来源:新立场NewPosition
Going overseas to find increments is probably the consensus of domestic Internet companies, especially in the e-commerce industry.
According to Alibaba's recently released interim report for fiscal year 2024, Taotian Group's revenue increased by 8% year-on-year, and the overall revenue of international retail business increased by 66% in the same period, and overseas business has become the most dynamic growth engine. The market generally believes that the 315% year-on-year increase in transaction service revenue in Pinduoduo's third quarterly report is inseparable from Duoduo's cross-border contributions.
According to Bloomberg, TikTok, which has the dual advantages of short video traffic and social proliferation, is expected to expand its e-commerce business in the United States tenfold to $17.5 billion in 2024.
With a surge in turnover and the establishment of the pattern of the four tigers, it is foreseeable that 2024 will usher in a "full-scale war" of cross-border e-commerce. In the wave, the term "full custody" has almost occupied the public's attention in the past two years, and is regarded as a major business innovation of cross-border e-commerce. Full custody has transformed the tripartite relationship between the platform, merchants and consumers in the context of e-commerce, especially the identity of merchants, which has been rewritten to a certain extent.
As the competition escalates, there are also platforms that try to make some workarounds outside of the general solution, such as the "New Position" discussed, AliExpress launched a semi-managed service in early January this year. Another example is "Jiemian News" reported on January 25 that Temu, a cross-border e-commerce platform under Pinduoduo, is preparing a semi-custodial model, which is planned to be launched in the United States on March 15 and expanded to European sites at the end of the month. Previously, "Xiaguang Society" also reported that Temu may test the POP model in 2024, and third-party sellers will be able to operate stores independently on the platform.
There is no one-size-fits-all methodology, and when the industry is rapidly evolving, the adaptation of the corresponding business model may become the focus of the next stage.
01. Fully managed spectrum
Stability is central to understanding the hosting model. From the perspective of risk resistance, it is easy to understand why platforms have successively embraced full custody, which is conducive to stability and expansion, especially in cross-border transactions full of uncertainty.
According to the statistics of iResearch, between 2017 and 2021, the scale of China's cross-border export e-commerce industry continued to maintain a year-on-year growth rate of more than 20%, and the scale of the cross-border export e-commerce industry in 2021 has exceeded 6 trillion yuan. In recent years, the popularity of global online transactions and the penetration rate of e-commerce have increased, and Chinese sellers have been able to develop rapidly by virtue of the advantages of domestic supply chains.
In the context of rapid development, risk events are even more glaring. Taking the Amazon account ban incident as an example, in 2021, Amazon banned Chinese sellers who had engaged in related behaviors and froze the settlement of assets on the platform on the grounds of merchants' illegal operations, including "manipulating reviews", "swiping orders" and "illegal account association". According to the statistics of the Shenzhen Cross-border E-commerce Association and some data given by Amazon, since May 2021, more than 50,000 Chinese sellers have been closed on the Amazon platform, and the estimated loss has exceeded 100 billion yuan.
There are risks in platform operation, and the conventional idea is to accelerate the construction of brands and private domains, and avoid over-reliance on third parties. However, full custody provides another way of thinking: the platform is on the front line to lead the operation, and the seller "retreats into the background" to focus on supply. In short, under the full custody model, the role positioning of the platform and the seller is reassigned, and the platform is responsible for shop operation, warehousing, distribution, return and exchange, after-sales service and other links, and the merchant focuses on providing goods and stocking and warehousing.
With clear rights and responsibilities and lightweight processes, merchants have avoided risks, and the platform has quickly distributed goods and occupied the market with large-scale cost control.
However, this seemingly unified solution is also differentiated, in the fully managed player club, a horizontal axis is drawn based on the degree of hosting, AliExpress is on the left, Temu is on the right, which is related to its business positioning.
AliExpress's newly launched "semi-custodial" emphasizes that "merchants have more space for independent operation", and it is not difficult to see its "blood connection" with Ali's shelf e-commerce. AliExpress started with traditional e-commerce, a variety of business models coexist, as an early entry into the cross-border players have accumulated a large number of POP sellers, with an industry-leading POP product library, the current AliExpress full custody and semi-custody merchants are mostly converted from the original POP merchants.
Temu's style of play is similar to that of Pinduoduo's main site, using extremely low prices to pry open the market, so the execution of full custody is more thorough. Merchants can only choose this model, and their operations are packaged and handed over to the platform, and all attention is paid to horse racing under the bidding mechanism.
The buyer side can also perceive this kind of minimalism, and clicking on the product link in the Temu comment area will not jump to the product window, but will select the SKU that the link points to by default and add it to the shopping cart. Its purpose is to compress the decision-making process of user orders to the shortest, and simplify the product link jump and payment jump to simplify the most efficient rolling transaction.
However, it is important to note that this spectrum is in flux, and as their operating environment changes, companies are planning to take their business to the next stage.
02. Advanced selection
The pros and cons of full custody have been written many times, such as the merchant needs to make a choice.
