"2025 will definitely be a more difficult year for cross-border expansion"

In 2024, the cross-border e-commerce industry has undergone drastic changes and competition. China's emerging cross-border platforms continue to rise, impacting the market position of traditional e-commerce giants. However, with the intensification of market competition and the uncertainty of the global economic situation, 2025 is widely believed to be a more challenging year for cross-border expansion.

For cross-border e-commerce, 2024 is destined to be an extraordinary year.

It is obvious to the naked eye that emerging forces from China are continuously challenging the world's established e-commerce platform giants and reshaping the global e-commerce ecosystem.

In the past, Chinese sellers were mainly concentrated on platforms such as Amazon and eBay. Unfortunately, with the change in the market competition pattern, the drawbacks of the old e-commerce platforms have become increasingly apparent, such as the increasing cost of traffic, the continuous increase in commissions, and the inability to control warehousing and logistics. These methods have also caused some overseas sellers to "return empty-handed".

China's cross-border e-commerce "Four Little Dragons Going Global" (AliExpress, Temu, TikTokShop, SHEIN) has brought about some subtle changes in the overseas market. After breaking the historical record of cross-border e-commerce in 2023, in 2024, as compliance channels continue to open up, the "Four Little Dragons Going Global" ushered in strong growth.

These cross-border platforms adapt to local conditions and innovate cross-border models. On the basis of full trusteeship, they compete to invest in semi-trusteeship (also known as "overseas trusteeship"), handing over logistics, warehousing, etc. to the platform to a certain extent, allowing merchants to focus on goods and allowing merchants to see new ways of playing and opportunities.

This whirlwind continues to impact the global cross-border e-commerce landscape. Most obviously, in order to avoid traffic fragmentation, Amazon had to compromise and launch a low-price mall, which brought the platform to new heights, but also further increased sellers' anxiety.

Therefore, in this extraordinary year of 2024, some people have made a fortune, while others have returned home disappointed. Under the Matthew effect, the strong will always be strong, and the weak will become weaker and even be eliminated.

In fact, whether it is the exploration of new models or the addition of various policies and measures, it reflects that the demand of global consumers for Chinese products is constantly changing, and the demands of Chinese cross-border merchants are also constantly changing.

Faced with the ever-changing international stage, merchants should keep up with the pace and make timely adjustments in order to survive; platforms also need to constantly find ways that are more suitable for themselves and let the "anti-involution" trend blow from domestic e-commerce to cross-border e-commerce.

However, despite the unpredictable changes in the overseas market, challenges and pressures coexist for merchants. In the new year, facing unknown risks and policies, many merchants still said, "Going overseas is still something that must be done. However, 2025 will definitely be a more difficult year for going overseas."

01 The strong will always be strong, and the weak will become weaker

Merchants on Amazon are facing more and more challenges.

Shi Yuan has been in the wig export business for four years. He told us frankly, "In 2024, the foreign trade business lost money. It feels like there are fewer opportunities compared to 2023."

Shi Yuan does foreign trade business in Xuchang, Henan Province, which is also the world's wig capital. Relevant data show that in 2022, Xuchang's hair products market will be spread across more than 120 countries and regions, with a market share of more than 40% in Europe and the United States and more than 70% in Africa.

Relying on the advantages of local hair products, Shi Yuan started foreign trade on Amazon early on.

In 2024, Shi Yuan discovered that, especially for cross-border e-commerce companies such as Amazon, the platform traffic was slowly being shifted under the fierce attack of the "Four Little Dragons Going Overseas".

"The rise of platforms such as TikTokshop has taken away a lot of traffic from other cross-border platforms. For example, Amazon has been divided by traffic and has had to compromise and launch low-priced malls to cope with it. At the same time, cross-border platforms have reached new heights, and sellers' profits are getting lower and lower."

Throughout 2024, Shi Yuan's company also faced low profits and high returns. The ever-present trademark registration problem and the problem of being copied by others also became the key factors affecting his cross-border e-commerce business.

