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The seemingly one-sided statement that "if you don't go overseas, you will be out" has become an increasingly irreversible trend in 2024.
As the growth of domestic e-commerce gradually reaches its peak, from small and medium-sized enterprises and brands to leading e-commerce platforms, they have all reached a consensus on opening up new growth overseas. In particular, the four little dragons have shined overseas, which has also attracted more platforms to compete for the globalization route and scramble for the sweet overseas market.
Pinduoduo’s overseas business has been online for only two years, but it has set off a hosting wave in the industry and achieved a global boom. Taobao, as the leading e-commerce company in China, is also jealous of the huge gold-digging potential of the overseas market, and is constantly accelerating its overseas expansion and increasing its investment.
In this increasingly fierce overseas battlefield, can Taobao carve out a place for itself?
In July this year, Taobao announced the launch of an overseas project called "Global Free Shipping Plan for Large Apparel" and recruited merchants from all Taobao and Tmall apparel merchants. Sellers who join the plan can display and sell products directly to billions of consumers around the world through Taobao Overseas Edition, AliExpress, Lazada and other apps based on their existing Taobao and Tmall stores.
Just recently, Taobao announced that it would upgrade its original "Big Apparel Overseas Plan" to the "Taobao Tmall Overseas Growth Plan", expanding it from being open only to apparel merchants to merchants in all industries, including beauty and maternal and child products, 3C digital, sports and outdoor, home fashion toys, small appliances, etc.
According to industry reports, Taobao and Tmall are responsible for the project, while Alibaba International is responsible for overseas logistics and user operations. Merchants who have signed up for the global free shipping overseas plan for large clothing companies will automatically be upgraded to Taobao and Tmall overseas growth companies.
It is learned that since its launch, the project has been focusing on selling points such as 0 returns, 0 refunds, 0 freight insurance, and 0 marketing investment , which has attracted a large number of clothing sellers to join in. Many sellers who have long been limited by the high cost, high inventory, and high return rate of the clothing industry have also been able to tap into new growth through this new channel.
After two months of trial, Taobao's overseas expansion model has been successfully implemented, with a significant increase in store visits and order volume for participating merchants. To this end, the ambitious Taobao immediately launched a gorgeous upgrade, shifting from focusing on a single category to embracing the entire industry and reaching a richer group of sellers. According to reports, Taobao will also invest tens of billions of yuan to help merchants expand overseas markets and gain new business and new growth.
Specifically, Taobao and Tmall's overseas growth plan will focus on upgrading services in two major directions based on the original model:
1. Reduce costs: lower commissions and expand free shipping areas
In order to further reduce the costs and risks of merchants going overseas, Taobao and Tmall plan to further reduce the commission for going overseas and continue to expand the free shipping areas. In addition, billions of funds will be invested to provide comprehensive marketing support and logistics guarantees.
According to industry sources, starting from October 11, 2024, the service fee standard for large apparel categories will be reduced from 20% to 15%, and the service fee rebate policy for overseas sales exceeding 5% will be cancelled.
2. Increase profits: Provide postage subsidies, covering over 1 billion products
In order to ensure the smooth implementation of the global free shipping plan, Taobao and Tmall will continue to provide postage subsidies for overseas products. This subsidy is expected to cover more than one billion products, covering all categories from daily consumer goods to high-end luxury goods, helping sellers reduce logistics costs, improve the competitiveness of products in overseas markets and expand profit margins.
It is worth noting that through this plan, the sales volume, transaction amount, store fans, and number of positive reviews of Taobao App’s overseas sites are all accumulated to the store; the transaction amount data of non-Taobao apps (such as Lazada) is accumulated to the store. In other words, in the process of developing overseas customer bases, sellers have also invisibly fed back to domestic business.
Behind the upgrade of Taobao's overseas projects, it is not difficult to see Alibaba's ambitions. First, to help sellers find new markets to increase sales amid the increasingly fierce competition for domestic inventory; second, to seize the huge opportunities in the overseas market and tap into its own second growth curve.
Although Taobao's overseas expansion plan has only been launched for more than two months, it has already successfully attracted hundreds of thousands of clothing merchants, including Tmall merchant Jiaoxia, Taobao merchants JOC, Meiyang, etc.
According to feedback from many parties, the first batch of sellers have already successfully taken advantage of the situation and achieved a simultaneous harvest of traffic and sales. One merchant’s single-day overseas order sales soared nearly 500 times year-on-year, and some merchants’ overseas transactions accounted for more than 50%.
According to the data from the General Administration of Customs, the import and export scale of my country's cross-border e-commerce is expected to reach 1.22 trillion yuan in the first half of 2024, a year-on-year increase of 10.5%. At this stage, the cross-border gold rush is just right, but for many domestic sellers, due to lack of experience, they are hesitant or cannot find the right opportunity.
The launch of Taobao's overseas expansion plan has provided an efficient and convenient channel for these sellers. According to industry reports, a clothing seller joined the project and achieved a daily income of 200,000 yuan after three days of trialing the project.
Behind the sellers' fruitful results, it is not difficult to see that although this model is still in its infancy, it has brought many benefits to new sellers thanks to generous support and early growth dividends.
Returning to the project itself, to a certain extent, this is not only a key means for Taobao and Alibaba behind it to retain and snatch sellers, but also an important attempt to catch up with overseas platforms such as Temu, SHEIN, and TikTok.
In the past year, the four little dragons have dominated overseas markets with their full and semi-hosted models, stirring up the industry. Taobao's overseas project can be regarded as a "Taobao version of semi-hosted" in a sense.
Sellers only need to ship goods to domestic shipping warehouses, and confirm receipt upon arrival, while the platform is responsible for cross-border operations, logistics, and after-sales service. However, compared with Temu's semi-hosted service, its biggest competitive advantage is that sellers have independent pricing rights and ownership of goods.
This strategic upgrade further demonstrates Taobao's determination to seize the market from overseas platforms such as Temu. It is not limited to the original single track of clothing, but like these platforms, it fully embraces sellers of all categories to provide overseas consumers with more diversified product choices.
As the leading e-commerce company in China, Taobao's years of e-commerce experience and supply chain advantages are undoubtedly its greatest reliance on its overseas expansion. The booming growth of sellers today also confirms the huge business opportunities and growth space of this project.
However, the overseas market is complex and changeable, and the logic of domestic e-commerce cannot be fully applied. While Taobao's overseas expansion plan is rising rapidly, it is also facing problems and challenges such as hasty preparations and imperfect rules and regulations.
Whether Taobao, which has expanded overseas, can accelerate its growth in the future and compete with platforms such as Temu is still full of unknowns.
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