Rushing into Southeast Asia, how far can Vipshop go?

As domestic e-commerce traffic has been divided up, many domestic companies have set their sights on overseas markets. Unlike Pinduoduo, which directly launched TEMU to seize overseas markets, Vipshop, as a second-tier domestic e-commerce platform, has a more circuitous overseas strategy, taking every step with extreme caution.

Since the beginning of this year, Vipshop has successively invested in overseas brands Qpendo and Rexing, trying to open up new growth by going overseas. Recently, Vipshop has also established a Southeast Asian department and may officially launch Southeast Asian services, engaging in fierce market competition with a number of established e-commerce companies in Southeast Asia.

At the same time, its independent women's clothing website Nowrain also lived up to expectations, not only winning the Top Fashion Merchant at the British Fashion Festival, but also becoming the top women's clothing brand on TikTok. With the three swords of self-built brands, strategic investment, and market expansion, will Vipshop achieve the desired results on its overseas expansion?

Vipshop officially enters Southeast Asian market

"VIPSHOP will officially launch related services in Southeast Asia," said a seller. Its official website and mobile application software VIPSHOP SG will be launched simultaneously. Currently, the Singapore site has been opened. The platform mainly provides high-quality, low-discount internationally renowned brand products to Southeast Asian consumers. A Southeast Asian business operation team has been established in Singapore.

On the LinkedIn page, we can find that Vipshop has set up its Southeast Asian headquarters in Singapore. The department currently has 46 employees. The head of Vipshop's Southeast Asia region is Bernard Tay, who previously served as a supervisor in multiple regions of Amazon. He began to be in charge of Vipshop's Southeast Asia region in April this year.

On Vipshop's Southeast Asia website, the shopping interface is very simple. Currently, there are only four sections: flash sale, last minute sale, coming soon, and previous events. Only some products are listed, involving categories such as clothing and beauty, and the slogan "officially open, 30% discount" is displayed. In response to the problem of few products on the shelves, Vipshop also stated that in the future, the types of products sold on the platform will continue to expand, and other products will be launched simultaneously.

In fact, Vipshop's entry into the Southeast Asian market had already shown signs two months ago, when it posted internship job opportunities in Southeast Asia on LinkedIn. One of the recruitment information showed that the job locations included Vietnam, Thailand, Malaysia, and the Philippines. It is clear that Vipshop's entry into the Southeast Asian market has already shown signs.

There is a reason why Vipshop is eyeing the Southeast Asian market. At present, the focus of China's cross-border e-commerce market is shifting from the European and American markets to the Southeast Asian market. The local cross-border e-commerce is growing rapidly at a rate of 5.1%. Coupled with a population of 600 million and an Internet penetration rate of over 70%, it can be said to be a blue ocean market. eMarketer predicts that the e-commerce sales in Southeast Asia will increase by 20.6% in 2022 , much higher than other parts of the world.

It is not surprising that Vipshop chose to expand to Southeast Asia. Like many companies, it wants to expand its overseas market business and seek new growth curves. However, with the rapid growth of e-commerce in Southeast Asia, Vipshop is under great pressure to take root in Southeast Asia. At present, Shopee, Lazada and Tik Tok Shop are the top three most popular e-commerce companies in Southeast Asia, backed by Tencent, Alibaba and ByteDance respectively . Compared with their long-term presence in Southeast Asia, Vipshop is just a newcomer. If it wants to stand out in Southeast Asia, it will need strong funds to increase traffic and market share in the early stage.

Although the road ahead is long, many industry insiders are still optimistic about Vipshop. In their view, Vipshop, which focuses on "brand" sales, has deep e-commerce experience in China, which is more in line with the gradually mature e-commerce market in Southeast Asia. With the complementary relationship, it is easier to gain the favor of local consumers in Southeast Asia. Entering the Southeast Asian market is likely to be a very important transformation opportunity for Vipshop. In the future, Southeast Asia is likely to set off a new competition.