"In order to cope with the traffic share, Amazon has to launch a low-price mall, which will only make the profits of sellers lower and lower."

To a certain extent, Shi Yuan believes that low prices are the sword that kills the industry. "It has a great impact on merchants. Product quality is getting worse and worse, and profits are getting lower and lower."

Not only Shi Yuan is anxious, but also some new "sea-hunters".

Lu Ming, a merchant from Puyang, Henan, also began to join the cross-border e-commerce team in July 2024.

Lu Ming's family runs a clothing factory, and they also do OEM for some brands and export trade. Seeing more and more merchants around him doing cross-border e-commerce, he also began to test the waters on the platform.

"The era of making money easily through cross-border e-commerce has long ended. If new merchants like me want to reap the benefits, we must study the rules of different platforms in depth to find the stage that suits us."

In Lu Ming's opinion, the semi-hosted e-commerce platform is more suitable for "primary merchants" with factories. "In this way, I only need to provide the goods, and I don't need to be responsible for other processes such as logistics and warehousing. Moreover, apart from the goods, I have no e-commerce resources and experience, and the investment in preparation is not much."

After half a year of trial, in December 2024, coinciding with the foreign holidays, Luming's store business experienced a small boom. But after Christmas, the store's transaction volume began to decline.

"There is still pressure. Funds are limited, and competition among platforms is very fierce. No one can guarantee that they can continue to create popular products. At the same time, special attention should be paid to qualification issues. Once faced with platform fines, it will be difficult to deal with." Lu Ming said.

Of course, in the wave of going overseas, many businesses have also risen to the challenge and found breakthroughs in 2024 by relying on the new platform model.

Located in Chenghai District, Shantou City, Guangdong Province, Mould King, a toy brand that sells building blocks overseas, is one of them.

Chenghai is a district in Shantou, Guangdong. The toy and gift industry has always been the most distinctive pillar industry in Chenghai, and it has been awarded the title of "China Toy and Gift City". However, as a microcosm of China's traditional manufacturing industry, Chenghai toys also face problems such as low overall level and fierce homogeneous competition.

Like many toy brands, Mould King has also gone through fierce market competition. In 2024, Mould King abandoned the strategy of "only selling at low prices" and began to focus on differentiated products with a sense of technology. It set the goal of "making toys move" and added batteries and motors to its products, allowing consumers to experience the fun of building and interacting.

Mould King's business is mainly on AliExpress. Sam, the person in charge of Mould King's AliExpress store operations, said, "We started to settle in AliExpress in 2019. We have been doing POP (Private Operation) before. In mid-2024, because of our experience in overseas warehouses, we decided to join overseas hosting and participate in the 10 billion subsidy."

Mould King made a small profit in 2024, with a breakthrough in the number of orders on AliExpress. One of its popular V8 engine toys saw its daily sales increase tenfold after it was added to overseas hosting.

02 The battle between new and old platforms is getting more intense

An indisputable fact is that the development of the "Four Little Dragons Going Overseas" represented by AliExpress in 2024 has to some extent impacted the global cross-border e-commerce ecosystem.

Some public data verifies these changes.

Public data shows that Temu has ranked first in the North American market in terms of total app downloads and new user growth rate over the past two years. Today, consumers from more than 70 countries and regions have purchased Chinese products through Temu.

Alibaba's third-quarter 2024 financial report data also showed that Alibaba International Digital Business Group's revenue from international retail business in the third quarter of 2024 was 25.618 billion yuan (about 3.65 billion US dollars), an increase of 35% from 18.978 billion yuan in the same period of 2023, mainly driven by revenue growth from AliExpress Choice and Trendyol.

In fact, at the beginning of 2023, everything seemed "shaky". At that time, the compliance requirements of the international market for Chinese companies were constantly tightening, and emerging cross-border platforms faced constant challenges. But these seemingly insurmountable barriers have been solved one by one in the past year.

