Original link: https://www.latepost.com/news/dj_detail?id=1226
Relying on China’s manufacturing industry, a rich and affordable international e-commerce platform has grown up in Amazon’s backyard. Open the site, and more than 5,000 new items hit the shelves every day—such as $9 dresses, $2 lamps, $3 lipsticks, and more.
Just like Taobao more than ten years ago, it started selling cheap clothes, allowing tens of millions of people to have the pleasure of placing orders at will, and gradually began to sell more different types of goods.
This is the goal Alibaba set for AliExpress 10 years ago. But the first to make the appearance of “overseas Taobao” was the start-up company SHEIN. In 2021, SHEIN’s sales will be close to 20 billion US dollars, doubling from the previous year, and its current valuation has exceeded 100 billion US dollars. In addition to clothing, the categories covered have also expanded to make-up, pets, shoes, home furnishing, etc.
In 2012, AliExpress started cross-border retail, backed by a complete Chinese supply chain to do global business. That same year, Xu Yangtian, founder of cross-border e-commerce startup SHEIN, shut down all other businesses to focus on womenswear.
Ten years later, SHEIN has expanded from women’s clothing to more categories, following the same path Taobao took in China in the early years; AliExpress is no longer the representative of Ali’s global business.
At the beginning of this year, Jiang Fan, the former president of Taobao and Tmall, took over Alibaba’s overseas digital business sector and began to restructure Alibaba’s global business layout.
“LatePost” exclusively learned that after Jiang Fan took office, he unified all teams related to cross-border business to AliExpress, and handed over to Zhang Kaifu, the former head of Taobao industry, for unified management. Localized e-commerce operations in various markets around the world are led by Lazada. Accordingly, part of AliExpress’s localization team in Europe has been transferred to Lazada.
As of today, AliExpress covers more than 200 countries. However, according to the data released by Ali at the Investor Day at the end of last year, the GMV (transaction value) of AliExpress is only slightly higher than that of Lazada, which mainly operates in 6 countries in Southeast Asia, and the number of monthly active users is even lower.
AliExpress once had all the advantages of being a good e-commerce retail platform – the largest traffic, the most merchants, and the most successful experience. But what determines the fate of a business is not what resources it has, but who it wants to be. Resources are just means, not goals.
Rearrangement after the new president takes office
On the first day of 2022, Jiang Fan, the former president of Da Taobao (Taobao, Tmall, Alimama), was transferred to be in charge of the newly established overseas digital business sector. He said at the investor conference at the end of last year that when he first joined Ali, the GMV of domestic business just exceeded 1 trillion yuan, and now it has reached more than 8 trillion yuan. He saw that Ali is currently in the same situation in overseas markets. In an early stage, “I think (globalization strategy) is also the most important strategy for Ali’s growth in the next ten or twenty years.”
“LatePost” exclusively learned that for half a year after taking office, Jiang Fan carried out a series of sorting and re-layout.
Strategically, Jiang Fan emphasized that AliExpress should pay attention to user experience and high-quality supply. The specific approach is to deepen the previous path, such as giving priority to supporting merchants in overseas warehouses; launching AEMall to conduct hierarchical operations for high-quality supply; developing independent applications in key countries, and the national station team will be more responsible for consumers and industry operations. The team is more responsible for the goods.
In terms of organization, Jiang Fan handed over the cross-border business of Taobao Tmall Overseas, Lazada and AliExpress to Zhang Kaifu, the former industry leader of Taobao, to integrate the cross-border related supply parts to form a cross-border business. In the middle platform of merchants, merchants no longer need to operate in multiple overseas channels of Ali, and only need to publish products once.
Jiang Fan took AliExpress as the leader to sort out and integrate cross-border business, and at the same time put more localization operations on Lazada. “LatePost” learned that AliExpress’s localization team in Europe is currently divided into two groups. Given to Lazada, the localized merchants already on AliExpress will continue to operate, and the newly expanded localized merchants will be handed over to Lazada for operation.
The overseas scenarios of Chinese e-commerce platforms are mainly divided into two categories. One is to sell Chinese supplies overseas, that is, cross-border; ized market.
A number of Ali overseas employees believe that Lazada’s localization business is a more growing market, and it is also the focus of Ali in the future. However, Ali denies the claim that cross-border and localized businesses are focused, saying that both are equally important, and the expansion of overseas consumer markets must be a combination of local supply and cross-border supply.
“LatePost” learned that SHEIN’s focus this year will also be on localized operations in various national markets. In terms of growth rate, Brazil and Japan are the key markets for SHEIN.