At that time, Vipshop's competitors will not be limited to similar competing platforms, but may involve more, especially those with whom it once maintained good cooperation. Some industry insiders speculate that TikTok, which previously maintained good cooperation with Vipshop , is likely to change from a partner to a rival due to overlapping businesses, but Vipshop's current survival is still an unknown.

It seems that Vipshop still has a long way to go to take root in the Southeast Asian market, and there is still a lot of experience to learn. On the other hand, Vipshop's overseas expansion is not limited to expanding the Southeast Asian market. It is also deepening its overseas e-commerce path by increasing investment in external overseas brands.

Vipshop invested in two cross-border brands in 2022

As a second-tier e-commerce platform in China, Vipshop seems to have always been in an awkward position, with Alibaba, JD.com and Pinduoduo in front and rising stars such as Douyin and Kuaishou in the back. Although Vipshop has achieved profitability for several consecutive quarters, its net income and active users have shown a downward trend since 2022.

In addition, the domestic e-commerce market is currently saturated, so it is not easy for Vipshop to maintain its basic market , let alone achieve further business growth. However, cross-border e-commerce has been gaining popularity in China in recent years, especially in the past two years, and is becoming a new trend.

Finding new market growth overseas naturally became the only choice for Vipshop. Although Vipshop started to develop its overseas business very early, unlike Pinduoduo, which invested heavily in TEMU and went overseas in a high-profile manner, Vipshop has always been more cautious and only tried to go overseas in small steps.

The editor learned that Vipshop had previously invested in Indian fashion flash sale website FashionAndYou, French fashion e-commerce platform Showroomprivé, British fashion sale e-commerce platform BrandAlley and Southeast Asian group purchase e-commerce platform Ensogo. Unfortunately, Vipshop seems to have not bet on potential stocks. The Southeast Asian e-commerce platform Ensogo invested in did not become the Southeast Asian version of Vipshop as expected. The failure of the platform also cast a shadow on Vipshop's overseas e-commerce market expansion. However, we can see that Vipshop has been trying to expand overseas markets by investing in brands, while accumulating experience in developing its own brands.

This year, Vipshop has made two investments in two overseas companies, Qpendo and Rexing, both of which can provide support for the development of its business.

Founded in 2022, Qpendo is a brand overseas company that provides high-frequency daily necessities for young and fashionable women aged 18-35 in the global market . The founder has entered the cross-border e-commerce industry since 2010 and was once a top merchant on platforms such as Amazon and AliExpress.

The company was initially established with the main business of incubating DTC brands. It has incubated brands including the maternal and infant brand Nemokid, the wig brand Colorlife, and the scarf accessories brand Fedlly . Qpendo has rich experience in product development, hot product creation, advertising, and social media marketing . As for Vipshop's own brand, the experience of incubating overseas brands seems to be able to be added to its brand Nowrain. According to the information received, Qpendo will also transform into a B2C platform e-commerce in the future and integrate the previously incubated brands on the platform.

Another brand, Rexing, was founded in January this year and is still in its early stages of development. It is a brand that focuses on women's outdoor functional clothing , and its products emphasize both fashion and practicality. At the same time, its founder and executive team also have many years of experience in operating overseas clothing and fashion brands.

At present, Rexing has built an independent website overseas. More than 70% of the website visitors are from the United States. It implements a policy of free shipping for orders over $99 and a 30-day return period. With the rich overseas and social media marketing experience of the team founder, Rexing has accumulated a lot of traffic.

From the above investment of Vipshop in the two companies, it is not difficult to see that the brand projects invested by Vipshop are mainly aimed at young female consumer groups, which is very similar to the main audience group of the domestic Vipshop platform. Perhaps it can be speculated that Vipshop wants to work hard in the field it is familiar with, and wants to reduce risks and do business in the same track. At the same time, Vipshop also wants to improve its overseas experience through these investment layouts, and provide support and reference for the development of its own independent station brand.

