The recruitment was full, the orders increased sharply, and the hosting business drove the performance of AliExpress to increase by 60%

2023 is the first year of full trusteeship. TEMU , AliExpress, SHEIN, TikTok and other platforms will launch a fierce attack. Platforms such as Amazon and traditional sellers will be severely impacted. In 2024, semi-trusteeship is expected to continue the growth myth brought by full trusteeship to the industry.

In February 2024, Alibaba released its third-quarter results for fiscal year 2024. AliExpress orders grew strongly by 60% year-on-year, and Alibaba International's revenue increased by 44% year-on-year, exceeding market expectations for six consecutive quarters .

The biggest highlight is that the Choice business, which is composed of the AliExpress hosting model, has become a new growth engine for AliExpress and even Alibaba International, accounting for half of AliExpress's total order volume.

In August last year , AliExpress pioneered semi-hosting and put it into trial operation. After four months of trial operation, AliExpress fully launched full hosting in January this year.

As soon as AliExpress semi-hosting was launched, it immediately received a lot of positive feedback from the market. The offline investment promotion meetings were almost always sold out, and it was common to see some late-arriving merchants standing and listening to the business introductions.

Figure: After the opening of AliExpress semi-hosting, offline investment promotion is very popular

The semi-hosted model is a logistics upgrade to the self-operated model of platform sellers: for stores joining the semi-hosted model, the pricing power, operations and stores still belong to the sellers, and the products have the same Choice label as the fully-hosted ones and can obtain traffic support, but the platform takes over the logistics fulfillment link to improve timeliness.

In this way, sellers do not have to be forced to raise prices, and can independently define their profit margins, while retaining the advantages of their products. Sellers with product development capabilities, brand operation needs, or clothing products with multiple SKUs can join, and sellers of non-standard products can also take advantage of the hosting trend. After these differentiated products join, the platform's hosting categories are broadened, buyers have more shopping options and are more likely to stay, forming a virtuous circle.

A large number of semi-managed sellers achieved a good start during the Spring Festival

Greater initiative also means greater enthusiasm.

AliExpress has a first-mover advantage in the semi-hosted business. With the performance feedback from the trial operation, it has continued to invest heavily after the business was officially launched. Sellers describe that in order to promote semi-hosted business, AliExpress has issued announcements for a week to spend money and subsidies, including commission reductions, early loan releases , subsidies for on-time delivery during the Spring Festival, free door-to-door collection, and exemption of warehouse rent, which is very generous.

The semi-hosting model is attractive, and with the platform's continued concessions, many sellers have joined the platform, ushering in the first wave of orders during the Spring Festival.

Figure: After the Spring Festival, AliExpress merchants posted screenshots of their explosive sales

When AliExpress launched the semi-hosting trial, Chushou Technology was one of the first to enter the market. The company mainly sells 3C accessories. In September last year, co-founder Chen Mingshun heard that the platform was promoting semi-hosting and decided to join the platform on the same day. Unexpectedly, orders were placed as soon as the platform was put on the shelves, and 300 orders were sold on the first day.

The beginning was unexpectedly smooth, so he called the operations director directly and asked him to put all the products into semi-trusteeship immediately. Chen Mingshun believes that this new model is in its window period, and the faster the sellers act, the faster the orders will come.

Xiaoxia, a post-95s seller, mainly sells home furnishings on AliExpress. This cross-border newcomer is also one of the first semi-hosted players. Xiaoxia is good at selecting products, and semi-hosted services can solve his biggest headaches of logistics and compliance. Through rigorous product selection and supply chain optimization, his store's hit product rate has reached 96%, and he has achieved a monthly sales record of 30,000 orders in less than a year since opening the store.

During the Spring Festival holiday, Xiao Xia, who prepared boldly, still sold out. "We still didn't prepare enough! We prepared more than 10,000 items for the Spring Festival, but they were all sold out. We couldn't bear to give up the traffic during the Spring Festival, so we continued to ship the goods ourselves." Xiao Xia was excited by the soaring sales. He said frankly that semi-trusteeship must be the next trend, and he would follow the trend of the platform.

Old sellers are more sensitive to trends. Gary, a seller on AliExpress, has been running a 10-year-old store. He was the first to enter the market during the trial operation of semi-hosting. Now nearly 80% of his products have joined semi-hosting. He found that the effect of adding semi-hosting to hot-selling products can be seen in about a week, which directly brings nearly 2 times the increase. During the Spring Festival, he decided to allocate inventory to AliExpress first, and as a result, the products in the store that have not yet joined semi-hosting also saw an increase in traffic. At present, seller Gary has added a 500-square-meter warehouse specifically for AliExpress products.

The new model stimulates multiple platforms to enter the market, and AliExpress will increase investment

In the cross-border e-commerce sector, it is not uncommon to see new business models changing the industry landscape.

With full hosting in hand, the "four little dragons" of China's e-commerce going global are advancing rapidly, with their voices and performance rising in the industry, giving them the upper hand in this industry transformation. Platforms that have not entered the hosting trend are in a passive position. Wish, once known as one of the four major cross-border e-commerce platforms along with Amazon, AliExpress, and eBay, has accelerated its decline. Last week, Wish announced that its parent company ContextLogic Inc. would sell it to Qoo10, and the transaction is expected to be completed in the second quarter of 2024, sparking heated discussions in the industry.

It can be seen that whether it is the platform or the seller, everyone is striving to catch up with every trend. Now, the entire industry’s desire for new models is focused on “semi-custody”.

At the beginning of 2024, just after AliExpress fired the starting gun for semi-hosting, Alibaba International Station and TEMU also rushed to make their layout, but the hosting links were different.

Temu plans to launch semi-hosting in the US on March 15 and expand to the European site at the end of the month. This model requires sellers with goods in foreign countries to import platform orders and fulfill their orders by themselves. The pricing mechanism is still determined by the platform. It is suitable for cross-border sellers who can prepare goods overseas. Compared with full hosting, semi-hosting sellers have to bear the logistics costs, while the key pricing power is still in the hands of the platform. The allocation of the initiative of the operation links by different platforms will directly affect the profits and layout of merchants, and the flow of sellers is inevitable.

Alibaba International Station has taken up the banner of cross-border B2B hosting. On February 18, Alibaba International Station officially launched semi-hosting in six countries, including the United States, Canada, Mexico, the United Kingdom, Germany, and France. All participating products are labeled "Alibaba Guaranteed". A large number of merchants placed orders on the first day of the launch. In March, the peak season for foreign trade, it is expected that semi-hosting will be very popular.

More and more platforms are entering the semi-hosted market. The leader AliExpress has also seen the explosive power of semi-hosted services and is determined to expand this market.

In the analyst meeting after the release of the financial report, AliExpress clearly responded that the next period of time will be a period of large-scale investment by Alibaba International, especially the Choice business related to various escrow services . From the current data, the user experience and retention of the Choice business are better than before, and there will be better returns in the long run. In the future, large-scale investment will be the first priority for growth.

The number of players in the industry is still increasing, and AliExpress's hosting business will be the highlight of the cross-border circle this year. AliExpress has also prepared enough guns and cannons for this year's market offensive.

For more ordinary sellers, semi-hosting may be the key to overtaking in business this year.