On December 19, PDD Holdings, the parent company of Pinduoduo and Temu, made a rare public disclosure by sharing key updates from its shareholder meeting. The company announced significant leadership changes and unveiled an ambitious vision for its cross-border e-commerce platform, Temu, aiming to “recreate another Pinduoduo” over the next three years.

Zhao Jiazhen and Chen Lei were confirmed as Co-Chairmen, in addition to their roles as Co-CEOs. This move consolidates leadership at a critical juncture, as PDD seeks to navigate the complexities of scaling its global operations while maintaining its domestic dominance. Zhao’s contributions since taking on the Co-CEO role were acknowledged, reflecting confidence in the current leadership structure.

The highlight of the meeting was the unveiling of Temu’s ambitious three-year plan. Zhao described the company’s strategy as a shift from diversification to a more focused approach, with high-quality supply chain development at its core. “This year marks the 10th anniversary of Pinduoduo,” Zhao said. “The next phase isn’t about expanding into more business areas. Instead, we are doubling down on focus—specifically, on supply chain upgrades. This will be the key to rebuilding our platform and driving ecosystem-wide value creation.” Temu has already achieved significant milestones, with its operations now reaching most major global markets. However, the company’s next chapter will prioritize supply chain efficiency and branding, with the goal of creating a more sustainable, high-quality platform.

During the Q&A session, an investor raised concerns about recent reports of the European Union launching a “dawn raid” investigation into Temu. Co-Chairman Chen Lei addressed the issue directly, acknowledging the challenges that come with Temu’s rapid global expansion. He explained that Temu has made remarkable progress, achieving in three years what Pinduoduo took a decade to accomplish domestically. “With such rapid growth comes scrutiny, surprise, and concern, which are all understandable,” Chen said. He further noted that regulatory reviews could ultimately strengthen Temu’s foundation for future growth. “These checks will help us not only adapt to evolving international political and regulatory environments but also explore new directions for operational models,” Chen added. He reiterated that compliance is the company’s bottom line and reaffirmed PDD’s commitment to sustainable growth, rooted in China’s robust supply chain infrastructure.

Zhao also admitted that Temu’s explosive growth has exposed gaps in PDD’s internal systems. “Our governance and talent development have not kept pace with the rapid expansion of our business,” Zhao said, acknowledging the significant challenges ahead. Nevertheless, he expressed optimism that the company’s focus on supply chain upgrades would unlock new opportunities for both Pinduoduo and Temu.

PDD’s announcement marks the first time the company has explicitly outlined a medium-term goal for Temu. However, the specifics of “recreating another Pinduoduo” remain unclear. Does the company aim to replicate Pinduoduo’s 2025 projection of 1 billion annual active users? Or is it targeting 5 trillion RMB in GMV, 3000 billion RMB in revenue, or a market cap of 1 trillion RMB? The company left these questions unanswered, leaving room for interpretation. What is clear is that PDD is betting big on the next phase of Temu’s development.

Fast forward to May 2025: Govee is in pre-IPO mode, with plans to go public. Anker, far from viewing Wu as a rival, backed him with 40 million RMB (about $5.6 million) in 2021. Industry insiders credit Wu’s relationship with Anker for accelerating Govee’s rise on Amazon.

Wu’s strategy capitalized on a gap in the market. While China produces 90% of the world’s LEDs, few companies embraced IoT-enabled products. Wu leveraged his resources and e-commerce expertise to dominate a market with little competition.

From Anker to Govee

Govee emerged as an ambitious project by Wu Wenlong, a co-founder and former CTO of Anker Innovations. Wu’s departure from Anker in early 2017, just six months after the company filed for its IPO, marked a strategic pivot towards the smart RGB lighting market. Building on his experience at Anker and leveraging his significant equity stake, Wu launched Govee in Shenzhen.

Wu’s position as a founding member of Anker gave him an unparalleled advantage. By 2020, when Anker went public, Wu had accumulated significant wealth and experience. Over the next three years, he sold 247 million RMB (about $34 million) worth of Anker shares, reducing his stake from 5.05% to 4.19% as of March 2025. Despite these reductions, Wu remains Anker’s fourth-largest shareholder, maintaining his influence within the company.

Anker’s relationship with Wu extended beyond his exit. In 2021, the company invested 40 million RMB (about $5.6 million) in Govee, acquiring a 1.257% stake. This strategic move was part of Anker’s broader diversification plan and reflected its confidence in Wu’s ability to navigate the emerging smart lighting market.

Govee’s growth trajectory has been nothing short of remarkable. The brand introduced its first music-sync RGB light strip in 2018, which quickly became a bestseller on Amazon.

By 2019, the company had generated 422 million RMB (about $58.7 million) in revenue, and by 2020, its sales surpassed $200 million. However, profitability lagged behind Govee’s top-line growth, as the market for lighting products was still viewed as less innovative compared to other smart devices like speakers and home appliances.

Small Lights, Big Business

In the competitive smart home market, it’s unusual for a brand to dominate Amazon with a product as seemingly niche as light strips. Yet Govee has done just that. According to Statista, the smart home sector reached $31.2 billion in 2017, growing over 25% annually, with North America leading the charge.

While most brands focused on popular categories like smart speakers and robot vacuums, light strips were largely ignored—until Govee entered the scene.

“Initially, no one thought light strips had real potential, but Govee’s innovative designs and savvy channel strategy changed the game,” said an industry insider.

Govee's breakout moment came in 2018 with the launch of its H601X music-sync RGB light strip. Within three years, it became the top-selling Alexa-compatible smart LED strip on Amazon. Crucially, Govee didn’t position itself in traditional lighting but firmly within the IoT space.

Today, Govee’s parent company, runs two main product lines. The flagship Govee brand offers TV backlights, smart lamps, projectors, and devices tailored for everyday living, while the 2021-launched GoveeLife line focuses on smart small appliances like countertop ice makers and humidifiers.

Govee’s products, priced between $20 and $490, combine decorative lighting with AI, smart controls, and sensor connectivity. With over 870 patents, Govee’s innovations include 16 million customizable colors and music-sync features, emphasizing personalization and interactivity.

The company’s proprietary Govee Home App ties its ecosystem together, allowing users to sync lights with music, games, or videos, and customize settings in real time. The app, which had over 30 million users by December 2024, also serves as a forum for customer feedback. “Our app is a constant work in progress,” said one executive, highlighting OTA updates that improve user experience.

Initially without its own factories, Govee rapidly scaled production as demand grew. It now operates three plants: two in Dongguan for LED strips and one in Zhongshan specializing in complex fixtures like outdoor lamps.

“Ambient lighting may not be essential, but strong holiday traditions in Europe and the U.S. boost demand for home decor,” said an insider.

Govee’s success mirrors Anker’s playbook: dominate Amazon before expanding to platforms like eBay, Walmart, and TikTok. On Amazon, Govee posted consistent 300% annual growth for three consecutive years. One LED strip alone generates $12 million in monthly sales, with several products topping Amazon’s Best Seller charts.

Outside Amazon, Govee’s website attracts 1.6 million monthly visits, with nearly 40% of traffic direct and strong organic (33.06%) and paid search (16.33%) performance, according to SimilarWeb.

The brand has also leaned on strategic co-branding. A partnership with Dune: Part Two in 2023 resulted in a smart TV backlight strip that mirrored the film’s glow, selling over 33,000 units and generating $3.58 million in six months.

Collaborations with Aquaman and Pantone further cemented Govee’s reputation, driving app engagement and retail sales.

By creating viral content and fostering a lifestyle around its products, Govee has struck a chord with Gen Z. “It’s not just about lighting rooms—it’s about setting moods and reflecting personalities,” said an insider.

Govee’s story highlights the untapped potential in niche global markets, offering lessons for both large and mid-sized players.

The move sent shockwaves through China's cross-border e-commerce sector, particularly among Amazon sellers who rely heavily on the U.S. market. As panic rippled across the industry, one company, Autel Tech, responded swiftly with a detailed strategy to mitigate the impact.

Its proactive approach not only revealed how one firm plans to survive the new trade environment—it also offered the world a rare glimpse into how Chinese cross-border sellers may respond to this intensifying crisis.

Autel, the automotive technology group founded in 2004, has established a strong global presence with products ranging from diagnostics to EV charging stations. Its reach spans more than 70 countries, including the U.S., Europe, Japan, and Australia.

The company has seen notable success on platforms like Amazon, where its EV chargers ranked second in U.S. Prime Day sales last year and first in Canada. Autel forecasts sales in this segment to exceed 200 million RMB ($27.5 million) in 2024.

In a statement to investors, Autel warned that exports from its Vietnam facility could face a 46% tariff. With supply chains under pressure, the company has introduced a five-pronged strategy in response to rising tariffs:

Stockpiling Inventory in the U.S.

Anticipating trade disruptions, Autel began boosting U.S. inventory in mid-2024. Its current stockpile covers six to nine months of sales—enough cushion to keep operations stable through the year.

Investing in U.S. Manufacturing

In 2023, Autel acquired a facility in North Carolina, which is now operational and producing EV chargers that qualify for federal subsidies. The company is evaluating further localization for its high-tech products, such as TPMS systems.

Going South—To Mexico

Autel finalized a new site in Monterrey by April 5. Thanks to USMCA rules, Mexico offers a tariff-free gateway to the U.S. market. It's a smart hedge—and a strategic supply chain expansion.

Raising Prices—With Buy-In

With factories in Europe and Taiwan also hit, prices are going up. But Autel says its U.S. customers are willing to absorb part of the cost. The company will adjust pricing based on market resonse.

Broadening Global Reach

In 2024, Autel intensified its global expansion, establishing over 14 regional offices and nearly 300 partner demo stations. First-half revenue from Europe surged 39%, reinforcing efforts to reduce U.S. dependency.

In recent years, the marijuana industry has garnered significant attention from investors, suppliers, and researchers. The legal US retail market for cannabis was valued at $38 billion in 2024 and is projected to reach $57 billion by 2028. This growth is expected to be driven by expanding legalization efforts and evolving policies surrounding the cannabis sector. The industry's rapid expansion has also had a global economic impact, with Chinese manufacturers emerging as key players in the U.S. cannabis market. While American companies primarily focus on cultivation, Chinese firms dominate the supply chain for essential growing equipment, such as LED lights and advanced grow tents.

A casual browse for plant grow lights on Amazon highlights this emerging trend—an influx of reviews showcasing photos of dimly lit tents illuminated by deep red and purple LEDs, nurturing cannabis plants. These advanced technologies have revolutionized indoor cultivation, with grow tents providing both discretion and LED lighting that optimize plant growth.

In 2021, Wei Zhe, the founder of Vision Knight Capital, highlighted a Chinese grow light manufacturer generating 40 million RMB ($5.52 million) in monthly profits.

What was once a niche market, cannabis grow lights have gained traction among many Chinese cross-border brands, who have shifted their focus away from conventional plant lighting to meet the rising global demand. According to Research Nester (October 2024), the plant grow light market is expected to reach $2.87 billion this year, with projections soaring to $34.85 billion by 2037, driven by a 21.4% CAGR from 2025 onward.

Chinese LED Makers Bet on Cannabis

Cannabis falls into two categories: industrial hemp and recreational marijuana, distinguished by their THC content. While industrial hemp thrives in natural light, recreational marijuana cultivation depends on grow lights to enhance potency and yield.

As regulations ease and profitability rises, more cultivators are entering the market, driving demand for advanced indoor cultivation technologies.

Chinese LED manufacturers, once focused on traditional horticulture, such as Shanghai-based SINOWELL, Shenzhen's Mars Hydro, and the recent UPSHINE have adapted to this growing sector, establishing a strong foothold by offering cost-effective and increasingly sophisticated lighting solutions.

• SINOWELL: From Greenhouses to Cannabis Smart Systems

Founded in 2009, Shanghai-based SINOWELL initially produced greenhouse lighting. By 2014, it discovered its products were being widely used for cannabis cultivation abroad and pivoted to cross-border B2C, launching VIVOSUN. With competitive pricing and strong products, SINOWELL built a loyal customer base, one Amazon reviewer even noted, "I paid over $600 for a Dutch tent, but SINOWELL's version was just over $100 and even bigger."

In 2022, SINOWELL introduced the Smart Grow System, an IoT-powered network of grow lights, fans, and climate controls, all manageable via smartphone. By 2023, it launched the VGrow Smart Grow Box, further driving its expansion. Priced between $300 and $1,000, the new product features automated climate control, CO2 monitoring, and data-driven optimization.

• Mars Hydro: Betting on Smart Lighting Shenzhen-based

Also founded in 2009, Mars Hydro initially focused on intelligent LED production before transitioning to cannabis cultivation equipment. By 2015, it introduced the Spider Farmer brand, which quickly gained popularity among cannabis growers in North America and Europe. One of its flagship products, the SF1000 grow light ($109), sold over 900 units in a month on Amazon.

In addition to its success in consumer grow lights, Mars Hydro has expanded into IoT-enabled cultivation technology for both home and commercial growers under the brand Mars Hydro. Its 730W FC6500 LED, known for its high efficiency (PPF 2182 µmol/s, PPE 2.9 µmol/J) and smart remote control capabilities, is designed to meet the needs of tech-savvy cultivators.

• UPSHINE: Expanding Beyond China Shenzhen-based

Founded in 2007, UPSHINE, a key player in commercial and industrial LED lighting, has seen plant lighting revenue surge 145% to about $6.94 million in 2023, outpacing its other divisions.

In July 2023, UPSHINE went public on the Shenzhen Stock Exchange, raising $184 million, surpassing its initial target. To mitigate North American tariffs, the company established a Vietnam-based manufacturing facility in 2022, preparing to expand production as demand grows.

China's Price War

However, the rapid surge in supply has turned the once-profitable cannabis lighting market into a fiercely competitive battleground. Since 2021, intensifying price competition has eroded profit margins, forcing companies to rethink their strategies. "The market is saturated, and sales are declining," noted a B2B seller whose annual revenue still reaches tens of millions, yet profit margins have shrunk to 15%.

The long lifespan of grow lights, typically around three years, further limits repeat sales. "The consumer base isn't expanding fast enough to absorb the supply surge," he added. A lack of differentiation has also weakened pricing power, making it difficult for companies to stand out. "There's no real innovation—just copy-paste tactics," he said. "Chinese firms excel at driving industries into margin-free competition."