In Vipshop's early layout, we can see that in addition to investing in cross-border e-commerce platforms, it is also involved in cross-border business, and the independent station brand Nowrain is Vipshop's answer to the overseas market.

Vipshop Nowrain won the Top Fashion Merchant Award at the British Fashion Festival again

In 2018, Vipshop launched its overseas social e-commerce platform - Octopus Shopkeeper. At that time, Vipshop tried to bring the domestic social e-commerce gameplay to foreign countries and entered the overseas e-commerce market through the North American and Singapore markets. However, Octopus Shopkeeper, which was based on the WeChat ecosystem, did not survive long. In less than half a year, Octopus Shopkeeper announced its closure.

Since the beginning of this year, Vipshop has stepped up its overseas expansion and recruited talents for its independent station brand Nowrain. In July this year, the editor learned that Vipshop was increasing its deployment of independent station teams and actively recruiting overseas social media operations, senior advertising experts, overseas clothing KOL operations and other related positions on multiple recruitment websites. The salaries ranged from 15,000 to 40,000, among which the salary of senior advertising experts (overseas women's clothing independent stations) could be as high as 40K.

The high salary paid to recruit talents for the independent website shows that Vipshop attaches great importance to this independent website. It is reported that Nowrain was first launched in 2019, mainly providing fashionable women's clothing to Generation Z users in Europe and the United States. In the more than two years since its establishment, its performance has been tepid, but since this year, this independent website brand has undergone a transformation.

In 2022, Nowrain began to settle in TikTok Shop . With the help of TikTok live broadcast and short video traffic, Nowrain has since opened the valve of rapid growth, and its brand awareness and sales have shown explosive growth. After half a year in TikTok , Nowrain has accumulated 100,000 fans and has become the leading women's clothing brand on the platform, ranking among the top three in the women's clothing category. At the same time, in the "Fashion Discovery" ranking competition held by TikTok, Nowrain not only won the title of TOP fashion merchant, but also won TikTok's Seller Gold Award trophy.

Perhaps because he has caught the dividends of TikTok, Nowrain has built his own account matrix on TikTok, with a total of 12 accounts, including 5 main accounts and the rest in different countries. Each account has a different style, using vertical styles to attract different users in a targeted manner . The 5 main accounts have accumulated more than 100,000 fans.

Nowrain has made full use of TikTok's traffic pool. On the one hand, he uses hot topics to create high-quality short videos for his account to increase the number of fans and divert traffic to his independent website; on the other hand, he also monetizes through live streaming. In addition to TikTok, Nowrain has accounts on social media such as Facebook and Twitter, accumulating a large amount of traffic.

As for the website, its design is relatively simple, and the product prices are mostly between 10 and 30 US dollars, which is relatively affordable, and there are corresponding discounts for purchases of a certain amount. At present, NOWRAIN's independent website has about 63,200 daily visitors and about 379,300 daily page views . The traffic among its visitors mainly comes from the British market, but there are reports that the next step of Nowrain's action has been directed to the United States. Vipshop is trying to accelerate its breakthrough in overseas markets through Nowrain.

At the same time, Vipshop has also set up multiple overseas offices and international warehouses to meet the needs of consumers in France, the United States, Australia and other places. But like many overseas companies, Nowrain also has certain shortcomings. As an emerging brand, although Nowrain's traffic and popularity have increased significantly this year, on many foreign social networking sites, consumers' overall satisfaction with the site is not high, only 40%, and the number of fans is growing slowly.

On Amazon, Nowrain also registered an account and did a small test by putting a piece of clothing on the shelf, but the clothing only had one five-star review. Vipshop does not seem to have much business operations for this brand on Amazon, but it does not rule out that Nowrain will accelerate its layout on Amazon in the future.

TikTok and independent websites show that Vipshop is determined to expand overseas. But as a long-established e-commerce platform, why is Vipshop so persistent in expanding overseas?