On the one hand, the overall operating cost and risk reduction, fast ordering, especially good for understanding production, not good at operating factory sellers. On the other hand, under the strong control of the platform, merchants are caught in endless price involution. The fully managed greenhouse created by the platform for merchants can only get a temporary ticket after a rigorous survival of the fittest.
It's common for sellers on social platforms and communities to discuss how competitive Temu is. Search for "Temu nuclear price" in Xiaohongshu, you can see screenshots of many sellers' PO offers, and in the extreme competition, it is not an exaggeration to suggest that the declared price be cut in half compared with the original price. Some sellers shared their experience that profits should at least be filled in by product costs, return fees, shipping costs, bad review fines and other expenses, otherwise it will be a loss to help the platform make money.
The referee is the platform buyer. According to Temu rules, every time a product in a category is released, the system will automatically pull the merchant into the buyer group of this category to communicate issues such as listing, price verification, and stocking. When a category publishes 50 products, buyers will take the initiative to contact merchants to help optimize product links and provide operational guidance.
Experienced buyers focus on developing the potential of the supply chain, and will benchmark the prices of wholesale platforms such as 1688 to approve merchants' quotations, and some sellers said that a product has just been sold in Temu and the buyer's inquiry call is called to the factory. As long as there is a merchant who is more volatile than you, you must at least follow its standard volume, with no upper limit. The right to promote and operate owned by the buyer is also the right of life and death.
But at the same time, as the battle line lengthens, the platform also faces some options.
Full custody integrates the white label into the platform system and outputs it to the outside world, so that you can get good sales without operating a brand, which also limits the tonality of the platform to a certain extent.
Let's take the two representative platforms mentioned above as examples. Guosen Securities analyzed in the "Cross-border E-commerce Industry Special Report" that the breadth of commodity SKUs under full custody is limited and the ability to deploy the warehouse network is high, which is more suitable as a benchmark for selected fields and improves the tonality of the platform.
Based on the current category of Temu C-side, assuming that each buyer covers the daily operation and maintenance of up to 5000 SPUs, Temu's SPU limit is 2.76 million. Compared with Amazon's data in 2021, the number of seller accounts exceeded 6 million, and Amazon's SPUs were about 600 million based on 100 SPUs for a merchant.
In addition, Temu is in a period of rapid growth, and the proportion of organic traffic is lower than that of mature e-commerce platforms, so it needs the support of external purchases, so marketing expenses continue to rise. CICC Research estimates that marketing expenses are expected to be about US$2.1 billion in 2023, accounting for 12% of GMV, and as the penetration rate increases, Temu's average unit of customer acquisition and retention costs will continue to increase gradually.
After crossing the initial stage of growth, the implementation of full custody without transformation may face the imminent GMV ceiling due to the insufficient richness of the covered goods, and it may also be difficult to cope with the excessive pressure of warehousing and logistics and the lack of operational flexibility in the bursting period. As mentioned above, Temu has already tested the news of semi-custody and self-operation, but the platform is working at full speed on full custody in the early stage, and it will not be too easy to turn the head.
On the other hand, AliExpress has taken the lead in reforming and adding semi-custodial custody to be compatible with all seller types and maintain its own category advantages. However, as analyzed in the previous article of "New Position", it is still necessary to observe whether the platform can quickly run a reliable profit model, and whether the relaxation of price control will reduce the attractiveness to consumers.
03. Write at the end
Looking back on the development process of domestic e-commerce, it is generally the first to start with the volume, establish a wide range of consumer minds, and then supplement the consumer experience.
Now it seems that cross-border e-commerce is evolving along a similar path, conquering the market and expanding the scale during the dividend period, and after the period of rough growth has passed, it has begun to compete for refined operations.
A cross-border e-commerce practitioner told "New Position" that whether it is Amazon's implementation of VC sellers before, or the current platform focusing on full custody, first rolling low prices, and then turning to high-quality products is a common way to play. Sooner or later, cross-border sellers will have to break away from the role of a single supply chain agent in the context of full custody, study how to provide high-quality products and services, and return to the "business nature" of merchants. After all, the cross-border e-commerce companies that are fighting away from home can't avoid the problem of how to deal with Amazon's home advantage.
In addition, it is difficult for TikTok, which is the latest to enter the game, to copy the fully managed operation, and the implementation of live e-commerce is not smoother than that in China. According to Morning Consult data, more than half of U.S. users are reluctant to shop through social media, nearly 80% of users have never participated in live e-commerce, and after 2 years of exploration, Meta turned off Facebook and Instagram live shopping in 22/23 respectively.
The traffic advantage makes TikTok competitive among many cross-border e-commerce, but it needs to transplant a full set of consumption minds based on live broadcast to a new field.
The full custody model leaves the impression of a large package to the outside world, which may be a phased feature, and the platform and merchants step into the other side of the ocean under the escort of full custody, and the future development still depends on what trade-offs are made between brands and prices, sellers and buyers.
*The title picture and the accompanying pictures in the article are from the Internet.