The “Four Little Dragons Going Global” besieged Amazon, relying on these people!

In 2023, the global economy will recover and major e-commerce platforms will start the "grab order" mode. As overseas consumers tend to pursue high-cost-effective products, China's "Four Little Dragons" have followed the consumption trend and connected with domestic industrial belt factories, launching a "hosting model" to attack Amazon with cost-effective tactics.

When factories become an important tool for large companies to expand overseas, the operating model of cross-border e-commerce has changed.

China's "Four Little Dragons" of e-commerce companies going global are collectively "rolling out", putting Amazon under great pressure

SHEIN, AliExpress, Temu, and Tik Tok, the four e-commerce platforms that focus on "domestic products going overseas", constitute the mainstream of China's cross-border e-commerce and are nicknamed the "Four Little Dragons Going Overseas" by domestic sellers.

( data.ai released the iOS global shopping app user rankings in January)

According to data.ai statistics, in the monthly active user ranking of IOS global shopping apps in January 2023, Chinese cross-border e-commerce apps occupied four places, among which SHEIN ranked 2nd, AliExpress ranked 7th, and Temu ranked 17th.

Temu was launched in September 2022. With its ultra-low price, it attracted a large number of users and quickly became the most downloaded app in the United States, expanding rapidly in North America. Some industry insiders believe that Temu is a disruptor who uses low prices to crush its peers. In fact, Temu's approach has a precedent. Fashion e-commerce SHEIN has already carved out a niche with low prices. Founded in 2008, SHEIN had sales of US$160 million in 2016 and more than US$10 billion in 2020, a 70-fold increase in 4 years.

Compared with Temu and SHEIN, which are heavily invested in the United States, AliExpress has firmly occupied the markets of Brazil, Japan, South Korea, Europe and other countries, and is currently gradually increasing its attention to the North American market.

Backed by the powerful Chinese manufacturing, the "Four Little Dragons" broke through the siege with low prices, catered to the new needs of global consumers, and their performance continued to rise. Under the siege of the "Four Little Dragons", Amazon began to "retreat" . In 2022, Amazon laid off about 100,000 employees and had a net loss of up to US$2.7 billion.

Faced with such a situation, Amazon had to resort to a powerful weapon - forcing sellers to lower prices. Many Amazon sellers received emails saying that their listings were suspended due to incorrect product pricing. Sellers found that Amazon would only resume selling their products if they lowered their prices.

(Amazon email notification)

Despite the siege from China's "Four Little Dragons", Amazon still ranks first in the world in terms of active users in the global market, but the "Four Little Dragons" are not to be outdone.

The overseas expansion routes of the "Four Little Dragons" are different. Among them, SHEIN focuses on the North American market and creatively applies the on-demand production model of "small orders, testing and then returning orders" on a large scale. Temu, which has recently grown rapidly by "burning money advertising" and "social fission", also has 95% of its downloads coming from North America.

Unlike SHEIN and Temu, AliExpress focuses on multiple national markets, with North America being just one of them, which can better offset the uncertainty of a single country market.

Factory goods have become an important tool for the "Four Little Dragons" to capture overseas markets

Behind the overseas expansion of major manufacturers such as SHEIN, AliExpress, and Temu, foreign trade factories are undoubtedly an important tool.

AliExpress watch manufacturer Zeblaze prepared 10,000 watches before the Lunar New Year, but received news that several models were sold out on the second day of the Lunar New Year. During the normal Spring Festival holiday, sales doubled.

  (Factory sellers saw a surge in orders after joining AliExpress’ “full trusteeship” business)

Consumption in Europe and the United States is currently declining. According to data from the U.S. Department of Commerce, the U.S. personal consumption expenditure price index increased by 5% year-on-year in December 2022, although the increase fell to the lowest level since the end of 2021. Executives of the country's large retail chains expect inflation to continue in the first half of 2023.

High prices have affected the lives of ordinary people. Europe and the United States have become more dependent on Chinese manufacturing. The high-cost-performance products of Chinese foreign trade factories just match consumer demand. Factories are eager to "go overseas" to grab market share. The "going out" of Chinese manufacturing has become a common demand of overseas consumer markets and domestic small and medium-sized enterprises.