An industry person who provides services for overseas enterprises analyzed that with the improvement of overseas Internet infrastructure, more and more entrepreneurs have cultural and contract performance advantages. There is no reason why local e-commerce platforms will not defeat cross-border e-commerce platforms.
But even if Lazada can do a good job in the local market in Southeast Asia, it does not mean that it can still successfully achieve localization after entering the European and American markets. An Ali overseas employee told “LatePost” that Ali’s current vision for overseas business is matrix warfare, that is, reducing internal competition and strengthening integration. “We need to work together to fight against Shopee and others.”
More competitors are joining the war. The independent station represented by SHEIN has greater ambitions, and TikTok’s live broadcast e-commerce is also trying to cross-border after localization. LatePost also exclusively learned that Pinduoduo has recently set up a project to promote its overseas business after two months of research.
“AliExpress inertia”
Effectively connecting Chinese factories to a large market can guarantee the success of a retail giant. Whether Taobao, JD.com, and Pinduoduo are in China, or Walmart and Amazon in the United States, they all rely on the cost-effectiveness of Chinese factories to sell trillions of yuan of goods a year.
When AliExpress started in 2009, no one had access to more Chinese factories and merchants than Alibaba, which owns both 1688 and Taobao. As a result, the platform has grown from 1 million users to 150 million in almost “natural growth”.
“Natural growth” is no exaggeration. The first platform to do small wholesale business. In 2012, the AliExpress team found that 70% of active users were individual consumers, so they decided to transform AliExpress into a retail business. Merchants sell goods without much effort, and the product information on Taobao can be transferred to AliExpress with one click.
In this way, AliExpress has become the e-commerce platform with the highest market share in Russia. In the words of several AliExpress employees, success is not due to some thoughtful strategy. “We have not determined which market to enter first. Just because Russia does not have light industries such as clothing, home furnishing, and digital accessories, e-commerce can only be started at first. Use AliExpress.”
After Ali went public in 2014, the issue of fake products attracted global attention, and AliExpress began to restrict Taobao consignment sales with no threshold. In those two years, the cross-border e-commerce platforms Wish and Shopee began to attract investment on a large scale. Similar to the story of small and medium-sized merchants on domestic Taobao flocking to Pinduoduo, small sellers who were dismissed flocked to rival platforms.
Two years later, AliExpress promoted brand transformation more aggressively, requiring merchants to have corporate qualifications and brand authorization, and comprehensively clean up individual sellers.
History seems familiar, but AliExpress failed to achieve a global Tmall. AliExpress directly invites big sellers on Tmall to settle in. By 2017, the overlap of these merchants is as high as 20%, including domestic brands Anta, Xtep, etc., but their contribution to GMV is only 5%.
An employee who was at AliExpress at the time analyzed that the transformation of AliExpress at that time was more like a “decree” of the platform, and the brand was not enthusiastic: it was when Tmall was growing the fastest, and the brand was making money in China, and there was no desire to go Overseas expansion, “It can only be said to give you face, come and do it.”
Consumer demands in China, Southeast Asia, North America, and Europe are quite different. The voltage and plugs of electrical appliances are different, and even the clothes size, sleeve length ratio and even the unit of measurement are different. Commodities aimed at the domestic market are often not suitable for selling globally. An AliExpress merchant explained that at that time, Tmall had a good business, but domestic hot-selling products were not necessarily easy to sell abroad.
During the same period, SHEIN also encountered similar problems, so they chose to design their own clothes and find manufacturers to place orders to ensure that they can provide suitable products for overseas consumers – not high quality, but to ensure that the clothes fit well and the quality is stable, allowing overseas consumption Those who are motivated often come to SHEIN to consume.
Cross-border e-commerce must be slower than local e-commerce, especially in distant Europe, the United States, and South America. If the goods no longer have distinctive features and stable quality, consumers will not often cross-border online consumption. “LatePost” learned that until 2018, the second repurchase rate of consumers on AliExpress was only a fraction of Taobao’s.
From 2014 to 2018, AliExpress’s policy of attracting sellers wobbled. In the end, the merchants saw that when the seller activity was low, the platform lowered the threshold; if there were too many people, the threshold was tightened; the big merchants invited by Tmall were not enthusiastic, and in 2016, they learned from the Tao brand to encourage “small but beautiful” .
This platform has long covered more than 200 countries around the world. However, its employees believe that the company’s operations in various markets are relatively extensive, and it has not optimized the consumer experience in a timely manner.
For example, when calculating the strength of the discount, AliExpress will not automatically adjust the currency and country. Consumers in some countries find certain numbers unlucky; in others, consumers are not used to coupons and are more used to coupon codes.