Especially after the Brazilian tax reform was implemented, some emerging platforms followed up and applied to join the tax compliance program. For example, the bills of various states in the United States to ban TikTok were also abolished, and the TikTokShop Indonesia site, which was forced to close, returned.

After the channel was opened, the "Four Little Dragons Going Overseas" launched a fierce offensive, constantly innovating in both models and marketing.

In the past, Chinese sellers were mainly concentrated on overseas platforms such as Amazon and eBay, and many merchants complained that it was "too energy-consuming" to do business.

Shi Yuan pointed out that when doing cross-border trade on Amazon, since traffic is basically concentrated on the top sellers, sellers who do not invest in traffic will be quickly eliminated. Generally speaking, in addition to uploading product information and preparing goods, sellers also have to pay attention to how to place goods on the platform; they also have to control logistics warehousing and other links by themselves, and need to consider logistics suppliers from multiple aspects such as timeliness, price, safety and stability.

The new cross-border e-commerce model launched by emerging platforms has given sellers, especially small and medium-sized businesses, more opportunities to go overseas.

The introduction of the "semi-hosting model" will, to a certain extent, help China's cross-border e-commerce platforms build competitiveness in 2024.

A cross-border e-commerce platform told us, "If full hosting is the main theme of cross-border e-commerce platforms in 2022, then in 2024, the semi-hosting model will be the hottest trend for going overseas in the second half of 2024."

The new "semi-hosting" model is a service between full hosting and merchant self-operation. Merchants operate independently, and the e-commerce platform is only responsible for warehousing and logistics, allowing sellers to focus back on R&D and production.

In the fully managed model, sellers are merely "suppliers" of the platform and have limited autonomy.

In the semi-hosting model, responsibilities are divided between sellers and platforms. The platform only helps sellers with marketing, logistics, and returns. Sellers also have the right to say in product pricing. Semi-hosting can also better supplement diverse product types and products with high unit prices.

"From the operation point of view, semi-hosting is particularly friendly to cross-border e-commerce merchants who want to build brands and products. Because I don't need to worry about the problems in the transaction process. After all, once a situation such as 'warehouse explosion' occurs, it will definitely kill a novice overseas investor quickly." Lu Ming believes.

In terms of marketing models, the "Four Little Dragons Going Overseas" have also demonstrated a high degree of innovation.

For example, Temu has migrated its domestic social fission gameplay to the overseas market, attracting customers through methods such as new customer purchases, 30% off coupons for registration, and free shipping for new users, which has led to a continuous increase in the activity of platform users.

AliExpress helps merchants achieve certain business growth through a series of marketing resources. For example, it has launched marketing activities such as "Big Brand Subsidy Day" and "Bai Bu Category Day", which provide brands with important channels to reach consumers during the new product launch stage.

In addition, AliExpress has become the exclusive e-commerce sponsor of the 2024 European Cup, and has signed local well-known spokespersons such as Beckham and Tang Wei in different regions, rapidly expanding its influence.

Especially in the just-concluded 2024 "Black Friday Promotion", the "Four Little Dragons Going Overseas" showed a strong offensive and took different measures, such as extending the time line of "Black Friday", brand-exclusive discounts, and hundreds of billions of subsidies, to continuously stimulate consumers' shopping enthusiasm.

Under the strong attack of the "Four Little Dragons Going Global", Chinese sellers on traditional platforms such as Amazon, especially small and medium-sized businesses, will clearly feel the impact in 2024. Shi Yuan said frankly, "The industry is getting more and more competitive. Because of the rise of other platforms, too much traffic cake has been taken away from traditional platforms such as Amazon."

In order to attract Chinese sellers, Amazon has set its sights on white-label merchants in China's industrial belt.

At the end of 2023, Amazon restarted the merchant recruitment conference in Shenzhen and opened Amazon's overall supply chain solution to Chinese sellers. In June 2024, Amazon secretly held a closed-door merchant recruitment conference in Shenzhen. Six months later, the Amazon Global Store Opening Cross-border Summit opened in Nanjing, and the low-cost mall Haul was open to invited merchants.