The impact of this intense competition is becoming increasingly evident. In 2024, UPSHINE's gross margins in the Americas fell to 29.8%, continuing a volatile downward trend.

Even Hydrofarm Holdings Group Inc., once a leader in the high-end segment, is struggling. In August 2024, the Pennsylvania-based firm reported a $23.5 million loss for Q2, pushing its total losses past $36 million. With sales declining 13% year-over-year, the strain of oversupply continues to weigh heavily on the cannabis sector.

Price remains the primary battleground in this competitive market. SINOWELL's VIVOSUN grow tent entered at just $100, drastically undercutting premium Dutch brand Gavita's $600 model. Some budget grow tents are now selling for under $50, further intensifying the price war.

As the industry faces an ongoing reset, companies must adapt quickly. With technology evolving faster than costs can decline, only the most agile players will survive in this increasingly cutthroat environment. Is the cannabis industry here to stay, or will it succumb to the pressures of oversupply and shrinking margins?

Often called the godfather of China’s cross-border e-commerce, Sun has kept a low profile despite his outsized influence. Today, he runs Typhur Technology, a high-end kitchen appliance brand, but his legacy is tied to Sunvalley Group (also known as Zebao), the company he founded in 2007.

Sunvalley was an early success story in China’s Amazon-driven e-commerce boom. Within three years, it surpassed ¥100 million ($13.64 million) in sales, and by 2020, revenue had soared to ¥5 billion ($682.01 million). In 2018, SACA Precision acquired Sunvalley for ¥1.53 billion ($208.69 million), taking it public through a reverse merger.

But rapid growth came at a cost. A power struggle led to Sun’s departure in 2020, and just a year later, Amazon suspended 330 of Sunvalley’s accounts, wiping out 70% of its stores and triggering a sharp revenue decline.

Despite its challenges, Sunvalley shaped China’s cross-border e-commerce ecosystem, alongside Anker Innovations and Patozon. Many of its former employees have gone on to launch their own successful brands.

One standout is Momcozy, a maternity and baby care brand founded in 2017 by Pan Silin, an alumnus of Sunvalley’s training program. By August 2024, the brand had sold 5.21 million units on Amazon North America, generating $230 million in revenue, according to SellerSprite.

Other brands with roots in Sunvalley include Melodysusie, Petlibro, Dreo, Epeios, and Vanture, all of which have secured significant market share in their respective categories.

Sunvalley’s Meteoric Rise—and Fall

In 2007, Sun Caijin founded Sunvalley in Shenzhen, setting the stage for one of China’s biggest cross-border e-commerce success stories. Initially selling on eBay, the company quickly pivoted to Amazon, where it became a dominant force in consumer electronics. Alongside Anker Innovations and Patozon, Sunvalley was part of the "Amazon Trios", a group that helped define China’s Amazon-native brand ecosystem.

From 2010 to 2020, Sunvalley’s sales surged 50-fold, climbing from ¥100 million ($13.64 million) to ¥5 billion ($682.01 million). Sun’s strategy was clear: aggressive category expansion, supply chain optimization, and a focus on high-quality, affordable products—particularly in 3C electronics and power banks.

But rapid growth came with challenges. In 2015, a supply chain inefficiency caused a major inventory crisis, forcing Sunvalley to bring in Japanese investors and new management to restructure operations. By 2016, the company had recovered, doubling down on R&D investments—spending up to ¥80 million ($10.91 million) annually—and expanding into offline retail markets, particularly in the Middle East, where top employees earned year-end bonuses of ¥1 million ($136,401).

In 2018, Sunvalley hired an Apple brand executive to revamp its marketing and brand strategy, shifting away from an Amazon-first model. That same year, it was acquired by SACA Precision for ¥1.53 billion ($208.69 million), a deal that sent SACA’s stock soaring for three consecutive days.

By 2020, Sunvalley was generating ¥5 billion ($682.01 million) in revenue, contributing 85% of SACA's total sales. The company explored an IPO and a reverse merger, but internal power struggles erupted. By September 2020, Sun Caijin left, followed by most of the original management team.

The aftermath was brutal. By 2021, Sunvalley’s workforce had shrunk from 958 to 757, with an estimated 90% turnover among senior staff.

The Product King of China’s Amazon Boom

During his tenure at Sunvalley, Sun Caijin focused on product innovation over daily operations, frequently traveling to the United States to study middle-class consumer trends. His approach was simple: anticipate demand, then build best-in-class products to meet it.

One of his most notable successes was the VAVA laser projector. Sun assembled an R&D team from Changhong and Xiaomi, investing ¥200 million ($27.28 million) in development. In 2019, VAVA’s 4K Ultra Projector, priced at $2,600, raised $2.15 million via crowdfunding, cementing the brand’s position in the North American projector market.

Sun’s philosophy of building ahead of demand influenced many entrepreneurs from Sunvalley’s ecosystem. In 2017, the company launched a $199 dashcam, which failed commercially. But former Sunvalley employee Chen Jian took these lessons and created Vanture, a brand that now dominates the North American and European dashcam markets.

Similarly, Melodysusie, a nail care brand founded by former employee Li Jinfang, turned Sunvalley’s 2013 $20.99 nail lamp success into a multi-billion-dollar business.

Now, Sun applies the same product-first approach at Typhur Technology, a high-end kitchen appliance company. With over 100 employees, nearly 60% in R&D, and talent from DJI and Dyson, Typhur is betting big on the future of home cooking innovation.

From Sunvalley to Startups

By 2020, as Sunvalley faced internal turmoil and China’s cross-border e-commerce sector continued its rapid ascent, many of the company’s top executives departed—only to launch their own ventures.

Among them was Wu Yu, former GM of Sunvalley’s U.S. subsidiary, who in 2019 founded DesignLibro in Shenzhen and launched Petlibro, a smart pet brand. Specializing in automatic feeders, water dispensers, and related accessories, Petlibro quickly secured millions in funding from Sequoia Capital and, by 2023, became the top seller in its category on Amazon U.S.

A year later, executive departures peaked. Wei Lihu, Sunvalley’s former rotating CEO, founded Hesung Innovation and launched Dreo, a home appliance brand focused on kitchen and small appliances. Within its first year, Dreo surpassed ¥300 million ($40.92 million) in sales and, by 2023, dominated U.S. Amazon sales in the tower fan and heater categories (Stackline data).

Hesung’s momentum caught investor attention—securing Series A funding within a year and completing five rounds of financing. Another former Sunvalley executive and rotating CEO, Huang Haoqin, is now a Hesung shareholder.

Sunvalley’s influence runs deep. Its management framework shaped the strategies of many of its former executives, who have applied its rapid-scaling model to their own businesses.

By the end of 2020, most of Sunvalley’s top executives had left, including four former VPs and the directors of R&D and branding. Among them, Shi Yuanye launched Epeios in 2021, mirroring Dreo’s approach but with a broader product range, including electric toothbrushes, kettles, air fryers, and even bath salts. Unlike Dreo, which targets the U.S. market, Epeios focuses on Japan.

While their product strategies vary, these new ventures share a common foundation: a focus on home appliances for middle-class consumers, a vision pioneered by Sunvalley and its founder, Sun Caijin.

Now, as the industry evolves, all eyes are on Sun Caijin’s current move.

AUKEY ranks among Shenzhen's cross-border e-commerce "Big Four," alongside Tomtop, Sailvan Times, and YOUKESHU, all based in China South City, a hub for sellers targeting global markets. While the others have already gone public on China's A-share market, AUKEY's journey to an IPO has been far more complex.

Initially listed on China's National Equities Exchange and Quotations (NEEQ, also known as the New Third Board, a financing platform for small and medium-sized enterprises) in 2015 as the first cross-border e-commerce company to go public, AUKEY delisted in 2019 to pursue an IPO on Shanghai's STAR Market, also known as the Sci-Tech Innovation Board, but ultimately failed to meet the criteria.

In 2021, AUKEY made another attempt, this time aiming for the ChiNext board, but suffered a major setback after Amazon suspended hundreds of its accounts. The fallout was significant: 276 stores were shut down, ¥236 million ($32.58 million) in assets were frozen, and the company posted a ¥589 million ($81.32 million) loss.

AUKEY suffered the heaviest blow during Amazon's crackdown on Chinese sellers. Rumors even spread that the company was facing bankruptcy.

However, three years later, the company made a successful comeback and went public. How did they pull it off?

Who's AUKEY

AUKEY's founder, Lu Haichuan, was born in 1979 in Wenzhou, Zhejiang, a city known for its business culture. His entrepreneurial career started with reselling Chinese goods in Germany.

In 2001, Lu moved to Germany to study at the University of Mannheim, where he enrolled with excellent academic performance. Like many Chinese students, he worked part-time to fund his studies, taking jobs as a flyer distributor, promoter, and dishwasher. During this time, he befriended Ze Huiyue, a fellow student, and they became close friends.

The turning point came when Lu needed to buy furniture. Local prices were high, so he turned to second-hand Chinese furniture online, which was available for as little as 20 or 30 euros. This experience highlighted a key business opportunity: China's manufacturing advantage meant its products were significantly cheaper than those abroad. The price difference extended beyond furniture to electronics like car DVD players and GPS systems, with gaps as large as 500 to 600 euros. This insight led to AUKEY's eventual founding.

In the summer of 2003, Lu Haichuan and Ze Huiyue visited Huaqiangbei, Shenzhen, one of the world's largest electronics hubs. They purchased items like laptops, GPS devices, and car navigation systems, which they began selling on eBay. At the time, cross-border e-commerce was largely unknown, but demand was strong, and nearly everything they posted turned a profit. "All we had to do was list it online, and we were making tens of thousands of yuan a month," Lu said.

Within two years, Lu was earning millions, covering his school expenses and supporting his family. By 2004, as he completed his master's degree, he had already hired six employees in Germany to help manage his growing online store. In 2005, he officially founded AUKEY International in Germany, later known as AUKEY Germany.

As the business expanded, Lu chose to return to Shenzhen to be closer to the supply chain. Initially, operations were set up in Huaqiangbei, but by 2007, AUKEY had grown to over 100 employees. Facing high rents in Huaqiangbei, the company moved its headquarters to China South City in Shenzhen, positioning itself for further expansion.

China South City provided AUKEY with expansive office space, financial incentives, and a well-developed cross-border e-commerce infrastructure, which allowed for rapid growth. By 2009, AUKEY Germany's annual transactions had reached nearly ¥100 million ($13.81 million), securing the company the top spot on eBay's Asia-Pacific sales rankings.

In September 2010, Lu Haichuan and Ze Huiyue co-founded Shenzhen AUKEY E-Commerce Co., Ltd. (AUKEY), leveraging Shenzhen's rich supply of electronics—including power banks, car chargers, electronic components, and computer peripherals—which they sold on eBay. They later expanded to other cross-border platforms like Amazon, which was still in its nascent stage in China.

By 2014, AUKEY’s annual revenue had risen to ¥480 million ($66.27 million). That same year, AUKEY embarked on a brand transformation, launching its own label, "Aukey," and shifting from pure reselling to a dual strategy of branding and distribution.

Reflecting on the evolution of cross-border e-commerce, AUKEY founder Lu Haichuan noted, "From 2003 onward, the landscape changed significantly over the decade. By 2012, as global information became more accessible, we realized price wars and low-quality products were not sustainable. That pushed us to rethink our strategy, and by 2013, we committed to building our own brand as the key to long-term growth."

AUKEY's shift to a brand-driven strategy was a turning point, driving substantial growth. By 2015, the company reported revenue of ¥910 million ($125.64 million), establishing itself as an industry leader. That same year, AUKEY made headlines by becoming the first cross-border e-commerce company to list on the NEEQ, also known as the New Third Board.

The growth continued. In 2016, AUKEY's revenues soared to ¥2.218 billion ($306.22 million), with net profits reaching ¥128 million ($17.67 million), a remarkable 639% year-over-year increase. By 2018, the company's revenue had surged to ¥5.109 billion ($705.35 million), with net profits of ¥199 million ($27.47 million), solidifying its dominance in the industry.

However, AUKEY wasn't satisfied with staying on the NEEQ. In 2019, the company delisted, aiming to list on the Shanghai Stock Exchange's STAR Market to align itself with China's innovation-driven capital market.

AUKEY's Setback

In 2020, as the COVID-19 pandemic locked down entire populations, online shopping became the lifeline for millions. AUKEY, capitalizing on China's robust supply chain, experienced a surge in demand that propelled it to new heights. By 2021, AUKEY's revenue exceeded ¥9 billion ($1.24 billion), marking a decade of rapid growth.

But this success came with a price. AUKEY had grown heavily reliant on Amazon, with the platform accounting for 83.9% of its revenue by 2021, up from 49.02% in 2016. This overdependence soon exposed the company to significant vulnerabilities.

In May 2021, Amazon's mass account suspensions rocked the cross-border e-commerce industry, impacting nearly 50,000 Chinese sellers by July. AUKEY, a major player, was hit hard. According to its prospectus, the company saw 276 of its Amazon stores shuttered, with ¥236 million ($32.58 million) in funds frozen.

AUKEY's gross merchandise value (GMV) on Amazon plummeted by 44.1%, from ¥8.79 billion ($1.21 billion) in 2021 to ¥4.91 billion ($677.88 million) in 2022. Annual revenue dropped 21.7%, from ¥9.07 billion ($1.25 billion) in 2021 to ¥7.1 billion ($980.23 million) in 2022, resulting in a net loss of ¥589 million ($81.32 million) for the year.

This crisis marked the beginning of AUKEY's next transformation: reducing its reliance on Amazon. The company scaled back its presence on the platform, trimming its Amazon stores from 645 in 2021 to 303 in 2022, with only 98 stores remaining as of April 2024.

Concurrently, AUKEY cut back its Walmart stores from 50 in 2022 to 33 and reduced its presence on eBay from 156 stores to 52. This retrenchment marked a strategic shift from a broad, inventory-heavy model to a more focused approach emphasizing premium products and a strong brand matrix.

Despite a decline in order volumes on Amazon—from 19.67 million orders in 2021 to 6.2 million in 2023—the company saw its average order value nearly double, climbing from ¥447 ($61.71) to ¥823 ($113.62). AUKEY also reduced its return rate, which dropped from 6.7% to 4%.

As part of its reorientation, AUKEY streamlined its product portfolio, phasing out brands with damaged reputations and focusing its efforts on building a renewed brand matrix designed for sustainable, long-term growth.