The four "Little Dragons" have followed the trend and launched a "fierce attack" on factories. Currently, SHEIN, AliExpress, and Temu among the "Four Little Dragons" are all recruiting investors from the backbone of the manufacturing industry - small and medium-sized foreign trade factories. It is reported that AliExpress held 100 investment promotion meetings in the three major industrial belts across the country in just two months after the beginning of the year.

my country's foreign trade factories have strong supply chain capabilities and have formed hundreds of export cross-border e-commerce industry clusters. The top cross-border e-commerce platforms also sell dozens of large categories of products with many subcategories. These industry clusters have their own characteristics and are spreading from the coast to the inland, from the east to the west. For example:

Pearl River Delta region : Shenzhen 3C, Shenzhen medical equipment, Foshan furniture, Guangzhou kitchen and bathroom, Zhongshan lamps, Shantou toys;

Yangtze River Delta : Hangzhou clothing, Ningbo small appliances, Ningbo office stationery, Yongkang hardware, Nantong home textiles, Wenzhou glasses, Anji chairs;

Haixi region : Quanzhou shoes and boots, Fujian clothing;

North China : Qingdao Home Textiles;

Central and western regions : Sichuan and Chongqing auto parts, Xuchang wigs.

Most of these factories are not familiar with how overseas operations and promotions work. In order to help foreign trade factories to speed up the recovery of production capacity while meeting overseas demand, cross-border e-commerce platforms have launched a "hosting model". Currently, AliExpress, Temu, and SHEIN have all launched related businesses, but TikTok has not yet followed suit.

This model eliminates the biggest pain point for factories and foreign trade sellers. Sellers only need to focus on the supply of goods, and store operations, logistics, after-sales and other work are all taken over by the platform, which significantly improves the success rate of going overseas.

Foreign trade factory managers have become popular in the eyes of the "Four Little Dragons Going Global", and both AliExpress and Temu are paying attention to this group of people

In order to attract more factory-type sellers, these platforms have also upgraded their services. Among them, the AliExpress full-hosting service, which was launched not long ago, has been favored by many sellers.

Recently, a cross-border insider revealed that many foreign trade companies have joined AliExpress's full hosting service. In the latest batch of companies that have joined, in addition to clothing giants and 3C factory super sellers from Fujian, there are also a considerable number of small and medium-sized factories and industrial and trade integrated sellers.

A small factory seller used to sell one hot link for $800 a day. After using AliExpress's fully managed service and opening a new store, he can now sell two links for $1,500 a day. The sales volume increased rapidly in a short period of time, and the sales volume nearly doubled.

Industry insiders assert that more and more factory-type sellers will choose the "multi-platform hosting" approach to go overseas, operating simultaneously on multiple platforms such as AliExpress Full Hosting, SHEIN, Temu, etc., to reduce the operating risks of a single platform.

It is worth noting that AliExpress’s full hosting service is not only suitable for factory-type sellers with simplified operations, but also for trade sellers who go global on multiple platforms.

Shenzhen Qian'an E-commerce Co., Ltd. started a multi-platform layout after experiencing the Amazon account ban. It entered AliExpress in July 2022. In the nearly half year since its opening, its GMV has soared 151 times, far exceeding the boss's expectations. At present, it also closely follows the platform policy and actively invests in full hosting; Yuansu Chuangda, one of the earliest merchants to enter Temu, ranks TOP3 in the same category, and also communicated with AliExpress in January this year to access full hosting services.

The cross-border circle generally believes that with the background of large companies concentrating on going overseas, the threshold for cross-border operations is being lowered, but merchants' control over the supply of goods has become more important, and product advantages are becoming more and more important. For cross-border sellers in 2023, they still have to choose platforms or services that are more suitable for their own advantages and operating methods.

Currently, AliExpress does not charge commissions for its fully managed service, and the sales returns are relatively fast. The platform is responsible for all cross-border logistics, and it also provides a three-month after-sales exemption period for the first batch of fully managed stores. If there is any refund during the exemption period, the platform will be responsible. This gives sellers a new choice besides Temu and SHEIN.

Alibaba, Pinduoduo, and SHEIN have begun to pay attention to factory-based, integrated industrial and trade sellers, as well as trade sellers with product supply chain advantages. These large factories are using an advanced "hosting" model to promote Chinese manufacturing abroad.

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