But some merchants are still re-evaluating Amazon.

An Amazon seller revealed, "The basic situation will be stable in 2024, which is not bad. But mainly in 2025, there will be too many problems and they are unpredictable." The seller admitted that next, he would consider multi-platform development to deal with some predictable risks.

03 What kind of cross-border platform is needed?

It must be admitted that both the new overseas expansion model and the marketing offensive have, to a certain extent, alleviated the supply problems of manufacturing companies.

Over the past decade, China's e-commerce platforms have experienced the most intense battle for survival in the Internet jungle. Traditional giants and new forces have alternated on the defensive, and shelf e-commerce and content e-commerce models have been iterated, with an extreme competition over traffic, users, supply, and prices.

As the traffic dividend of mainstream e-commerce platforms has peaked, various platforms have begun to try to break down barriers and move from internal competition to competition and cooperation, but this does not mean that the competition is over.

For example, some factory owners have previously complained about full trusteeship, saying, "If the platform keeps pushing prices lower and lower, it will only become more and more disadvantageous to the merchants."

Especially since 2024, the "low-price" strategy has spread from domestic to overseas, which has also intensified the internal competition among merchants, resulting in "lower and lower profits."

The loss of price advantage of Chinese manufacturing is also an inevitable path for industrial upgrading. Previously, companies going to Africa revealed that in the African market, which values ​​price advantage, Chinese manufacturing is facing low-price competition from countries such as Vietnam and Malaysia.

In fact, whether it is the platform's strategic adjustments or the merchants' choices, they are all revealing the fact that under the current economic environment, the cross-border e-commerce industry has entered a new red ocean stage.

Some businesses rely on the extreme efficiency and low prices of the source factories to break through the siege, while some businesses insist on the dream of Chinese brands and carefully polish their own technology and products. There are also a number of domestic trade brands that have already gained popularity in the domestic market and have completed brand exports, and have long set their sights on the wider overseas.

Many overseas companies that have a full understanding of the "involutionary" low-price competition are also trying to break through. They may focus more on high-profit products and use efficiency to hedge cost pressure; or moderately raise prices based on product and sales volume; or diversify their layout to reduce the impact of the new tariff policy in 2025.

These merchants who do not want to simply offer low prices also urgently need an overseas platform that allows them to prove their uniqueness through advanced technology, design and cultural concepts, impress overseas consumers and realize the value of their brand.

This also makes the platform realize that in addition to competing for traffic and price, it also needs to open up new arenas.

What we can see is that by 2024, major platforms in the cross-border e-commerce industry will have developed from a single model to a multi-model, and in the process they will gradually find an overseas model that suits their own characteristics.

For example, AliExpress seizes POP merchants and allows high-quality POP merchants to obtain more rights and interests; the operating rules are simpler to help merchants intercept freeloaders and resist zero-yuan purchases; the return rules are optimized to reduce merchants' after-sales costs, etc.

In fact, these are the platform measures that merchants need more. What the industry needs is to fight against involution and truly provide good cross-border e-commerce services, rather than just falling into the spiral of internal friction.

To some extent, 2025 will definitely be a more difficult year for going overseas.

Shi Yuan said, "The risks will definitely be greater. The global economy is still declining. The practice of stimulating the economy through various domestic subsidies shows that not only the Chinese economy, but also the world economy is not good, and foreigners have no money to spend."

Lu Ming also believes that "the trade and tariff policies in the new year cannot be determined. Only when platforms and merchants work together can we seize the new wave of cross-border opportunities."

Only when the anti-involution trend truly blows to cross-border e-commerce can a healthier and more standardized ecology be outlined in 2025.

(Shi Yuan and Lu Ming in this article are pseudonyms.)

Text | Xiao Ting Editor | Rao Yan