AUKEY's product offerings are divided into six key categories: Furniture & Home, Power Tools, Home Appliances, Consumer Electronics, Sports & Health, and Others, with a diverse array of brands supporting each category. By April 2024, AUKEY had expanded its brand portfolio to include 211 different brands.

However, the company has been actively streamlining its brand matrix. According to its prospectus, the top 10 brands by GMV had 4,946 SKUs as of April 2024, a significant reduction from 10,366 SKUs in 2021, 10,205 SKUs in 2022, and 10,614 SKUs in 2023.

AUKEY has also reduced its number of suppliers. As of April 30, 2024, the company worked with 575 manufacturers as OEM partners, down from 1,517 in 2021, 865 in 2022, and 810 in 2023.

AUKEY's Comeback

In its prospectus, AUKEY highlights its focus on furniture and home goods, marking a strategic pivot in its revenue composition. The share of revenue from consumer electronics and power tools fell from 29.4% in 2021 to 9.1% in 2023, while home goods climbed from 41% to 75.9%, becoming the company's main income stream.

According to Frost & Sullivan, AUKEY leads six subcategories on Amazon U.S., including bed frames, food cabinets, dressing tables and stools, bookshelves, dining cabinets, and refrigerators. The company also commands a market share over 10% in 10 categories on Amazon U.S. In 2023, 11 of AUKEY's brands each achieved a GMV of over 100 million yuan ($13.81 million).

AUKEY's rise in the furniture and home goods sector is closely tied to its strategic logistics operations. In 2020, the company acquired Western Post to combat rising logistics costs and long shipping times for large, bulky furniture. To address these challenges, AUKEY focused on direct sea shipping to overseas warehouses as its primary logistics model.

AUKEY has since accelerated its logistics expansion. As of April 2024, Western Post had set up 27 overseas warehouses, spanning over 5.5 million square feet (around 510,000 square meters). This self-managed logistics network has led to significant cost reductions, with logistics expenses decreasing from ¥2.58 billion ($356.2 million) in 2021 to ¥1.86 billion ($256.79 million) in 2023. This resulted in savings of over ¥700 million ($96.64 million). By April 30, 2024, logistics costs had dropped further to ¥556 million ($76.76 million), down from ¥612 million ($84.49 million) the previous year.

AUKEY has turned its logistics services into a competitive edge, with Western Post at the forefront. According to its prospectus, Western Post uses advanced warehouse and transportation management systems, allowing it to offer delivery prices that are 30% lower than Amazon FBA. In 2023, over 95% of medium and large-item orders were transferred to last-mile delivery providers within 24 hours.

Western Post has also expanded its influence within the e-commerce ecosystem, serving 700 e-commerce companies in the past three years. It completed 3.2 million, 4.4 million, 6.1 million, and 2.5 million orders in 2021, 2022, 2023, and the first four months of 2024, respectively.

Logistics revenue surged from ¥490 million ($67.65 million) in 2021 to ¥775 million ($107 million) in 2022, ¥1.65 billion ($227.80 million) in 2023, and ¥583 million ($80.49 million) in the first four months of 2024. Logistics contributed to 5.4%, 10.9%, 19%, and 20.6% of AUKEY's total revenue during these periods.

Frost & Sullivan ranked Western Post fourth among all B2C cross-border logistics providers in China in 2023, with a 1.2% market share. Additionally, it was the top provider for large and bulky B2C cross-border logistics solutions among Chinese companies.

AUKEY has bounced back from Amazon's account suspensions by strategically adjusting its product offerings, sales channels, and logistics. In the first four months of 2024, revenue increased by 16.9% to ¥2.83 billion ($390.71 million), compared to ¥2.42 billion ($334.11 million) in the same period in 2023. Net profit surged by 96.8%, rising from ¥96 million ($13.25 million) to ¥189 million ($26.09 million).

AUKEY is now approaching its peak financial performance. In 2023, the company reported ¥8.7 billion ($1.2 billion) in revenue, close to the ¥9.07 billion ($1.25 billion) it achieved in 2021. By April 2024, AUKEY's gross profit margin had grown from 20.9% in 2021 to 34.5%, while its net profit margin rebounded from -6.5% to 6.7%.

AUKEY's profitability is in line with industry norms. From 2023 through April 2024, AUKEY's gross profit margin of 34.5% was closely aligned with SONGMICS HOME (formerly Ziel Home), which reported margins of 36.32% and 34.92%, respectively. Net profit margins stood at 6% in 2023 and 6.7% by April 2024, while SONGMICS HOME posted 6.8% and 4.61%, respectively. SONGMICS's dip in net margins was attributed to rising shipping costs, while AUKEY benefited from its in-house logistics network.

In response, a new wave of Chinese cross-border e-commerce companies has risen, leveraging competitive pricing to challenge industry giants like Grainger. VEVOR is a standout in this field, having seen its revenue soar from just a few hundred million yuan to over 8 billion RMB ($1.13 billion) in just a few years. Its valuation has also surged from a few million yuan to over $1 billion, with revenue doubling nearly every year.

VEVOR specializes in MRO tools and equipment, selling worldwide on platforms like Amazon, eBay, and its own DTC site, and now serves over 10 million members. In 2020, VEVOR hit 3 billion RMB ($423.63 million) in revenue, making it China's top MRO tools retailer in cross-border business.

600mn to 8bn in 5 Years

Jiao Rubao, the founder of VEVOR, initially started his business journey not in MRO tools but in the apparel sector. Despite being well-known within Shanghai's cross-border e-commerce circles, the company only took off after moving into MRO tools.

In 2012, VEVOR began selling on eBay, and by 2015, sales hit 240 million RMB ($33.79 million). They soon moved to Amazon as well, and by 2017, they were growing fast — seeing over 50% revenue growth for several years straight.

• In 2017, VEVOR diversified its product lines and refined its offerings, with global sales surpassing 600 million RMB ($84.73 million) for the first time.

• In 2018, as the company continued to expand, VEVOR's monthly sales exceeded 70 million RMB, reaching 900 million RMB ($127.09 million) in global sales.

• By 2019, VEVOR's sales worldwide jumped 88% year-on-year to 1.7 billion RMB ($240.06 million).

• In 2020, VEVOR's sales skyrocketed to 2.5 billion RMB ($353.02 million), with several products topping the tool category, prompting the launch of its own DTC site.

• In 2021, VEVOR broke the 4 billion RMB ($564.84 million) sales mark for the first time.

• By 2022, VEVOR was projected to hit a record 8 billion RMB ($1.13 billion) in global sales.

Today, VEVOR stands as a leading MRO supplier integrating production and supply chain, with over 60 warehouses in major markets like Australia, Canada, Germany, the UK, and the U.S., reaching 200 countries and serving more than 10 million users globally.

Some Chinese investors Vevor's incredible growth boils down to two main factors.

The biggest one is simply the opportunity in the MRO market, which has long been strong in Europe and the U.S., led by well-known companies like Grainger, Fastenal, and Wurth. Grainger, for instance, a Fortune 500 name, made $13 billion in 2021. However, these companies still primarily relies on traditional, offline sales channels and focus heavily on conventional B2B sectors like manufacturing, transportation, and construction.

But the consumer market for home tools has always been huge, too. "In Europe and the U.S., B2C MRO makes up 40% of the whole market," says Li Tong, a senior investment manager at Foresight Capital, who knows this sector well.

Before, the B2C market mostly relied on offline channels, which couldn't grab market share quickly online. VEVOR has stepped in to fill that gap, focusing on online sales for regular consumers, boosting MRO e-commerce penetration, and seizing the market previously held by smaller offline businesses via cost-effective offerings.

"And as VEVOR has grown, it's definitely built a name for itself. The bigger the name, the more the revenue; and the more the revenue, the bigger the name—it's a win-win situation." It's fair to say that "VEVOR is the one that's really made the most of this industry boom."

VEVOR's rise is a lot like companies such as Anker in cross-border e-commerce, using online strategies to outpace the competition and snag market share through its cost advantages.

The second reason is the people behind VEVOR. Founder Jiao Rubao entered the MRO sector early on, bringing valuable experience from his previous work in a factory, which equipped him with insights into large-scale supply chain management.

VEVOR's team made their mark in this area by focusing on three essential aspects. First, managing a complex supply chain for bulkly items isn't easy, but they pulled it off. Second, they prioritized building their overseas warehouses to ensure smooth logistics and inventory management—another challenging task. Third, they have been meticulous in their online operations.

With advantages in supply chain efficiency and high operational effectiveness, VEVOR consistently ranks at the top across all its categories on Amazon, showcasing its impressive capabilities.

VEVOR on Social Media

Today, vevor.com gets about 7 to 8 million visitors each month, with 69.1% of those from the U.S., making it the number one site in its category within the U.S.

The main traffic sources include direct access, paid search, organic search, and social media, making up 36.03%, 32.34%, 13.29%, and 12.57%, respectively.

For paid search, VEVOR spends about $200,000 a month, with peak costs hitting $530,000 in busy periods. Given the variety of VEVOR's offerings, the company targets about 1,500 keywords, focusing primarily on product names, broad categories, and brand names.

VEVOR's social media strategy is essential for connecting with users. By creating carefully planned content and encouraging strong user interaction, VEVOR has built a significant brand presence on social media. The company utilizes platforms like Facebook, YouTube, Instagram, and Pinterest to share the latest projects, helpful tips, product reviews, and a variety of DIY-related content, successfully engaging users with diverse interests.

Facebook accounts for a significant portion of VEVOR's social media traffic, with 150,000 followers and generating 59.82% of its traffic. VEVOR's Facebook page is more than just a space for product information; it's a lively community where users share their DIY creations and exchange tips and advice, creating a supportive and collaborative environment.

YouTube also plays a key role, contributing 34.21% of the traffic with its high-quality videos showcasing tool operations and DIY projects, which attract a dedicated audience.

On platforms like Instagram and Pinterest, VEVOR captivates users with stunning images and creative layouts that spark inspiration. With a bunch of well-crafted videos and illustrated tutorials, VEVOR shows off how easy its products are to use and the creative projects you can tackle, while also getting users to share their own creation processes and final results.

This approach not only boosts user retention but also allows potential customers to discover and trust VEVOR's products through user-generated content (UGC) on social media.

Despite TikTok's low traffic share, its creative content, featuring short videos that showcase product applications, DIY projects, and unique tool uses, has quickly caught the eye of tons of young users.

Last September, VEVOR launched its TikTok shop in the U.S., and in a year, VEVOR has achieved sales of $15.38 million with 248,080 units sold, ranking first among similar stores and marking a new growth avenue for VEVOR.

Looking at the data, a big chunk of VEVOR's sales comes from the promotional videos made with influencers on the platform. In the last month alone, VEVOR has been linked to 4,250 of these videos from 1,800 influencers, racking up an estimated $2.72 million in sales.

By working with various influential creators, VEVOR has successfully enhanced its brand presence while also driving direct sales conversions. This collaborative approach effectively pairs the popularity and trustworthiness of these creators with VEVOR's product quality and value, capturing the attention of many potential consumers.

VEVOR's thoughtful strategy on TikTok is evident in its follower count, which now stands at 68,000 dedicated fans. This figure highlights not just VEVOR's rising influence on social media, but also the impact of its continued investments and community-building efforts. This data showcases how VEVOR effectively utilizes TikTok to achieve both brand promotion and sales growth.

New MRO Players After VEVOR

"In 2019 and 2020, when VEVOR was doing well, a bunch of sellers formed teams to jump into this field. Some made it, some didn't, but hitting over 300 million RMB ($42.24 million) in sales isn't that tough. I know a few that hit 500 and 600 million RMB ($70.40~$84.49 million) , and one even reached 500 million RMB ($70.40 million) in just one year," shared an investor familiar with the MRO sector.

• YesWelder

This company started in 2018 in Wenzhou and focuses on welding products, such as machines and helmets. Their brand has taken off, growing at a rate of 1.5 times or even more each year. An investor mentioned they made about 500 million RMB ($70.40 million) in revenue in 2022. Interestingly, this company doesn't want to raise money or go public.

From what's been reported, YesWelder has two founders: Zhu Chengfeng, who manages the brand and sales channels, and Zhang Zhouyou, who runs the e-commerce side. Zhu is around 40 and comes from a design background, so he really cares about the brand’s style. When you check out YesWelder's website, you'll see an awesome scene with sparks flying, featuring a model in a cool welding helmet doing some welding.

To achieve growth, YesWelder is working on expanding its offline presence after establishing its brand. "They mentioned plans to partner with Walmart and Home Depot in the future and are looking to develop offline distributors."

• Chervon

Aside from companies like VEVOR and YesWelder, many traditional brands are also thriving in Jiangsu and Zhejiang. Initially serving as OEM factories for big names like Bosch, these companies later launched their own brands and found success overseas. Relying on their supply chains and product quality, these traditional brands stand alongside rivals like VEVOR and YesWelder, while likely having stronger offline presence.

For instance, Chervon, an electric tool manufacturer that was founded in 1993, was a tool trader before moving into manufacturing, making products for well-known companies like Bosch and Flex. Later on, it launched its own brands, targeting the DIY home market in Europe and the U.S. with mid-to-high-end brands like SKIL, FLEX, EGO, and HAMMERHEAD, which are sold through major local home material stores.

In building brand recognition, Chervon understands that European and American consumers are highly loyal to tool brands they purchased before. Therefore, from the very beginning, Chervon opted to enter the European and American markets by acquiring mainstream tool brands. This strategy not only quickly elevated the awareness of its own brand but also expanded its product line.

The European tool brand FLEX, acquired by Chervon, has also successfully turned from loss to profit. Furthermore, the acquired American brand SKIL has impressively made it onto the "Top 100 Cross-Border E-Commerce Brand Influence List" in China.

• Positec

Founded in 1994, Positec has achieved annual sales exceeding 3 billion RMB ($422.43 million). The company offers a diverse product line that includes power tools and garden tools, targeting both professional and DIY markets.

Its own brands feature WORX, which includes WORX Orange for DIY tools and WORX Green for professional tools, as well as acquired brands like ROCKWELL and KRESS. WORX Orange and ROCKWELL primarily serve major retailers in the U.S., Europe, and Australia, while WORX Green focuses on the domestic professional tools market.

