E-commerce battle, four major cross-border e-commerce platforms VS Amazon

As China's domestic traffic pool becomes increasingly saturated, China's cross-border e-commerce companies have tacitly turned to overseas markets to conquer cities and territories.

Known as the “Four Little Dragons cross sea”

AliExpress, SHEIN, Tik Tok Shop and Temu

Relying on China’s strong domestic manufacturing capabilities, supply chain and logistics foundation, as well as its own unique business model innovation, it will surge forward in 2023 and disrupt the global e-commerce landscape.

The four little dragons have different playing styles.

But they all made the world feel the powerful Eastern power.

In the past year, they dominated the global shopping APP downloads and ranked among the top four in terms of growth rate.

The fierce momentum forced Amazon, the traditional hegemon, to put down its posture and hastily challenge

Cross-border e-commerce platform Temu will only be launched in the United States in September 2022

However, its "barbaric growth" speed is staggering, and it has expanded to nearly 50 countries and regions around the world within one year of its launch.

“Team Up, Price Down”

Coupons and discounts fly together, the absolute low price advantage and viral social fission become Temu’s invincible spear of attack.

February 2023 Temu appears in North America's "Super Bowl"A $15 million advertising slogan “Shop like a millionaire”. Its downloads surged 45% in one day

It can be said that it seizes the minds of users with "low price",a successful attempt,The “fully managed model” popularized by Temu,It is the most critical innovation in this round of overseas expansion.

Merchants focus on supply, Handled by the platform nanny

Operations, warehousing, distribution, after-sales and other links, Lowering the threshold for businesses, Save effort and worry, It is convenient for the platform to take advantage of industrial clusters, Achieving dimensionality reduction on price, Temu was able to quickly gain a foothold,“Full custody” plays an important role.

Seeing that Temu has tasted the benefits, the other three companies have followed up with "full custody" and become a common choice for overseas e-commerce companies. However, this model has been criticized for one thing, that is, the pricing power is in the hands of the platform, and the brutal price comparison mechanism means that merchants The profit share will not be considerable

To this end, AliExpress, a subsidiary of Alibaba, took the lead in launching "semi-custodial" to return pricing and operating rights to sellers.

Difficult aspects such as logistics are left to the platform to make up for the inherent shortcomings of "full custody"

Temu soon followed suit and announced the launch of its own "semi-managed model".

The name is the same, but the lining is different. Temu is still responsible for pricing.

However, the merchants themselves are responsible for warehousing and logistics performance.

This just exposes the shortcomings of Temu, a dark horse, in logistics.

Another company that is good at price tags is SHIEN, but as a fast fashion unicorn that focuses more on clothing,

It also attaches great importance to the fashion of product selection, so it is very popular among young people.

It has built a unique "quick return for small orders" model and uses algorithms to track trends

Forecast demand and test market response with small batch orders of 100 to 200 pieces.

(Only China has the ability to undertake such small orders)

If the sales volume is considerable, the order will be returned to production, otherwise, production will be stopped immediately to avoid inventory backlog.

It can also rely on its rapid response capabilities to create hot products with a flexible attitude.

So how do you track and take care of countless small orders at the same time?

SHEIN vigorously promotes the digital transformation of the supply chain. By helping and cultivating traditional manufacturers to upgrade, SHEIN has achieved full-link informatization, that is, the progress of all links from design to logistics can be controlled.

The best boxer is the one who can't break fast

The flexible supply chain has created SHEIN’s speed. From design to finished product, a piece of clothing can be

It only takes 7 days, with 2,000+ new items released every day, compared to ZARA which releases new items twice a week，A few streets away

But SHEIN also has troubles that he can't get rid of while he's galloping.

After being criticized for plagiarism and going to court with Temu, as well as the pressure of slowing down growth to conquer the world with "fast", the "fear of slowing down" can easily become a personal demon.

SHEIN has made frequent moves in the past year. In addition to operating its own brands, it has promoted third-party platform business, while also launching a "buy, buy, buy" model and acquiring Missguided, etc.;

A basket of fast fashion brands is also rumored to have quietly launched an IPO in the United States.

In a word, the moves are not slow and the pressure is not low.

In comparison, AliExpress, which is backed by Alibaba, has the oldest qualifications.