A former AliExpress marketing employee said that at the time, no one really paid attention to users. “You almost never found a banner with a black or Muslim image on the site. In AliExpress’s eyes, it seems that international business is equal to white and white. people to do business.”
He feels that this is related to Ali’s genes. “The first customer in Ali’s responsibility is the merchant, and the second is the consumer.” For a long time, the focus of Ali’s assessment has been GMV, PV (total visits), UV ( Visitors), consumer experience has not been the most important metric for the business, and this has only improved this year.
Amazon has spent nearly 20 years to establish a global logistics system. It has its own freighter and even nearly 100 cargo planes, and continues to send goods produced in China to the world. Shopee and Lazada are close to China, with convenient logistics. Latecomers such as SHEIN often start from a single category of commodities, with simpler logistics and lower costs, and expand categories when they have scale.
The variety of AliExpress is complex, and it is even more necessary to improve logistics efficiency and encourage consumers to repeat purchases. However, AliExpress’s warehousing, logistics, and customs clearance all rely on Cainiao’s capabilities and do not have its own contract performance department. An AliExpress employee said, “Cainiao will not only consider the interests of AliExpress, but must comprehensively consider the group and Cainiao. self and other interests.”
An example is that AliExpress wants Cainiao to provide more customized services for sellers on its own platform, but Cainiao wants to use unified products to serve sellers on other platforms to achieve its faster scale growth.
Cainiao offers standard products like $2 20-day, $5 10-day, $10 5-day. According to the report of Zhongtai Securities, it only takes 7 days for SHEIN products to be produced and distributed to consumers after they are put on the shelves, and it can be fully shipped without losing money very early.
Cainiao said that standard products are a trend, while AliExpress merchants mainly focus on small packages, pursue certainty and cost-effectiveness, and choose more standard products. Customized requirements are generally more applicable to B2B international freight customers.
Throughout the 2018-2020 period, when AliExpress wobbled in strategy and direction, competitors quickly caught up. Shopee has maintained a sales growth rate of more than 70% for three consecutive years since 2018, and SHEIN has achieved a sales growth rate of more than 100% for several consecutive years.
After 2019, AliExpress has made localization a strategic focus, but it has also taken a detour, choosing to transport Chinese goods across borders to be sold locally, or to find Chinese businessmen with local goods, rather than going to expand their categories locally and cooperate with them. Cooperation with local suppliers leads to dislocation of supply.
This is due to inertia, and it is also path dependent. After 2018, many AliExpress employees came from the Tao Department, and the successful experience of Taobao and Tmall was copied overseas. All aspects can find existing strategies, and then reuse them all the time, and many things have been done.
There are also issues with strategy and execution. In June 2021, AliExpress and Shopee will compete for the Brazilian market at the same time. Both sides went to the market on the other side of the ocean and started from scratch. As a result, after three or four months, AliExpress began to give up subsidies and further investment in the market.
The difference is determination and clear play. Shopee pulled a team of 300 people, and within a month, the business, products, and middle platforms all arrived in Brazil. They taught the merchants how to operate, and the user side also clarified the policy of full free shipping. And AliExpress employees said that AliExpress is very swaying in its user growth strategy, and who, how much, and how long the subsidy is being subsidized has been changing, “This month attracts a group of people, and next month attracts another wave, users and merchants. Bad experience.”
The lack of strategy and execution is essentially the input of resources and talents.
As early as when it went public in 2014, Ali announced that it would achieve its globalization goal of generating half of its revenue from overseas customers within 10 years. However, there is too much space in the Chinese market. In the past 8 years, the annual number of buyers on Taobao and Tmall has increased from 200 million to nearly 900 million, and the GMV has increased by 8 times. According to the revenue in 2022, this main business will earn 1.6 billion per day.
The competition has never stopped. Ali needs to compete with JD.com for brands, with Pinduoduo for cost-effective users, and with Douyin for user attention. In addition to core e-commerce, Ali has too many new businesses in the domestic market that are more important and urgent than overseas business – payment, logistics, cloud computing, new retail, local life, community group buying, etc. Ali has too many fronts that require resources and management’s energy investment, and there are too many positions that are more urgent for talents than going overseas.
The 13-year history of AliExpress is a process in which Ali constantly adjusts its perception of overseas business, and it is also an expensive but possibly unavoidable tuition fee.
Now Alibaba is reorganizing its globalization layout, bringing more experience and replacing managers who understand the consumer experience better, and has also caught up with a more unfriendly global environment and more mature competitors.
For Ali, and more Chinese business giants, global competition is harder today than it was a decade ago. But now there is no other choice but to try.
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