Positec began as an OEM manufacturer, gradually establishing its own factories to produce for well-known international brands such as Bosch, Black & Decker, and Craftsman. The company has since grown significantly, with manufacturing bases located in Suzhou and Zhangjiagang.

Since its founding, Positec has gone through three major changes: moving from trade to manufacturing, then from manufacturing to OEM, and finally from OEM to establishing its own high-end brands. Each of these changes happened at a time when the company was gaining momentum, spurred by a sense of urgency. Founder Gao Zhendong noted in an interview that this feeling of crisis was a key factor.

"When we started trading in 1994, a small team of about twelve people managed to pull in $30 million in revenue in a year. If I recall correctly, the total export value of electric tools in China that year was $260 million. So, we made up over ten percent of that, which sounds quite impressive. But there's no such thing as a free ride. The reform and opening-up had only recently started; buyers didn't know where to find sellers, and sellers were equally lost. We were lucky to be in the middle. However, I knew that trade wouldn't generate real value—manufacturing is what creates genuine value. Once they started collaborating, I could lose my business, and that was a significant crisis."

In addition, several MRO brands are targeting emerging markets, such as Dongcheng and Boda. These companies have ventured abroad, establishing a strong presence in neighboring countries like Vietnam, Myanmar, Mongolia, and Russia. Currently, Boda is the leading power tool brand in Myanmar, while Dongcheng holds the top position in Vietnam.

In the near future, it is possible that VEVOR will face direct competition from them, signaling a new wave of rivalry among Chinese brands in the global market.

Take VeSync, for example—when it started as a VC seller in 2017, sales from VC accounts were just 8.4% of its revenue. By 2019, that jumped to over 50.8%. And Aukey, a top Amazon seller, has since made a comeback thanks to VC accounts though it faced significant setbacks and almost went bankrupt in 2021 when multiple stores were shut down by Amazon.

Meanwhile, Spotter, a newly established company, is riding the wave created by VC accounts.

Who is Spotter?

Spotter is dedicated to assisting businesses in B2B cross-border trade, providing precise solutions to empower Chinese brands in overseas market, with services available in logistics, channel sales, Amazon operations, and finance. As a pioneer in global self-operated channels, Spotter has formed alliances with many top Chinese sellers on Amazon.

Founded in 2021, Spotter has set up supply chain and channel centers in North America, with its headquarters in Chongqing and branches in Hangzhou and Shenzhen. Targeting Europe and the U.S. as core markets, Spotter aims to streamline the processes for domestic sellers on global cross-border platforms.

By 2022, Spotter had grown its global team to over 100, with members from big names like ByteDance and BAT(Baidu, Alibaba, and Tencent), generating more than 250 million RMB (35.65 million USD) in revenue.

In 2023, Spotter became the first domestic platform in the cross-border market to integrate supply chain, channel operations, and financial services into a cohesive platform. With innovative digital solutions for sellers aiming at the European and American markets, Spotter achieved over one billion RMB (142.62 million USD) in revenue, a 400% increase from 2022.

In China, Spotter operates through Chongqing Yilian Tech, led by legal representative Zhao Lu. There is also another key figure in Spotter, who previously worked at VeSync, renowned for its high revenue from Amazon VC accounts in the industry.

After leaving VeSync, this person started his own venture and founded Cellections in February 2014, which focuses on Amazon VC business. He holds all the company shares through a foreign partner and registered the entity in Brooklyn, New York, a hotspot for Amazon sellers, mostly Jewish.

In 2019, Shenzhen-based cross-border seller Sunvalley acquired Cellections for 13 million RMB (1.85 million USD) to boost its VC business, drawn to its VC resources and connections. After the deal, the founding members left the company and Spotter was born.

Why is Spotter?

In 2022, Amazon's total GMV hit $672.1 billion, with sales by Amazon (also known as first-party sales) reaching $247.2 billion, making up a third of its total sales. Sales by Amazon (first-party sales) mainly come from VC accounts, where sellers provide goods to Amazon at wholesale prices, and Amazon then sells them to customers.

The roughly 1700 billion RMB market is highly enticing for many third-party sellers (Seller Central, or SC). With big players like VeSync and Aukey in the mix, the wealth potential from VC accounts is hard to resist.

DJI, now a global leader, also leveraged Amazon's VC to expand its reach. Initially, DJI tried selling directly on Amazon, but the results fell short as the brand had yet to mature. It wasn't until they were invited by Amazon to become a VC seller that their sales took off.

The high privileges of VC accounts often puts SC sellers at a disadvantage, as VC products can be offered at lower prices while maintaining profit margins, aided by Amazon's traffic. Embracing the philosophy of "if you can't beat them, join them," sellers are trying every way to become Amazon's VC seller, and as demand rises, so do the prices of VC accounts in China.

Back in 2020, you could get an Amazon VC account for just 200,000 to 300,000 RMB (28523.76 to 42785.64 USD) in China. By 2021, that price soared to about 800,000 RMB (114095.04 USD), and now some reports say that during peak demand, an established U.S. VC account is being sold for as much as 1.5 million to 2.6 million RMB (213928.20 to 370808.88 USD).

Even though VC accounts have more privileges, Amazon isn't shy about suspending them. Amazon typically does a yearly check-up on VC accounts, and failure to meet the criteria can result in suspension.

Starting May 2024, Amazon began a crackdown on VC accounts, with many sellers receiving emails saying that their accounts would be terminated in 60 days. Some VC sellers reported seeing over 30 accounts flagged for closure, and there are confirmed reports from vendor managers (VMs) indicating that this enforcement will continue throughout 2024.

VC accounts are pretty rare in China, with insiders saying there are fewer than 1,000 active ones held by Chinese sellers. Sellers don't want to spend big bucks on uncertain outcomes, but the appeal of Amazon's VC account is hard to resist. This creates a demand that some companies offer their VC accounts for collaboration with sellers who don't have them. This approach, known as VC consignment, allows VC account holders to partner with SC sellers, enhancing their inventory while earning a commission—a mutually beneficial arrangement.

Some companies have quietly grown by capitalizing on VC consignment, and Spotter is one of them. "This model has been proven effective, and we can expect more SC sellers to join the VC scene in the future," an insider said.

"As long as the VC account operates healthily—ensuring stable supply, meeting Amazon's profit criteria, and maintaining product quality without hurting the brand image—Amazon usually won't bother too much," a VC service provider explained.

How Spotter Stands out?

Spotter generates most of the revenue from its solutions in three main areas: platform operations, logistics supply chain, and financial services.

For operations, Spotter has developed the SEVC system, which allows brand owners to track their product sales on Amazon while Spotter takes care of the VC accounts, sells the products to Amazon, and earns a commission from the sales.

Using its self-developed SEVC system, Spotter has developed two integrated systems: a fully intelligent order management system and a shipment management system. These systems streamline the handling of VC orders and logistics, turning manual tasks into automated processes, which saves time.

Plus, as an official certified partner of Amazon, Spotter offers an in-house intelligent advertising platform that facilitates fully automated management of various Amazon advertising channels, including Sponsored Products (SP), Sponsored Brands (SB), and other ad types.

This platform enhances efficiency and transparency while allowing for seamless management of advertising accounts, thus optimizing labor productivity and streamlining operations. Furthermore, Spotter's proprietary AI technology automatically adjusts campaigns based on established performance objectives.

In addition, for clients engaging in partnerships exceeding $20 million, Spotter provides additional value-added services, such as official Amazon interviews, training through offline meetings, and other opportunities. These services are designed to deepen understanding of Amazon's operational strategies and market dynamics, ultimately enhancing brand visibility and driving sales growth.

In logistics and supply chains, Spotter has set up a one-stop overseas warehouse service to help brands get their products delivered on time. The warehouse management system works seamlessly with major platforms including Amazon, Shopify, Walmart, Wayfair, eBay, Wish, Temu, and AliExpress, making it easy for cross-border sellers to jump in without needing to change much in their backend.

In addition, Spotter offers a full package of warehousing and delivery services, ensuring door-to-door options so sellers don't have to look for other logistics partners or overseas warehouses. Spotter has also rolled out tailored multi-channel transportation management and FBA transfer services specifically for cross-border sellers and Amazon sellers operating on various platforms.

In late February this year, Spotter entered into a deep collaboration with Cainiao for overseas warehouse operations, utilizing Cainiao's self-developed WMS (Warehouse Management System) as the core to streamline the entire process of Spotter's proprietary warehouses.

"Previously, Spotter relied on both outsourced and in-house WMS systems, which struggled with efficiency in complex and large B2B shipments. The operations were not user-friendly with disorganized data, and it didn't integrate well with other systems, making it difficult to support the increasingly lean logistics goals," explained Sam He, CTO of Spotter.

The WMS project between Cainiao and Spotter has kicked off. Centered on Cainiao's self-developed WMS system, this project integrates seamlessly with OMS, MDM, ERP, and BI systems to make sure warehouse operations are fully managed from start to finish.

Once the WMS is up and running, it will provide Spotter's overseas warehouses with an efficient and standardized management system, ensuring the accuracy and timeliness of system information. This will streamline business processes, boost operational efficiency, improve inventory accuracy, lower product damage rates, and make sure everything is traceable along the entire supply chain.

Spotter currently operates 16 overseas warehouses in the U.S., spanning four major states: New York, California, Texas, and Georgia.

In terms of financial services, Spotter collaborates with various institutions to offer supply chain financing to sellers. While Amazon's VC accounts do not have monthly or annual fees, storage fees, delivery fees, or sales commissions, there are still other hidden fees, such as account period fees.

• LovelyWholesale was established even before SHEIN, and both brands capitalized on the rise of U.S. social media — LovelyWholesale with Facebook, and SHEIN with Pinterest.

• Since its 2011 launch, LovelyWholesale's GMV has reached hundreds of millions, backed by 6 million followers globally, including 4 million on Facebook alone.

• The brand's focus on Latina and Black women in the U.S. emerged naturally through Facebook ads, driven by customer demand.

• SHEIN perfected its supply chain by 2018, while LovelyWholesale only realized its importance that year, leading to a delayed move to Guangzhou.

• With the rise of Chinese e-commerce, LovelyWholesale has joined SHEIN Marketplace and TEMU to broaden its market.

Who, you might ask, is LovelyWholesale? While not widely recognized, this fashion brand has captured the hearts of Latina and Black women across the United States.

The brand's origin is even more surprising — it was founded by three male engineers in Shanghai. After graduation, their first venture was selling jade on eBay. In 2011, they launched the LovelyWholesale website.

By 2016, LovelyWholesale's gross merchandise volume (GMV) had soared to hundreds of millions of dollars. The brand's influence has also grown, with more than 6 million followers across various global medias, including 4 million on Facebook alone.

LovelyWholesale was founded even before SHEIN. Its co-founder, Guo Le, also knew SHEIN's founder, Sky Xu, in their early years. Both brands made it big by riding the wave of U.S. social media — LovelyWholesale with Facebook and SHEIN with Pinterest.

How did a Chinese startup end up targeting such a niche market of Latina and Black women in the U.S.? How did they amass 4 million followers on Facebook? What's their strategy for marketing overseas? How did they tackle supply chain challenges? And why has SHEIN pulled so far ahead?

Recently, we had an exclusive interview with Guo Le to delve into these questions.

Pioneers in the Game

Brands Factory: Could you walk us through the founding of Pinteng?

Guo Le: My two partners and I were college classmates. After graduation, I went to work at Huawei, while the other two started selling on eBay. I eventually joined them, and we founded Pinteng in Shanghai in 2008. Back then, we sold anything and everything on eBay. One of my partners is from Nanyang, a place known for jade, so we sold some antiques and, in the fall and winter, we sold boots.

Brands Factory: So at first, you didn’t plan to focus on clothing? You just sold whatever was available.

Guo Le: We launched our DTC site in 2009, keeping an eye on what was selling well on eBay. We tried beauty products, boots, and antiques, but antiques had too small an audience, and shoes took up a lot of inventory space and were costly to fulfill. Eventually, we realized that clothing was the best option — it’s small, cheaper to ship.

Brands Factory: You were probably one of the first to set up a DTC site, right? There wasn't even Shopify back then, right?

Guo Le: Yeah, Shopify hasn't appeared yet. While there were few e-commerce platforms in China, we built our own website. We were running DTC sites from 2009 to 2011.

Brands Factory: Was there much infrastructure for cross-border clothing businesses back then?

Guo Le: We didn’t really think about that at the time. There was supply, mostly through 1688. There were early cross-border platforms like DHgate, but they were more like marketplaces. Very few DTC site like us.

Brands Factory: So you didn't really have a concept of branding back then — it was more about just listing clothes online for sale?

Guo Le: Exactly. We simply applied the same approach we used on eBay to our DTC sites. Later, we went through the phase of experimenting with multiple sites. It began in 2017, and by 2018, we saw many companies in Shenzhen booming with this approach.

We were also thinking, "we've done well so far, so could we replicate this success ?" Our target users are pretty small and limited to the U.S., so we knew growth would eventually hit a ceiling. We need to make change.

Brands Factory: So you began focusing on mass listings.

Guo Le: We weren't actually aiming to do mass listings. Instead, we were thinking about creating more brands like LovelyWholesale in the white market or other niche categories.

Ride Social Media Wave in U.S.

Brands Factory: You were one of the first in China to get into the cross-border fashion business, right?

Guo Le: Yes, we started quite early. Around the same time, Romwe, which later became a sub-brand of SHEIN, was also emerging. Romwe was originally run by a company in Nanjing, adopting the multi-site strategy with a bunch of brands. Other early players included LightInTheBox and Globalegrow. We were fortunate to start early and experienced the peak and boom of the industry.

Brands Factory: When did you start to feel like the market was really taking off?

Guo Le: To be honest, we didn't have a strong sense of the industry being in a boom. Everyone knows we target people of color — Latinos and African Americans — but that was more of a coincidence in how our user base developed. We weren't particularly focused on people of color while doing the Google paid ads, and the ROI on Google keywords was pretty high back then.

Brands Factory: How high are we talking?

Guo Le: Generally around 5-6.

Brands Factory: That's impressive.

Guo Le: Indeed. It was around 2012 or 2013, when we noticed that category-specific keywords on Google were yielding good ROI and sales results. Google traffic was primarily about targeting those ready-to-buy customers in the marketing funnel. At that time, we didn't really think about who was buying. It wasn't until 2014, when we began working with Facebook ads, that we saw a significant shift towards people of color in our user base.