Will Vipshop achieve the desired results when it goes overseas?

The domestic e-commerce landscape has been formed, and the old e-commerce company Vipshop has fallen into an awkward situation. On the one hand, the traffic is almost monopolized by the first-tier e-commerce platforms, and if it wants to maintain active users, it will undoubtedly increase marketing expenses ; on the other hand, the emergence of inventory distribution e-commerce is eating up Vipshop's tail goods inventory , and its core competitiveness has been affected.

But it was precisely at this time that the domestic e-commerce track repeatedly encountered development bottlenecks, while the overseas apparel track emerged like mushrooms after a rain. Whether it was SHEIN established in 2008, Zaful established in 2014, or Cupshe established in 2015, they all showed Vipshop the huge development potential of the overseas market.

For Vipshop, which started out by selling women's clothing, it is not difficult to invest or build its own overseas brands. Backed by China's powerful industrial chain and supply chain, Vipshop has established good cooperative relationships with most brands. Vipshop's many years of layout in cross-border e-commerce has enabled it to form its own cross-border e-commerce self-operated model.

Looking at the domestic women's clothing brands that have been able to gain a foothold overseas, they all have a common advantage, that is, they have strong competitiveness in supply chain and brand awareness. If Vipshop wants to achieve further growth of its independent station brand Nowrain, it also needs to work hard in these two aspects.

In the fast fashion women's clothing market, the fierceness of the competition is evident. There are not only giants like SHEIN, but also many second-tier brands. At the same time, many large manufacturers are also choosing to go overseas and try to get involved in the fast fashion field. For Vipshop's overseas brands, there will be many competitors in the future.

Although Nowrain has become a top seller on TikTok, and its in-depth cooperation with TikTok has also played a positive role in improving its brand awareness, for Vipshop, Nowrain's operation on TikTok is only a branch of the e-commerce field, not the entire overseas e-commerce market . This also means that Nowrain only occupies a very small volume in the e-commerce field, and this volume is not enough to support Vipshop's ambition to achieve business growth overseas.

If Vipshop wants to truly gain a foothold overseas and make overseas business the company's second growth curve, it still has a long way to go. It urgently needs to improve in many aspects, including supply chain, warehouse layout, and brand awareness. But it is undeniable that the two brands invested by Vipshop can, to a certain extent, assist its own brands in the layout of overseas supply chain and social media. Through investment, Vipshop can understand and participate in investment projects, learn from each other's strengths and make up for its weaknesses, which is also of great reference significance for the operation of its independent station brands and the improvement of its overseas experience.

In fact, Vipshop's overseas expansion is not a one-man show. In Vipshop's equity structure, we can see that Tencent is Vipshop's second largest shareholder, holding 9.8% of the shares; JD.com is its fourth largest shareholder, holding 6.5% of the shares. Backed by the Tencent and JD.com camp, Vipshop opened up the warehousing and logistics system with JD.com as early as 2018. The two parties can share the supply chain system in various aspects such as procurement, marketing, logistics and services, which is undoubtedly a sharp weapon for Vipshop's overseas expansion.

Today, Vipshop's layout may be just as Shen Ya emphasized, Vipshop is following the trend. Whether it is choosing to go overseas to develop cross-border e-commerce private brands, or entering TikTok Shop with private brands, or now entering the Southeast Asian market, perhaps Vipshop is following the trend of brand going overseas and trying to write a new success story.

From the current perspective, Vipshop's overseas expansion is generally positive, but compared with other brands, Nowrain is still in the early stages of development. Although it has a product and supply chain foundation and has achieved some success in the British market, it is still a big challenge for Nowrain to increase its overseas visibility and expand the scale of overseas markets. For Vipshop, the current overseas e-commerce layout cannot quench its thirst in a short period of time. In the future, Vipshop still needs to strengthen itself to seek breakthroughs in overseas markets.

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