It has a more solid style of play. It is the only player among the Four Little Dragons that "builds its own logistics." It has persisted in infrastructure construction for more than ten years since its establishment. Today, it has built a "moat" that is insurmountable by its opponents.

It has been deployed around the world for many years and has covered more than 200 countries and regions.

In September 2023, with the blessing of Cainiao, AliExpress launched the "5-day delivery" international express.

Be the first to go online in 5 countries including the UK, Spain, and the Netherlands.

Let the slow-moving foreigners experience the "Chinese speed".

Even the Korean market has been torn apart by it. In October last year, AliExpress became the first overseas platform to enter the TOP3 of Korean e-commerce. In January this year, AliExpress fully launched the "semi-managed" service, giving full play to its own strengths, and has become a new trend after Temu's "full managed" service.

TikTok Shop takes a different path, relying on TikTok live broadcasts and short videos to accumulate

With a huge traffic pool, TikTok Shop has strong social attributes and content e-commerce potential.

For example, data show that U.S. users brush for 2 hours a day TIKTOK. It is difficult to resist the temptation of shifting from "brushing" to "buying and buying". Compared with, they spend an average of 9.7 minutes a day on Amazon. The giant Amazon is inevitably jealous of the gap.

In the Southeast Asian market, which was the first to test the waters, the development of TikTok Shop has been full of twists and turns.

From being invincible with over 300 million monthly active users, to being accused of “damaging the interests of local small and medium-sized enterprises”

The most critical Indonesian market was suddenly shut down. Later, through dialogue with the government, merger with local Indonesian e-commerce companies, and of course financial investment, it was finally approved to open again without any danger.

His experience fully revealed the policy risks faced by overseas e-commerce companies.

In 2024, TikTok Shop has set an ambitious GMV (gross merchandise transaction) target of US$50 billion, more than double the US$23 billion in 2023. Judging from the current momentum, as long as it does not encounter unexpected policy interference, this A number should be its target that can be reached in one jump

Each of the four little dragons going overseas has its own advantages and different path choices, but together they demonstrate

Several major capabilities of China’s overseas e-commerce;

First, relying on the strong domestic manufacturing base, accurately connecting suppliers and market demand, and providing a wide range of high-quality and affordable products; second, being good at using diversified social media channels to quickly increase visibility and user stickiness; third, through continuous Optimize logistics and other aspects to allow global users to enjoy an unprecedented convenient and efficient shopping experience

In contrast, Amazon, the big brother among overseas e-commerce companies, has accumulated more than 20 years of experience in warehousing and logistics construction since it started as a self-operated business. With its good logistics performance capabilities, focus on product quality and better user experience, it has long been the European and American leader. The perfect choice for online shopping for the middle class

But when China’s “book kings” went abroad and spread the “cost-effectiveness” trend overseas, Amazon’s territory was gradually eroded. As of October last year, Temu and SHEIN had nearly 110 million U.S. users.

Close to Amazon, which lost 8% and 15% of its users respectively compared with the previous two years.

Big Brother finally couldn't sit still anymore. It made a rare concession and reduced the sales commission for clothing products priced below US$15 from 17% to 5%. It clearly intends to fight.

On the "Black Friday" in 2023, the Four Little Dragons jumped ahead and extended the promotion cycle with powerful discounts and diverse gameplay. In contrast, Amazon, which is quite traditional, couldn't help but experience it, similar to "Double Eleven" In the fierce battle, the overseas e-commerce landscape is being shaken and reconstructed by fierce new players.

However, the rapidly rising Four Tigers should still maintain a clear mind and a humble attitude while making rapid progress. First, Amazon, as a long-term overlord with deep barriers, its strength cannot be underestimated. As the Four Tigers go out to sea and enter deep waters, competition will become increasingly fierce. .Secondly, the encounter of TikTok Shop in Indonesia

It provides a sobering lesson, as the increased uncertainty brought about by going overseas will continue to exist.

The third is to rely on low prices to open the market. Although it has been proven to be feasible, the sustainability of money-burning subsidies is still questionable.

The Four Tigers' journey overseas has just begun. In the future, they will continue to adapt to changes in demand in overseas markets, strengthen localized operations and services, and at the same time continue to innovate business models and marketing methods.

In the long term, solid quality control and logistics infrastructure construction, continuous improvement of user experience and even further brand building are internal skills that every entrant needs to practice hard.