Brands Factory: How did that happen? You weren't even designing clothes specifically for these people, so why did they start buying from you?

Guo Le: It all started when we began running ads on Facebook. We noticed two main changes. First, when we were using Google, most sales were made on PCs. But when we moved to Facebook, sales started shifting to mobile devices, showing the rise of mobile internet.

The second change was our user base. Facebook ad's targeting features played a role here — unlike Google, Facebook has more user data as it's social commerce-oriented. As people made purchases, Facebook used that data to target and reach similar and related groups, gradually revealing our core audience.

Brands Factory: Did you ever make a trip to the U.S. to meet your customers and understand what drives them to buy your clothes?

Guo Le: At the time, we didn't really have that idea, but we did take a quick look around. Mostly, we relied on surveys to understand their preferences. Later on, as Facebook and Google introduced more developed tools for analysis, we noticed that our repeat customers were pretty focused. So in a way, it was the customers who chose us.

Brands Factory: How many followers did you have on Facebook then?

Guo Le: Around 4 million.

Brands Factory: A single account with over 4 million followers — that's really something.

Guo Le: It's mostly because we got started early. When we hit 1 million followers, Facebook approached us to create a success story showcase. We noticed then that most of our followers were over 30, with many being Latino and Black. Facebook saw this trend too, recognizing that our audience was pretty focused, so they made us a case study.

Brands Factory: In some ways, your early social media strategy seems similar to what SHEIN did. Did you look into what they were doing back then?

Guo Le: SHEIN's first big wave of traffic came from Pinterest. At that time, Pinterest had a strong affiliate system where you could post there and drive traffic to your site. SHEIN, back then it was still SheInside, cleverly tapped into this and took over 80-90% of that traffic. Afterwards SHEIN moved to Instagram, and as Facebook grew, we all started ads there.

Brands Factory: So in a way, SHEIN grew alongside social media's golden era.

Guo Le: Exactly, before 2020, everyone involved in cross-border e-commerce was riding that boom. We hit a snag when running multiple sites: traffic was cheap and grew fast, but supply couldn't keep up. When you launched a product, it could sell hundreds or even a thousand units the next day, and no supply chain could keep up with such rapid demand.

Brands Factory: What did this lead to in the end?

Guo Le: In the end, it resulted in site closures. Facebook ads would get suspended, and Shopify would shut down sites. We had been with Shopify for over a year, built a team of 30-40 people, and managed up to ten sites at one time. We faced internal conflicts as the operations and sales teams clashed. Sales wanted to capitalize on the traffic, but fulfillment was an issue. Sites kept getting shut down, making it feel like we were always starting over. We had to wait until inventory was in place before continuing with marketing, which was a tough balance to strike.

Brands Factory: In a way, it was also due to the overwhelming flow of traffic.

Guo Le: We had to make sure we could handle all the orders and get all of them shipped out.

Left Behind by SHEIN

Brands Factory: When did you first realize the need to build your own supply chain?

Guo Le: By 2016, the fashion industry already developed a substantial network of supply chains for on-demand manufacturing. It was mostly informal initially, with many small workshops run by couples.

Brands Factory: People say SHEIN was the first to establish a flexible supply chain for clothing. So you were doing the same thing at the same time?

Guo Le: At first, we sourced products from AliExpress and 1688. Our first suppliers were small family-run businesses that took small orders of 30 or 60 items. Many of our suppliers were based in Quanzhou, and the supply chain there grew alongside our business.

In this process, SHEIN nurtured many small suppliers. As it expanded, SHEIN switched to bulk orders because handling scattered orders was tough due to size variations and restocking issues. SHEIN was ahead in realizing how critical the supply chain is. You can't keep the whole business going with small, scattered orders.

Cross-border supply chains aren't something you can just buy with money; it takes time and mutual adaption.

Brands Factory: How did SHEIN's approach differ from yours, since you also realized how important a flexible on-demand supply chain was?

Guo Le: We were just a few years behind. Most companies end up being late. When the traffic surge happened, SHEIN took on the tough and demanding task of managing the supply chain.

Brands Factory: I've also heard that it was quite challenging for SHEIN to negotiate with these clothing factories back then.

Guo Le: Exactly. Our cross-border model works by collecting payment from users upfront and then paying suppliers, who need to make the goods for us. This means suppliers have to invest in the process. Those willing to invest eventually began working with us.

From 2015 to 2018, SHEIN was busy building and perfecting its own supply chain. We only came to understand this fully in 2018 while working with Shopify. It was also during this time that we moved our supply chain operations to Guangzhou to be closer to our suppliers.

Brands Factory: So it's about two or three years later than SHEIN.

Guo Le: Right.

Follow the Routine of Fashion Nova

Brands Factory: What was your annual revenue back then?

Guo Le: It was no more than 1 billion RMB ($140.17 million), with multiple sites included.

Brands Factory: By 2019, it was quite a significant number. When did you decide to build a DTC brand?

Guo Le: Honestly, it was our users who pushed us in that direction. At first, we were just committed to building something long-term and didn't even think of ourselves as a brand. But around 2018 or 2019, as we focused more on LovelyWholesale, we took things a bit further.

We went beyond simple surveys and started inviting customers to join our online meetings, and their passion really got to us. In a way, our two brands were all driven by our consumers. By 2019, customer satisfaction had become a core value of our company.

Brands Factory: How do you define a brand?

Guo Le: To be a brand, first and foremost, you need market share — you must ensure that your products reach your target customers. That’s the most important thing to consider. Secondly, you must differentiate yourself. Brands like Halara and Cupshe have thrived until now because they have specific target audiences and have built up strong barriers around their niches.

Brands Factory: After targeting minority groups, did you make any changes to your supply chain and design?

Guo Le: At first, we didn’t have a clear product strategy. We operated similarly to other cross-border companies — if something sold well, we’d create similar products. It wasn’t until around 2015 or 2016 that we started to better understand our customers and reflect that in our products. In 2018, we got a chance to visit Eifini, a renowned domestic womenswear brand. That was when we started to learn what it really takes to build a fashion brand.

Before that, our approach was pretty broad, but from that point on, we began to focus on what it really means to be a clothing brand, like how to organize product assortments and spread out marketing resources. After 2019, we put more effort into making LovelyWholesale a solid fashion brand.

Brands Factory: You mentioned creating bestsellers before. How do you approach that?

Guo Le: Before 2019, our strategy was more reactive—we would quickly copy anything that was selling well in the market. But there’s another way, which is based on a deep understanding of your users.

We also learned from Halara. Their product line was incredibly focused, with just one main item — the everydaydress yoga pants — and all their influencers were promoting it. We tried in a similar way. Back then, there weren't any basic items on our websites, though for domestic brands, basics can make up 10% of their stock and sometimes up to 50% of their sales.

We also looked at Fashion Nova, a fast fashion e-commerce brand in the U.S. that caters to the Black community with basic items. Most of what SHEIN sells are basics too, like tank tops or camisoles for just a few bucks. We even studied SHEIN's production and found that they don't do anything with more than three processing steps, as it would increase costs and make it harder to maintain quality.

Brands Factory: How did things turn out?

Guo Le: We quickly hit 1,000 sales a day on our independent site. Before that, 100 sales a day was enough for us to call it a hit. After that, our standard for a hit product became 1,000 daily sales. We poured a lot of influencer resources into this, but honestly, it wasn’t that difficult. I think it’s more about having the right understanding.

Brands Factory: Which platform’s influencers are you talking about?

Guo Le: Initially, we mainly focused on YouTube and Instagram. By 2020, we were also on Facebook, and later, when TikTok started taking off, we shifted our focus there.

Working with influencers was effective at first, with a high ROI. But it's a labor-intensive job; one person can only handle few influencers, and by the time we tried to scale up, the results had already dropped off. So, most of the time, influencer marketing doesn't work out for us — you can't really measure how much revenue it brings in.

We started working with influencers around 2015, and for five or six years, there was hardly any return. Before TikTok became commercialized in the U.S., the results from influencers were very limited and could barely cover the costs of two or three staff members.

Brands Factory: Any tips for influencer marketing?

Guo Le: The key is to scale up. Sales isn't the top priority initially; it's more about finding influencers with high engagement. If they interact well with their audience, sales will follow. To see any results, you need to reach those with a certain basis — about 1,000 videos per month for 3-6 months.

Influencer marketing is easier to scale than live streaming. Success in live streaming is tough to duplicate. On TikTok, live streaming might make up 10-20% of the market, but most sales still come from influencers.

DTC sites have a natural edge in influencer marketing; it's much cheaper than traditional ads. With just one day's worth of your ad budget per month, you can reach hundreds of thousands more people. Plus, unlike ads that users often scroll past without stopping, influencer content stays there and is something people actually pay attention to.

Adapt to SHEIN and TEMU

Brands Factory: What made you decide to bring LovelyWholesale to TEMU?

Guo Le: Two things about TEMU really impressed me. First, they have a long-term vision, looking at things over a 3-5 year span, which is different from others I've met who think money alone can fix things fast. My biggest fear was jumping onto a marketplace that talks big, and then I’m stuck with unsold inventory. The second thing is that they've got enough funds to back it up, which put my mind at ease.

Brands Factory: Women's fashion doesn't seem to be TEMU's strong suit right now, does it?

Guo Le: Exactly, their initial success came from African Americans in the U.S., followed by a focus on Amazon-like products and home goods.

Brands Factory: For a while, TEMU was really pushing for clothing sellers, trying to compete with SHEIN.

Guo Le: Yeah, they planned to focus on fashion, hiring three to four hundred people just for that. But once they launched, they quickly saw that home goods took off, outpacing clothing.

Brands Factory: You also joined SHEIN later on. When did they invite you?

Guo Le: They reached out to us when they were rolling out their fully-managed service. We were among the first to get invited, even before TikTok. We started on it around February or March last year.

Brands Factory: How are your sales performing on SHEIN?

Guo Le: SHEIN has a wide product range, but the African-American market is still relatively small there, so our sales are mid-level at best. Most of SHEIN’s focus is on the white demographic. For instance, some sellers we know in Guangzhou sell over 10,000 items a day on SHEIN, primarily to white customers.

Brands Factory: As a DTC brand, how do you feel about selling through other channels?

Guo Le: Before 2020, what we did, what SHEIN did, and what many other cross-border peers did was pretty muck like TEMU. I used to think of us as the TEMU for minority groups, and SHEIN as the TEMU for white people.

Our customers are very price-sensitive, which is why they moved online in the first place. So it makes sense that they would also go to an "online TEMU" for the same reason. Where you sell depends on where your customers are, and if my customers are there, that's where I'll be.

From 2020 to 2021, as traffic on DTC sites started to decline, we began to feel some pressure. That's when I realized that what really matters is getting our labelled products into the hands of our customers.

Brands Factory: 2020 to 2021 seems to have been a tough time for cross-border fashion brands.

Guo Le: During the pandemic in 2020, we experienced a rapid growth thanks to platform subsidies and quickly expanded our team from over 100 to more than 400 people, which led to the only major crisis we've faced in over a decade. At one point, we were even struggling to pay suppliers.

It's easy to think that rapid growth was due to our own skills, but it was actually more about the subsidies. Once those subsidies began to dwindle and the U.S. raised interest rates, our customers, which were already financially fragile, felt the squeeze. Changes in Facebook's algorithm also hit us hard, causing a sharp decline in our sales and making it much harder to attract new customers.

Many brands that experienced a surge during 2020 and 2021 did so mainly because of subsidies, rather than their own branding, team, or marketing efforts.

Brands Factory: You've been in China's cross-border industry for a long time. Over the years, you've probably seen a lot of ups and downs

Guo Le: Indeed. In the beginning, many companies collapsed because they operated in borderline legal areas; some tried to pivot but failed, sticking to gray area. The second wave of firms, like JollyChic, couldn't survive the competition. Those in the third wave mostly couldn't make it through the downturn.

The problem was that they didn't build core competencies like a solid supply chain, so when the market's growth slowed, they couldn't survive.

Overall, the cross-border e-commerce was quite rough before 2020. Everyone was just selling stuff, and it didn't feel like there was much competition. That's why 2020 is often seen as the first year of the era of brand globalization.

Shein's global profile has risen dramatically in recent years. In 2023, the company's profit surged by 55% to over $2 billion, with a total GMV of approximately $45 billion, surpassing the entire sales of its rival Inditex, the owner of Zara, for the first time.

Shein's success has spurred the rise of a new wave of service-oriented enterprises, particularly in logistics. As Chinese e-commerce giants like Shein extend their global reach, Chinese logistics firms are also making significant advances abroad, following in their footsteps.

With Shein's substantial order volumes reaching regions such as the Middle East, Latin America, and Africa, Chinese logistics companies are rapidly expanding in these emerging markets, capturing opportunities for swift growth.

Prominent players in this sector include iMile, known as the "Middle Eastern UPS," Brazilian logistics pioneer Anjun Logistics, the billion-dollar express giant J&T Express, Buffalo, dubbed the "DHL at the Cape of Good Hope," and Zongteng Group, recognized as China's leading cross-border logistics provider.

iMile · Middle East

In 2015, Shein ventured into the Middle East as the region witnessed its first e-commerce boom. By 2016, Shein had amassed a sales revenue of $27.77 million USD in the Middle East. The momentum continued in 2017 with Amazon's acquisition of the local platform Souq and the emergence of Noon as another e-commerce player.

Witnessing the influx of products into the Middle East via e-commerce channels, Huang Zhen was inspired to establish a logistics-focused company addressing industry challenges, giving rise to iMile.

Notably, iMile's Series A funding round, spearheaded by a female founder, stands as one of the largest financings in the Middle East to date, securing a total investment of $40 million USD, with ByteDance contributing $10 million USD at a lower valuation.

The Middle East logistics sector faces two formidable challenges: entrenched cash-on-delivery (COD) habits and the complexities of last-mile delivery.

An overwhelming 95% of Middle Eastern consumers prefer COD for their online purchases. While this practice reduces refusal costs for customers, it imposes a financial burden on logistics firms and hampers warehouse efficiency.

Meanwhile, last-mile delivery in the Middle East is particularly challenging. Dispersed populations, scattered dwellings, and rugged terrain—including deserts and hills—complicate the task. Fuzzy regional demarcations further exacerbate the difficulty of pinpointing precise addresses, significantly impeding delivery efficiency and diminishing user experience.

