also vigorously promoted the CH O I CE program in South Korea, constantly recruiting merchants to enrich supply.
At the same time, a special CHO i ce display entrance is opened on the homepage of the app to give merchants more traffic support.
Profitable, last year's Double Eleven, the stock volume of AliExpress's rookie preferred warehouse increased by 10 times compared with the previous year, including the Shandong warehouse, which has increased significantly.
Korean consumers have also felt the change, and some users have reported that they only spend 150,000 won (about 81 yuan) bought a 45-centimeter-high plastic Christmas tree on AliExpress, which is at least double on mainstream Korean e-commerce platforms.
Based on this, in November 2023, the number of users of AliExpress Korea Station will reach 7.07 million, successfully surpassing South Korea's veteran shopping **GM A R K ET and ranking among the third largest e-commerce platforms in South Korea.
In other words, AliExpress met the demand of Korean consumers for "fast delivery" by building its own warehouse, and leveraged the supply of cost-effective goods through services such as CH O I CE, and finally snatched food from South Korea's local e-commerce.
As the world's fourth-largest mature market in terms of e-commerce penetration, South Korea's e-commerce market has exceeded $160 billion, almost the same as the entire Southeast Asia.
In order to eat more meat, AliExpress has released a long-term line to continuously expand its competitive advantage.