As e-commerce giants like Shein, Souq, and Noon see a surge in orders, iMile has leveraged its technological expertise from Chinese cities such as Hangzhou and Shenzhen. This has led to the development of a sophisticated digital system and the establishment of a robust address database.

As reported in August 2023, iMile has established itself as the dominant force in e-commerce delivery across the Middle East, achieving a significant milestone of profitability. This success is largely attributed to its robust partnership with key client Shein, whose order volumes in the region skyrocketed during the pandemic, reaching nearly $3 billion in sales.

iMile's strategic focus on perfecting the crucial "last-mile" delivery has been pivotal to its success. Beyond platforms like Amazon and Noon, which have in-house last-mile logistics capabilities, iMile has forged collaborative ties with other major players in Middle Eastern e-commerce, including TikTok and Temu.

The unprecedented surge of e-commerce in the Middle East has attracted numerous logistics contenders eager to tap into this burgeoning market. The swift market penetration of J&T Express in 2021, with a robust delivery network established in the UAE and Saudi Arabia within eight months, served as a catalyst for iMile's expansion beyond the Middle East.

Following the trajectory of e-commerce giants like Shein, whose expansion into regions like Latin America and Europe has been relentless, iMile adeptly seized the opportunity to establish its presence in Mexico in late 2021 and subsequently entered Brazil in 2022.

"While iMile and Shein may explore collaborations in other emerging markets, meticulous market assessments will be conducted to evaluate market maturity and policy alignment with cross-border e-commerce, given the substantial investment logistics entail and the imperative of infrastructure development in each country," shared an insider from iMile.

Anjun Logistics · Brazil

Beyond the Middle East, Brazil has emerged as a strategic focal point for Shein's global growth trajectory. With a population of 210 million, Brazil stands out as the largest market in Latin America, offering unparalleled opportunities.

According to Sensor Tower data for 2021, Shein recorded 23.8 million downloads in Brazil, topping the fashion e-commerce charts. The company's estimated revenue in Brazil reached $400 million that year.

However, Brazil's heavy taxation, formidable entry barriers, and complex customs clearance present significant challenges for Chinese global e-commerce enterprises. Logistics, in particular, emerges as a major pain point in getting goods into the country.

With Shopee and Shein making waves in Brazil in recent years, 2023 has seen a surge of global e-commerce platforms setting their sights on this market. Tackling logistics intricacies has become the foremost task in penetrating the Brazilian market. While Shein has leveraged iMile's expertise for last-mile logistics in the Middle East, its partnership with Anjun Logistics is pivotal in addressing similar challenges in Brazil.

In 2020, Shein ventured into the Brazilian market, following in the footsteps of Shopee. By 2021, the company had pivoted to a dual strategy, focusing on both cross-border operations and localizing its presence in Brazil.

"Our partnership with Shein began in 2020. Before that, shipping from China to Brazil took between 30 to 90 days. With the gradual establishment of logistics channels, 80% of shipments now reach major Brazilian cities within 9 to 14 days, while the central-western region sees slightly longer transit times of 14 to 25 days," disclosed Fang Ke, the founder of Anjun Logistics.

"While Shein wasn't our first client, its significance cannot be overstated, given the volume of its orders," affirmed Fang Ke. Initially, Shein had three logistics partners when it began working with Anjun, assigning only a few hundred shipments annually. By 2020, thousands of orders were flowing into Anjun from Shein, with volumes continuing to rise steadily.

Throughout this journey, challenges such as tax evasion and returns due to Brazil's high obesity rates emerged, prompting Shein and Anjun to collaborate closely on refining their logistics model.

Fang Ke observed Shein's remarkable growth in Brazil between 2021 and 2023, noting a significant surge in orders after 2021. By late 2021 and early 2022, Shein had strategically pivoted to bolster its localization efforts. The company's strong performance in the region is now primarily attributed to local businesses, although its cross-border operations continue to witness steady growth. Concurrently, Anjun has ridden the wave of Shein's growth trajectory, experiencing symbiotic expansion alongside its strategic partner.

In March 2022, Shein launched its integrated Marketplace in Brazil, enabling local merchants to set up shops and sell their goods. By April 2023, Shein announced a significant investment of approximately $150 million in Brazil to convert 2,000 apparel manufacturers into its suppliers. The goal is to ship 85% of its locally made products across Latin America by 2026.

A look at the timeline reveals Shein's rapid progress in establishing a local presence and swiftly localizing its supply chain by setting up warehouses. During the initial phase, before Shein had registered its local entity, Anjun played a crucial role. Anjun facilitated Shein's procurement, warehouse equipment purchases, and even assisted with obtaining the necessary certificates for cross-border customs clearances. This groundwork, supported by expertise from Anjun's two acquired Brazilian firms, laid the foundation for Shein's expansion in the region.

Shein's entry into Brazil has been marked by efficiency and cost-effectiveness. "Unlike Shopee, which grappled with logistics losses during its first year in Brazil, Shein managed to turn a profit," emphasized Fang Ke. Beyond its international special lines, Anjun has forged a strategic alliance with Brazil's postal service, providing significant advantages in last-mile delivery. To meet Shein's local business demands, Anjun undertook a substantial expansion of its local team in 2022, with a sharp focus on improving capabilities in collecting and delivering shipments.

By the end of 2023, Anjun Logistics and Brookfield, an asset management company, inked a contract for the delivery of a supervision warehouse at Guarulhos International Airport. The 25,000-square-meter facility aims to enhance customs' commercial express clearance capacity to 1 million tickets per day, addressing the issue of clearance delays in Brazil due to site limitations.

In 2024, Anjun Logistics plans to focus on developing five innovative services: direct mail for small international packages, port services, local deliveries, express transportation, and overseas warehousing. These offerings are set to revolutionize the logistics landscape in Brazil and across Latin America.

J&T Express · Middle East & Mexico

J&T Express went public in the Hong Kong Stock Exchange in October 2023. J&T dominated the Southeast Asian market in 2022. According to its prospectus, in 2022 alone, the company handled 2.513 billion shipments in the region, claiming a market share of 22.5%, clinching the top spot.

Currently, J&T boasts a global network of more than 290 large-scale transit centers and over 22,000 distribution points, with a workforce exceeding 350,000, spanning across Asia, Europe, Africa, the Americas, and Oceania.

Despite its global reach, J&T finds itself ensnared by platform dependencies wherever it ventures. In Southeast Asia, Shopee has been the main conduit for J&T's orders since their collaboration began in 2017.

Learning from Lazada's stumble—attributed to its over-reliance on a single logistics provider—Shopee has been bolstering its own logistics capabilities to reduce dependence on J&T. Meanwhile, in China, J&T faces its toughest challenge, as it remains excluded by Alibaba's Taobao and Tmall, which together command a 50.8% share of the Chinese e-commerce market.

The relationship between J&T Express and Shein in Mexico has grown increasingly nuanced and intriguing.

J&T entered the Mexican market in 2021, largely influenced by Shein's established presence in the region since 2018. Over the past three years, Shein has experienced rapid growth in Mexico, expanding from online retail to brick-and-mortar stores.

Initially, Shein grappled with last-mile logistics challenges in Mexico, with limited logistics services in options. J&T swiftly moved to fill this gap, driven by Shein's substantial order volumes in Mexico and its willingness to collaborate with Chinese cross-border logistics firms.

Backed by its financial prowess, J&T rapidly expanded its network, achieving favorable average order values. Consequently, Shein entrusted all its local orders in Mexico to J&T, with 60% to 70% of its cross-border volume following suit. J&T was even recognized as a strategic long-term partner by Shein.

In May 2022, J&T proudly announced its full coverage across Mexico and Brazil.

In May 2023, Temu ventured into Mexico, marking another significant win for J&T in securing an e-commerce giant. However, a hiccup in late 2022 involving J&T's Mexican warehouse led to a period of turbulence. In China, 80% of J&T's orders come from Pinduoduo, Temu's parent company.

Leveraging Pinduoduo's influence, Temu demanded J&T's unwavering commitment to fulfilling its Mexican orders. This put J&T in a difficult position, forcing it to scale back on fulfilling some of Shein's orders across 16 Mexican regions to meet Temu's demands, causing ripples in Shein's supply chain stability.

Since then, Shein has kept J&T at arm's length. Currently, in addition to forging logistics alliances with firms like iMile, Shein has established its own warehouse in Mexico. Meanwhile, J&T's strategy for 2023 mirrors Shein's approach in Brazil. Insiders report that Shein has offered J&T an additional 1% profit margin compared to Temu.

Buffalo · South Africa

Despite Buffalo's establishment in 2017, its remarkable ascent began only recently—more than two years after Shein's entry into South Africa in 2020. Although Shein utilizes two logistics providers within South Africa, Buffalo International Logistics has emerged as a pivotal element contributing to its growth.

In 2023, Shein experienced a surge in popularity, coinciding with Buffalo Logistics attaining its Level 1 Authorized Economic Operator (AEO) accreditation from the South African Revenue Service (SARS). This certification, valid for five years, grants Buffalo Logistics access to streamlined procedures, reduced frequency and swiftness of inspections, exemptions from certain customs oversight, and lower security deposits, according to SARS.

"We have consistently maintained the lowest inspection rate and the highest clearance rate at Johannesburg airport customs over the years," Buffalo's website asserts, highlighting the company's operational efficiency and reliability.

With Shein's meteoric rise in South Africa, Buffalo has been riding the wave of success: capturing 90% of the market share of e-commerce shipments from China to South Africa, with streamlined delivery times from an initial month-long wait to as quick as three days.

Cross-border logistics in South Africa is largely dominated by DHL, UPS, TNT, and FedEx, which prioritize bulk shipments. In contrast, Buffalo exclusively serves clients and procures orders from Chinese e-commerce platforms, concentrating on small to medium-sized parcels.

This strategic focus allows Buffalo to operate symbiotically alongside established players like DHL and UPS, thereby circumventing direct competition. Buffalo explains that it ships products in bulk to its sorting center in South Africa and leverages local couriers for fast last-mile deliveries.

Earlier this year, Temu made its official debut in South Africa. Capitalizing on its swift shipping and efficient customs clearance, Buffalo successfully forged a partnership with Temu. Additionally, South African online fashion retailer Zando has recently partnered with Buffalo to serve as its logistics provider for Zando Global, an international e-commerce platform akin to Shein.

Buffalo now stands as the premier B2C logistics company facilitating shipments from China to South Africa, paying up to 1 billion Rand ($53.88 million USD) annually in customs duties to the South African government.

Zongteng Group · North America

Although Zongteng Group has maintained a low public profile, it has not escaped the notice of investors, especially given the meteoric rise of Shein, with whom it has collaborated for years.

As the logistical backbone for major cross-border e-commerce platforms such as Amazon, eBay, TikTok, Shein, and Walmart, Zongteng has established itself as an industry unicorn, bolstered by billions in investments from entities like ByteDance and Hillhouse Capital.

Li Cong, Vice President of Zongteng, attributes the company's rapid growth to its strategic decision in 2014 to invest in global logistics infrastructure, particularly targeting the European and American markets.

Shein's agile supply chain owes much to Zongteng's support, ensuring timely deliveries to American consumers. This collaboration underscores that the trend of going global extends beyond products to essential infrastructure services.

Zongteng operates primarily in two domains: direct line logistics services and overseas warehousing, bolstered by international freight forwarding and customized logistics solutions.

Currently, the company manages a daily volume of 1.5 million parcels and boasts 1.2 million square meters of overseas warehousing space, marking a significant milestone as the first entity in China to surpass the one million square meter benchmark. Additionally, Zongteng owns and operates two 777 cargo planes.

The current prominence of Zongteng can be attributed to a combination of its proactive endeavors and favorable historical circumstances. A pivotal aspect of its success is rooted in China's robust manufacturing capacities, adeptly meeting the demands of the global market.

In 2024, Zongteng's strategic trajectory involves strengthening air routes to ensure stability, beginning with two additional charter flights this year and more expansions planned. The company aims to enhance its overseas warehousing footprint, both in terms of quantity and strategic distribution. Additionally, Zongteng plans to support Chinese brands venturing into international markets, targeting both commercial entities and end consumers.

SHEIN's success is built on its flexible supply chain and savvy social media strategies. Over the past three years, the company has undergone substantial development. Let’s take a quick look at the progress SHEIN has made during this period.

SHEIN beats Amazon as the most installed e-commerce app in the US

In 2022, SHEIN surpassed Amazon for the first time ever as the most downloaded shopping app in the U.S. In the same year, SHEIN saw remarkable growth with an annual GMV of $29B USD, marking a 45% increase from the previous year and exceeding ZARA's annual sales for the first time.

SHEIN more than doubled profits to $2B in 2023

SHEIN's profit in 2023 surged by 55% to reach over $2B USD, with a total GMV of roughly $45B USD, surpassing the entire sales of its rival Inditex, Zara's owner, for the first time. In comparison, Inditex sales in 2023 grew 10.4% to reach 35.9B euros ($38.12B USD).

SHEIN was once valued at $100B, more than the combined valuations of H&M and Zara

Global investors pumped SHEIN's valuation up to $100 billion USD in April 2022, making it the world's third most valuable startup behind ByteDance, the Chinese parent of TikTok, and Elon Musk's SpaceX.

SHEIN's been on fire lately over the past three years, expanding rapidly on a global scale while adeptly catering to local preferences, akin to the success of TikTok. However, it is important to note that e-commerce presents a distinct set of challenges that are far more complex than those faced by social media platforms. This article will explore how SHEIN is reinventing itself in this intricate landscape.

Brand Portfolio

There are two major strategies behind SHEIN's rapid growth: developing an Amazon-like marketplace and launching more sub-brands to create another SHEIN, which help shield SHEIN from geopolitical risks as well.

On May 4, 2023, SHEIN announced the launch of its global integrated marketplace. SHEIN Marketplace, initially introduced in Brazil, now is available in Mexico and US. The platform encompasses local and international third-party sellers on the SHEIN site alongside SHEIN-branded apparel products, as the company expands to meet increasing demands for product variety.

SHEIN Marketplace allow sellers to access SHEIN's real-time insights and learn from the company's on-demand production and demand measurement capabilities. "SHEIN is committed to delivering the best shopping experience for customers and empowering the communities where we operate while doing so," said Sky Xu, Chief Executive Officer of SHEIN.

Besides the marketplace, SHEIN has a more discreet strategy in play: replicating its success to launch more DTC brands.

Industry insiders attribute SHEIN's thrive in European and American markets not only to its supply chain prowess but also to its far-sighted marketing, exactly riding the waves of social media's booming. Up to now, SHEIN's main official account has gained over 30M followers on Instagram. Through partnerships with countless micro-celebrities and fashion bloggers, SHEIN now boasts the largest follower base on social media among fast-fashion industry.

Leveraging its robust supply chain in womenswear, SHEIN seeks to maintain the competitive pricing and quality of its sub-brands while replicating its proven marketing strategies.

Initially, SHEIN introduces new product lines on its main site for trial sales and testing, while also providing trust endorsements for sub-brands. After building trust and gather feedback from users, SHEIN would launch independent sites for these brands to precisely target new consumers.

Meanwhile, SHEIN facilitates the growth of its sub-brands on social media by leveraging a prominent main account to amplify the reach of smaller sub-accounts, thereby accelerating their development. This strategic deployment on social platforms ensures that they effectively engage with their target audience from the outset.

Through a series of innovative initiatives and expansion strategies, SHEIN has expanded its portfolio to over ten brands, each targeting specific market segments to cater to diverse consumer needs and preferences. This array includes:

• ROMWE: Focus on youthful fast fashion, appealing to trend-conscious young adults.

• EMERY ROSE: Offers sophisticated fashion for mature women, combining elegance with contemporary styling.

• MOTF: Positions itself in the high-end apparel sector, providing premium quality at competitive prices.

• DAZY: Specializes in Korean-style fashion, known for its chic and minimalist designs.

• Glowmode: A sportswear brand that blends functionality with fashion, suitable for active lifestyles.

• Luvlette: An intimate apparel brand that focuses on comfort, style, and inclusivity.

• SHEGLAM: SHEIN's cosmetics line, offering a wide range of affordable beauty products.

• Cuccoo: A footwear brand that provides stylish options ranging from casual to formal.

• PETSIN: A pet brand catering to the needs of pets and pet owners, with a focus on quality and style.

• Slow Sunday: A lifestyle concept shop featuring homeware and other daily goods crafted by creative souls from around the globe.

ROMWE and MOTF are SHEIN's experiments in different directions. ROMWE operates like another SHEIN with its own main site, app, and third-party seller integration. Meanwhile, MOTF keeps prices reasonable but pushes the upper price limit, marking SHEIN's entry into the higher-end market.

Growth via Acquisitions

SHEIN's acquisitions of its rivals come at a time when the company is looking to further expand its global influence.

Early in 2014, SHEIN formally acquired its Chinese rival ROMWE to expand new product categories. One year after that, the company announced its acquisition of US-based Make Me Chic, alongside its decision to establish a customer service center in the United States, which significantly increased the market share of North America. Concurrently, SHEIN also integrated the entire founding team of ZZKKO, the original name before it became the trendsetter we know today, into its operations during the same year to improve the mobile shopping user experience.

In 2022, SHEIN made a significant £300M ($322.94M USD) bid to acquire the UK's largest privately owned fashion retailer Arcadia, home to renowned brands like Topshop, Topman, and Miss Selfridge. Despite the unsuccessful bid, SHEIN remains committed to its trajectory of mergers and acquisitions.

• SHEIN x Forever 21

In August of last year, SHEIN acquired approximately one-third shares of the joint venture company SPARC Group, marking the first time SHEIN has invested in an established brand. SPARC Group operates several clothing brands, including but not limited to the fast fashion brand Forever 21, outdoor brand Nautica, and mid-range men's clothing brand Brook Brothers.

Following the acquisition agreement, SHEIN planned to feature Forever 21's products on its website and mobile app with extra substantial online traffic. While Forever 21 boasts numerous physical stores and its own digital sites, this deal allowed the brand to tap into SHEIN's vast online user base of up to 154 million users.

• SHEIN x Missguided

Subsequently, in October 2023, SHEIN has bought the Missguided brand from Frasers Group, marking the e-commerce giant's first purchase of a British brand. Founded in 2009, Missguided was one of the largest online fashion retailers in the UK. However, the pandemic and rising costs due to inflation led the brand to file for bankruptcy in May of last year. Frasers Group subsequently acquired it for £20M ($21.52 USD) in June. It's worth noting that SHEIN was one of the bidders for Missguided at that time.

Going Offline

Apart from building a strong technology-driven marketplace, SHEIN is also putting effort into offline retail. As consumer preferences shift, the company is experimenting with pop-up stores in various global locations, starting from London, New York, and Dubai.

• SHEIN Pop-up Stores

Unlike traditional brick-and-mortar stores, SHEIN's pop-up stores primarily offer try-on and viewing services, enabling customers to make online purchases via QR codes after experiencing the products. Besides, the wide range of product offerings continues to attract consumers to queue up for the in-store experience.

In November 2022, SHEIN opened its first ever permanent physical store in Tokyo as the online retailer takes the next step after multiple pop-ups. The space may also be modified to host fashion shows and designer events as needed, the spokesperson said.

Recognizing the growing importance of in-person experiences, SHEIN will keep going offline with a plan to open approximately 30 pop-up stores in major cities across EMEA (Europe, Middle East, Africa) region, the North America, and Asia this year.

SHEIN's acquisition of Forever 21 is also inseparable from its parent company SPARC Group's offline store network. SHEIN opened a pop-up store within a Forever 21 store located in Ontario, Canada, covering 20% of the store's total area. During a four-day promotional period, it attracted over 7,000 visitors, resulting in a 62% increase in comparable sales compared to the same period the previous year.

Supply Chain Diversification

In response to increasing geopolitical tensions and market pressures, including criticism and regulatory scrutiny in various countries, SHEIN is actively seeking to expand part of its production beyond China, diversifying its supply chain.

In January 2024, Peter Pernot-Day, SHEIN's Head of Strategic and Corporate Affairs for North America and Europe, emphasized SHEIN's continuous efforts of localization in new markets, with a special focus on the United States, the European Union, and Brazil for the year 2024. Pernot-Day expressed particular enthusiasm for the brand's growth in Brazil, revealing SHEIN's substantial investment of over $50 to $100M USD in the country's garment manufacturing industry. Once operational, this investment aims to serve both Brazil and the broader Latin American market.

Reuters reported that SHEIN will complete the localization of its supply chain in Latin America by 2026.

• Brazil

In July 2023, SHEIN signed an agreement with Coteminas to invest approximately $150M USD in Brazil for 2,000 of the textile company's apparel manufacturers to become SHEIN's suppliers to serve the Brazilian and Latin American markets. To date 336 partnerships have been signed, of which 213 are producing clothes across 12 Brazilian states, according to the company. In this way, SHEIN aims to ship 85% of its products made in Brazil around Latin America by 2026, said Fabiana Magalhaes, Director of Local Production at SHEIN Brazil. Currently, 70% of SHEIN's products sold in Brazil come from China.

In early 2023, SHEIN made a strategic move by appointing Marcelo Claure, former CEO & COO of SoftBank Group International, as the Chairman of SHEIN's Latin American. Insiders revealed that part of Marcelo's job is to extend local supply chains in Brazil and other regions through cooperation with local companies and manufacturers. Later in August 2023, Marcelo Claure was named as Group Vice Chairman of SHEIN.

"Marcelo's leadership and relationships have been instrumental in strengthening SHEIN's business development and strategy in key markets. We are fortunate to have Marcelo's unparalleled expertise at scaling global companies as we further expand SHEIN's marketplace model, localization strategy and other key initiatives to further meet the needs of our customers in over 150 markets." said Donald Tang, Executive Chairman of SHEIN.

• Mexico

In a bid to optimize delivery efficiency, SHEIN is also doubling down on its investment in Mexico. In October 2023, Mauricio Vila, the Governor of Yucatán, announced SHEIN's plan to set up its production and distribution center in Yucatán, backed by a substantial $100M USD investment. The new factories in Mexico promises to significantly shorten delivery times and lower distribution costs across Latin America, marking a significant move for SHEIN to expand into the Latin American market.

Yucatán was chosen primarily for its advantages in nearshoring and high-quality textile. Emulating successful models from Brazil and other regions, the forthcoming factory will collaborate closely with local garment and goods manufacturers. And SHEIN is gearing up to forge strategic partnerships with local manufacturers, aiming to facilitate small businesses in promoting their products on the platform while offering them trainings to navigate the evolving e-commerce dynamics.

"SHEIN's localization strategy allows us to shorten delivery times to customers while expanding product variety and supporting local economies," said Marcelo Claure. SHEIN is "continuing to explore nearshoring options," he added, referring to manufacturing closer to the point of sale. Through this move, SHEIN is also looking at making Mexico a production hub for other countries, including potentially the United States.

• Turkey & India & Other Countries

Meanwhile, SHEIN has been accelerating its manufacturing activities in Turkey, one of the world's largest cotton producers, where it tries to recreate its "small order and quick response" business model. By the end of 2023, 20% of SHEIN's sales in Europe originated from Turkey. Local production is also being considered in India under a partnership in May 2023 with Mukesh Ambani's Reliance Industries Ltd, India's largest multinational conglomerate headquartered in Mumbai.

Furthermore, SHEIN launched three distribution centers in Poland, Italy, and the United Arab Emirates, shortening delivery times in the serviced areas from 2 weeks to 3-4 days. After Whitestown, Indiana, SHEIN also plans to build two more warehouses in the US that should bring delivery times down from 1-2 weeks to 3-4 days. This will be highly necessary for its marketplace since Amazon offers same-day and next-day delivery to 72% of US customers.

Review

SHEIN has emerged as one of China's most successful global ventures, following in the footsteps of TikTok, despite its cautious approach to overtly aligning with a Chinese identity. Its success illustrates the powerful combination of social media dynamics and a flexible apparel supply chain. Shein's growth trajectory depends not only on its internal strategies but also on its ability to navigate global geopolitics and expand its international presence.

• This year, the scrapped IPO plans of Cloud and logistics Cainiao, as well as the delayed IPO of the grocery business Freshippo, indicates the failure of Alibaba Group's management shake-up.

• Despite the Group's lower-than-expected financial results after reshuffle, Alibaba's International Digital Commerce segment performed strongly with 44% surge to 4.02B USD in 2023 Q4 revenue.

• In November 2023, Alibaba's B2B site 1688.com, a domestic business unit, announced to join Alibaba's cross-border B2B party. Up to now, 1688.com has launched its sites in Vietnam and Japan.

• Since the launch of Five-Day Global Delivery in last September, Cainiao's related orders have achieved a triple-digit growth in Q3 with an average fulfillment rate over 90% in four European countries.

• Alibaba Group cancelled Cainiao's IPO recently with the aim to reach deeper strategic synergies between its e-commerce businesses and logistics service.

• Alibaba Group's plan to split is being replaced by greater focus on its core businesses, e-commerce and cloud.

Background

The year 2023 witnessed Alibaba Group's biggest corporate restructuring since its establishment more than two decades ago. Facing growing pressure from rivals like PDD, the owner of Temu, Alibaba Group reorganized its businesses into six independent entities, each led by its own CEO, with a new governance model of "1+6+N", in which each business unit will face the test of market forces individually with the potential to seek its own IPO.

However, just one year after the reshuffle, Alibaba's plan to spin off its cloud unit was cancelled, with the company pointing to difficulties caused by elevated U.S. export controls on chips to China. An initial public offering of its logistics unit Cainiao and its grocery business Freshippo is also being held back for better timing.

"We concluded that to maintain our competitive edge, we must increase our investment in core capabilities and adopt a more aggressive approach toward competition in order to win growth." said Eddie Wu, Alibaba Group's CEO, on the earnings call earlier this year. In this way, Alibaba has all but abandoned spinoffs in favor of combining operations to drive its core businesses of e-commerce and cloud.

Alibaba is navigating a challenging period, with its once-dominant business in the Chinese e-commerce landscape slipping from a high of 70% market share to less than 50%. The company's halted restructuring efforts are seen as a strategic move to regain lost ground and refocus on its core e-commerce business, including its critical international division. Also noteworthy is that Alibaba's foundations were built upon its global expansion, with Alibaba.com serving as the company's inaugural business.

And maybe there's a silver lining. Alibaba's International Digital Commerce (hereinafter referred to as "AIDC"), Alibaba's overseas e-commerce marketplaces, performed strongly, with AliExpress orders rising 60% YoY, according to the financial results announced by Alibaba Group for the quarter ended December 31, 2023. "There is huge potential for AIDC to increase penetration in many markets," said AIDC's CEO Jiang Fan on a call with analysts following earnings.

Overview

Here we will make a deep dive into Alibaba's international business, which includes AIDC, Cainiao Network, the logistic arm behind AIDC, as well as the Group's B2B site 1688.com, a domestic business unit which announced to join Alibaba's cross-border B2B party at the end of last year.

Currently, AIDC can be roughly divided into two segments: one is the wholesale business, conducted by Alibaba.com; the other is the retail business, led by Lazada, AliExpress, Trendyol, Daraz, and Miravia.

In Q4 2023, AIDC's revenue jumped by a significant 44% to 4.02 billion USD, where retail commerce revenue surged 56% to 3.28 billion USD and wholesale climbed 8% to 740 million USD.

Alibaba.com

Launched in 1999, Alibaba.com marks the Alibaba Group's inception in the business realm and international business is where the group started from. In fiscal year 2023, buyers who sourced business opportunities or completed transactions on Alibaba.com were located across over 190 countries, with over 220,000 paid supplier members worldwide. Additionally, the platform witnessed a 110% growth in GMV and a 47% increase in orders in 2023, with a compound annual growth rate (CAGR) of over 100% in paying buyers over the past three years.

At the end of 2023, Alibaba.com completed the acquisition of Visable, the European B2B digital trade platform. Thanks to this deal, Alibaba is further expanding its supplier base in the region and further advancing Alibaba.com's global expansion and dual brand strategy, said AIDC CEO Jiang Fan.

To address the concerns and streamline global sourcing, Alibaba.com launched Alibaba Guaranteed in March 2024, an innovative service where purchasers can benefit from set per-unit prices, reduced minimum order quantities, and assured delivery dates when buying products.

As for now, Alibaba Guaranteed orders are eligible for shipping to addresses within the United States, Canada, Mexico, the United Kingdom, France, and Germany. Products under this category are required to be shipped within 72 hours to 7 days, ensuring timely delivery.

AliExpress

Launched in 2010, AliExpress is a global marketplace targeting consumers around the world and enabling them to buy directly from manufacturers and distributors in China and around the world. In addition to the global English-language version, AliExpress is also available in 17 other languages, including Portuguese, Spanish and French. Top consumer markets where AliExpress is popular are the United States, Brazil, France and Spain.

AliExpress is the key contributor to AIDC's growth, recording YoY growth of 60%, mainly driven by Choice launched in early 2023. Currently, AliExpress's Choice has been launched in 55 countries and regions worldwide and continues to upgrade consumer experience with price competitiveness and improved service standards, through supply chain optimization and parcel consolidation in key strategic countries. As of January 2024, Choice deals already occupied half of AliExpress's total orders. 　

AliExpress has performed strongly since the launch of Choice. SimilarWeb data indicates AliExpress's monthly average visits in the U.S. soared to 24.2 million in 2023, a 290% YoY increase, marking it as one of the nation's fastest-growing e-commerce sites. According to app analytics firm Wiseapp·Retail·Goods, AliExpress's monthly active users (MAU) in South Korea more than doubled to 8.2 million in February from 3.6 million a year earlier, making it the second-largest e-commerce platform by MAU. In Spain, AliExpress was the second most-visited e-commerce platform in December 2023, as per Club Ecommerce and EGI Group statistics.

Besides Choice, in early 2023, AliExpress also rolled out the half-managed and overseas consignment services, which are hailed as innovative models in cross-border e-commerce, facilitating loads of Chinese factories and old-school exporters to jump on the e-commerce bandwagon.

This year, AliExpress remains active in exploring new markets. In March, AliExpress unveiled its plan to invest 1.1 billion in South Korea over the next three years and recently announced Tang Wei as new brand ambassador. In the Middle East, AliExpress has announced Saudi soccer stars Salem Al-Dawsari and Feras Al Brikan as its regional brand ambassadors in early March. And in the UK, the company has debuted its livestreaming shopping service on March through a partnership with Vogue Business. Also a livestreaming competition will be held in which winners will have the chance to develop their own fashion collections. Not long ago, AliExpress secured a deal to become an official partner of UEFA Euro 2024, doubling down on its bet in the European market that echoed rival Temu's multimillion-dollar investments in the Super Bowl for two consecutive years.

Miravia

Miravia, launched in 2022 by Alibaba Group in Spain, also signifies the company's strategic foray into the European market. It serves as a multifaceted platform, blending a marketplace with entertainment elements, catering to both mid-range and high-end products. Miravia adopts an influencer marketing-focused approach, akin to Shein's strategy, allowing influencers to create content within the platform to showcase products in real-life scenarios, enhancing the customer's purchasing experience.

In March of last year, Data.ai released the ranking of e-commerce app downloads in Spain. The top three were dominated by Chinese companies, with Miravia and AliExpress ranked in 1st and 3rd place, and fast fashion Shein in 2nd place. Now Miravia boasts more than 12,000 brands and retailers home and abroad and will be one of the main sponsors of the next Olympic Games in Paris 2024.

Cainiao Network

Founded in 2013 by Alibaba Group, Cainiao now is the world's largest cross-border e-commerce logistics company, with solutions covering express delivery and global supply chain services for both Alibaba and third-party customers. In fiscal year 2023, Cainiao processed over 4 million cross-border parcels daily with its international logistics revenue hit 5.08 billion USD, accounting for 47.4% of the total. In Q4 2023, Cainiao's revenue grew 24% YoY to 4,011 million USD, primarily driven by cross-border fulfillment solutions.

To support cross-border business development, with the upgrade of end-to-end capabilities, Cainiao and AliExpress jointly launched the Five-Day Global Delivery Service in last September for consumers in its main markets, including Spain, Netherlands, UK, South Korea and Belgium. In March this year, the service has been expanded to Germany, France, Portugal, Saudi Arabia, Mexico, and the US.

Customers who place an order in those regions on AliExpress can now expect to receive their parcels in five days, delivered by Cainiao. Since the launch of Five-Day Global Delivery, related orders have achieved a triple-digit growth in the third quarter with an average fulfillment rate over 90% in four European countries.

1688.com

Launched in 1999, 1688.com is China's largest integrated domestic wholesale marketplace in 2021 by net revenue, according to Analysys. As the biggest Chinese B2B platform for dropshipping and wholesale, 1688.com is the main source for Taobao, Pinduoduo, Amazon, Shopify, Wish, eBay and other platforms overseas. Since it's mainly for B2B purpose, the price on the site is competitive to gain dropshippers and wholesalers.

Back in mid-November 2023, 1688.com was upgraded as the priority of Taobao Tmall Commerce Group, Alibaba Group's main business unit. 1688's foray into overseas markets primarily revolves around providing sourcing solutions for cross-border sellers, particularly those engaged in content-driven operations on platforms like TikTok.

To be specific, 1688.com rolled out three cross-border sourcing solutions: the Xunyuantong API, overseas direct procurement, and source exchange. Through a cross-border API interface, products information on 1688.com can be imported into various overseas procurement websites for dealers to place orders directly.

At the end of October 2023, 1688.com and Vietnam's VelaCorp Group jointly launched B2B site named SaboMall, where product procurement and technical support are provided by 1688.com to satisfy more than 10 million stores' needs for cross-border products from China to Vietnam.

In Japan, 1688 has teamed up with Rakumart, an innovative B2B digital trade platform catering to the needs of small and medium-sized overseas buyers. Headquartered in Hangzhou, Zhejiang Province, the birthplace of Alibaba, Rakumart has now expanded its presence with dedicated sites in Japan, Brazil, and South Korea. Buyers can seamlessly make purchases on the website, leveraging Rakumart's collaborative logistics for efficient shipping.

Insiders revealed that there's no head-to-head competition between 1688.com and Alibaba.com at the moment. While AIDC's Alibaba.com garners a significant portion of its revenue from cross-border transactions and logistics, 1688.com primarily focuses on supplying goods for cross-border trade, with no immediate plans to venture into direct online transactions with overseas buyers. Senior executives at 1688.com view the overlap and competition among Alibaba's sectors in global ventures as beneficial, advocating for an open market without protective barriers for specific sectors.

Review

AIDC is hailed as Alibaba's most promising segment, with its head Jiang Fan earning praise within the industry. Currently, AIDC is actively expanding its team, not just domestically but also overseas, targeting key markets like France, the United States, Spain, and South Korea. AIDC also remains a popular choice for internal transfers within Alibaba Group, partly because of its impressive growth trajectory and a youthful and dynamic work environment cultivated by Jiang Fan.

In the three quarters following Alibaba's restructuring, AIDC has led the charge with revenue growth rates of 41%, 53%, and 44% respectively, gradually increasing its revenue share within the group to 9.45%, 10.9%, and 10.95%.

HSBC predicts that AIDC has gradually matured, with a large user base across the EU (including the key Turkey market), ASEAN, South Korea, and Latin America. By 2027, AIDC's GMV is expected to reach 118 billion USD, doubling from 53 billion USD in 2022.

When assessing the future of Alibaba's international business, particularly in its rivalry with Temu, we foresee significant headwinds on the horizon.

First, while Jiang Fan may be on par with the likes of PDD's founder Huang Zheng and Temu’s head Gu Linglin, there are still execution gaps and more significant internal challenges at Alibaba Group.

For example, AliExpress had once achieved significant breakthroughs abroad, but internal strifes caused a major setback that it struggled to overcome.

Second, Chinese businesses are facing an escalating challenge due to geopolitical uncertainties, exemplified by the recent ban of TikTok in the U.S.

Miracle Miles (hereinafter referred to MM) was established as a seller of women shoes in 2009.

MM's business has evolved since its early days. Today they go beyond shoes design and sales.

Moreover, its sales channels have been diversified, with products available on Amazon, eBay, Walmart, among others, as well as its own physical stores. MM claims that its business reaches over 10 countries worldwide, serving more than 16 million customers.

MM has been growing rapidly since its foundation, with revenue over 3 billion RMB (US $416.8 million) today.

It has also achieved significant success in fundraising, securing investments from several prominent VC across China. In March 2022, MM obtained a $100 million funding jointly led by Sequoia China and IDG Capital. In December 2023, MM got another $100 million financing, further bolstering its financial position.

Currently, MM ranks as the NO.1 shoe-seller on Amazon. While its sales volume may not rival that of Shein, it has been hailed as the "Shein in Footwear" within China's cross-border e-commerce community

Sky Xu, founder of Shein, does not come from an impressive background. The university he graduated from in China is not well-known. Mr. Xu didn't have any overseas experience before starting his business. In contrast, MM's co-founder and CEO Lin Yang appears to be very international.

He came to the US when he was a teenager. He graduated from Stony Brook University in 2004 with a degree in Computer Science. After that, he worked as an engineer in New York for more than a decade years.

MM's Road to Glory

Reflecting on the rise of MM, it's clear they seized two significant opportunities.

The first time was in 2009, when the US was going through an economic crisis. Decreased wages and rising unemployment forced consumers to tighten their budgets and pay more attention to product quality rather than brand names.

Lin Yang and his partners saw a golden opportunity in the market for cheap shoes. Shoes are a necessity -- even when people are trying to save money, they still need to buy them. On average, North Americans purchase 7.4 pairs of shoes per year, with an average spending of $319 each person. Women show an even stronger demand for shoes, with data showing that the average US woman owns a collection of 30 pairs

Meanwhile, Lin Yang also recognized the value of China's shoe manufacturing industry. China is a major production hub of shoes with export over 10 billion pairs every year, accounting for 82.5% of the world's shoe production capacity. Lin Yang grew up in Fuzhou, one of the main textile and footwear production bases in China. With this backgroud, they were able to utilize Fuzhou's powerful supply chain and cost advantages to create a line of shoes that are both high-quality and affordable.

The second chance came in 2014 when MM made the strategic shift from brick-and-mortar stores to online stores. Back then, the US e-commerce was steadily growing, with platforms like eBay and Amazon surged in sales year by year. Relying on its competitive pricing and varied styles, MM's sales skyrocketed from millions to billions in just a few years

Brand Portfolio

The first brand of MM is Dream Pairs, which means that everyone can find their dream shoes there. Kicking off in New York, Dream Pairs won hearts with unbeatable prices for stylish shoes. From 2009 to 2013, Dream Pairs expanded rapidly with more than 30 stores opened.

MM revamped its game in 2018, no longer playing it safe with just women's footwear. The company has established a brand portfolio revolving around four brands: Dream Pairs, Bruno Marc, Nortiv8, and Dream Pairs Kids. This portfolio encompasses a wide array of product categories, including women's footwear, children's shoes, men's shoes, outdoor shoes, and work boots. By tailoring its offerings to diversified customer bases and scenarios, MM has expanded its user base significantly

Empowered by its robust supply chain and all-round brand portfolio, Dream Pairs quickly made itself a top player in Amazon's footwear segment during the pandemic.

Dream Pairs, the flagship brand of MM, targets the young and fashion-conscious consumers. It releases over 300 attractive designs annually paired with ultimate comfort at average price of $50. Being the NO.1 self-owned brand in female fashion footwear on Amazon USA, Dream Pairs has served over 10 million customers with more than 30 million pairs sold, including sandals, flats, pumps, hiking shoes, boots and more

Bruno Marc caters to the working man aged between 25 and 45, with a selection that takes him from the boardroom to a casual Friday and weekend adventures. It offers a variety of options, such as leather oxfords, casual mesh sneakers, and military boots. They focus on quality and comfort, with a simple yet stylish design

Founded in 2019, Nortiv 8 specializes in a wide range of comfortable and durable outdoor shoes, including hiking boots, work and snow boots, water-proof shoes, and more. While brands like Danner, Arc'Teryx, and Hoka sell men's hiking boots for over $200, Nortiv 8's waterproof are currently on sale for as low as $40 on Amazon. Industry insiders have disclosed that Nortiv8 has been growing at a rate of 200% per year

Dream Pairs Kids is a children's shoe brand with a core positioning of fashion, comfort, and fun. It targets children of different ages, from 6 months to 14 years old, providing them with functional and cute shoes while emphasizing the importance of caring for their foot development

MM is also constantly introducing new brands. In March 2023, they launched the sustainable brand BURUDANI, with a mission to "provide natural comfort for every step." The brand is all about lightweight and comfortable shoes for easy commuting, including flats and high heels.

However, goburudani.com is no longer in operation, and BURUDANI has been integrated into the product line of Dream Pairs brand.

Follower of SHEIN

According to reports, MM currently has over 500 employees worldwide, with over 300 based in the Changsha office in central China. About 80% have a bachelor's degree or higher, and almost half work in internet-related roles. The Changsha office comprises two separate buildings, with rows of computers neatly lined up instead of the usual sewing machines, scissors, fabrics, and rubber found in shoe factories.

MM follows SHEIN’s way to digitalize its supply chain, making effort to achieve a technology-driven and data-support process from design and manufacturing to marketing and fulfillment. As early as 2018, MM developed its own ERP system to deep dive into data about end-to-end processes. After that, MM's online revenue grows exponentially year by year, with $100 million in 2019, nearly $138 million in 2020, and $417 million in 2022.

According to SellerSprite, the best-selling item for Dream Pairs in the last 30 days was a women's chunky heel sandal that was released in April 2019 and sold 2,657 pairs per month. Insider sources revealed that MM's classic products often have an exceptionally long life cycle of around 3~5 years, and even though their 240 classic products only make up about 30% of their total SKU, they contribute to nearly 70% of their sales.

With data-backed insights, MM can rapidly adjust its new product plans in response to market changes, resulting in a remarkable pace of new releases and a high success rate for bestsellers.

To keep consumers engaged, MM launches nearly 300 new products each year, leveraging data intelligence to predict fashion trends and achieving a remarkable 60% success rate for new offerings.

Besides products R&D, technology is also the force behind MM's globalized warehouse and logistics network. With partnerships across dozens of international shipping routes and its own warehouses, MM has created an intelligent platform with visualized data for warehousing and shipping.

MM began its journey with brick-and-mortar stores and then embraced online markeplace. Now it is returning to offline sales. At the end of October 2023, Dream Pairs opened a store again in New York's Bay Plaza Shopping Center, with the aim to open 20 stores in the US by the end of 2024, marking a triumphant return to its roots.

All images in the article are from Miracle Miles official website