Week #5: Temu Aims to Reduce Reliance on US | Alibaba Embraces Young Leadership and B2B Business may Go All-In Overseas
Latest news and analysis on China's global e-sellers.
Last week, the most eye-catching news still came from Pinduoduo and Alibaba. Pinduoduo released its financial report, which far exceeded expectations. Though Pinduoduo did not expose detailed data on Temu, whether revenue or cost input, Temu has become a new growth driver for the company. In contrast, Alibaba is dealing with its own crisis, and a large-scale executive reshuffle is one of the measures. Overseas, their movements are constant. Miravia has become an Olympic sponsor. Unlike Temu, Alibaba emphasizes its advantages in B2B cross-border trade, and its B2B business may go all-in overseas.
Here’s our pick for last week’s news:
Alibaba's Cainiao and AliExpress Expand Five-Day Delivery Service for Global Customers
Driven by Temu, PDD's Revenue Surges by 123% to $12.29bn in Q4 2023
Temu Aims to Reduce Reliance on US by Halving the Share to 30% in 2025
Dreame, a Robot Cleaner Brand, Reports 120% Growth in Overseas Market
Annual Revenue Hit $1,241.1M, Baozun will Promote British Footwear Hunter in Southeast Asia
Alibaba Embraces Young Leadership and B2B Business may Go All-In Overseas
Amazon Top Seller Chervon Reports a Loss of $40 Million in 2023
Alibaba's Miravia will Sponsor the Olympic Games in Paris 2024
Shein Unveils the New Initiative "Supply Chain As a Service" to Global Brands
AliExpress Launches Livestream Shopping in UK
Alibaba's Cainiao and AliExpress Expand Five-Day Delivery Service for Global Customers
Earlier in September 2023, Cainiao and AliExpress jointly launched their Five-Day Global Delivery Service for consumers in Spain, Netherlands, UK, South Korea and Belgium. This month, 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, the Alibaba logistics platform.
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.
Driven by Temu, PDD's Revenue Surges by 123% to $12.29bn in Q4 2023
On March 20, Temu's owner PDD Holdings Inc. (PDD) released its financial report for the past year. In 2023, the company's revenue surged by 90% to ¥247.6 billion ($34.9 billion), which was primarily due to Temu's success in overseas markets. In the last year alone, Temu has entered 40 countries and regions. According to a report by HSBC, Temu is estimated to contribute 23% to PDD's total revenue in 2023. This number is expected to rise to 43% in 2024 and exceed 50% in 2025.
“2023 represents a pivotal chapter in our corporate history,” said chairman and co-CEO Chen Lei, who remained cautious when talking about Temu, claiming that their global business is still in its early stages and there will be more uncertainties and challenges along the way.
Looking ahead, Chen Lei stated that in 2024, the company will continue to focus on key areas critical to the high-quality development of the platform and enhance their ability to deliver good value and excellent service. Also more efforts will be made to refine the supply chain with more advanced technology to help manufacturers reduce costs, increase efficiency and develop more products that resonate deeply with consumers.
Temu Aims to Reduce Reliance on US by Halving the Share to 30% in 2025
As the most downloaded free app in the US in 2023, Temu became the second-most visited commerce site in the world in last December, with sales up to US$ 5 billion in 2023, just one year after launch.
The US alone accounted for 60% of its total sales, and the company now intends to reduce that percentage to as low as 30% by 2025, as American lawmakers increasingly target fast-growing Chinese companies like Shein and TikTok. Now Temu is expanding its presence in Europe, Middle East, Japan and South Korea, and has informed its merchants to prioritize stocking up on products which are popular in those regions.
"We've seen excellent consumer feedback and strong customer retention in the US, and we'll further increase investment there in 2024. While the US market continues to grow and remains vital, its percentage in total GMV will decrease as we expand into more markets." A Temu spokesperson said.
Dreame, a Robot Cleaner Brand, Reports 120% Growth in Overseas Market
Dreame is accelerating steps to expand its global presence with the revenue from overseas markets surging 120% year-on-year in 2023. The products of Dreame have been sold in more than 120 countries and regions with more than 4,400 physical stores worldwide.
Founded in 2017, Dreame has invested heavily in bolstering technological innovation in their intelligent products to cater to the diversified and personalized demands from global consumers. With core technologies that include high-speed digital motors, intelligent algorithms, and motion control, Dreame now boasts 4 major product lines: robotic vacuums and mops, cordless stick vacuums, wet and dry vacuums, and high-speed hair dryers. According to Bloomberg, Dreame plans to go public this year. However, Dreame denied it.
Annual Revenue Hit $1,241.1M, Baozun will Promote British Footwear Hunter in Southeast Asia
Starting with Singapore and Malaysia, Baozun Inc. will introduce the British footwear brand Hunter to the Southeast Asian market in second half of 2024 through various channels across e-commerce, retail, and wholesale markets. This collaboration was facilitated by Baozun's acquisition of 51% stake of Hunter in Greater China and Southeast Asia. Under the terms of the deal, Baozun has been granted the right to manufacture, market, distribute and sell Hunter brand products across all the regions in that area.
Founded in 2007, Baozun Inc. is a leading digital commerce partner for global brands which has served more than 400 brands from various industries and sectors around the world, including East Asia, Southeast Asia, Europe and North America. According to Mr. Arthur Yu, Chief Financial Officer of Baozun, the company closed 2023 with a 5% year-over-year revenue growth to RMB8,812 million (US$1,241.1 million), marking new records for both annual operating cash flow and free cash flow.
Alibaba Embraces Young Leadership and B2B Business may Go All-In Overseas
Alibaba Group is undertaking leadership reshuffle with more young executives taking key roles. Since Eddie Wu took over as Alibaba Group CEO in last September, he has called for change and reform to cope with rising competition in a letter saying the company would rejuvenate the team with the core management made up of millennials in four years.
This strategic shift by Alibaba's leadership also elevates the role of Jiang Fan, the CEO of the Alibaba International Digital Commerce Group (AIDC). Jiang Fan is only 39 years old and is Alibaba's youngest partner.
AIDC operates multiple international commerce retail businesses, including Alibaba.com, Lazada, AliExpress, Trendyol and Daraz. This year the focus of AIDC will be on the B2B business, namely the Alibaba.com, the backbone of Alibaba Group. And B2B may go all-in overseas markets.
Amazon Top Seller Chervon Reports a Loss of $40 Million in 2023
Amazon top seller of power tools Chervon Holdings Limited reported a net loss of between around $35 million and $40 million for the year 2023, as compared to a net profit of $139 million in 2022. The other two main players in the industry, Greenworks and DAYE, also reported a same transition from profit to loss.
The main reason behind the loss is the significant decline in revenue from its main sales region, North America. The company's revenue in North America dropped by a notable 30.30%, totaling $485 million. Europe also witnessed a decline, with revenue down by 12.07% to $175 million.
Chervon is a supplier of power tools such as saws and drills, as well as outdoor power equipment such as riding mowers and snow blowers. Chervon’s EGO brand, established in 2013, is a well-known electric outdoor power equipment brand in the United States and other markets.
Alibaba's Miravia will Sponsor the Olympic Games in Paris 2024
Miravia will be one of the main sponsors of the next Olympic Games in Paris 2024. Miravia was launched by Alibaba in 2022 with the presence of top-level brands and an offer of mid-range and high-end products.
Miravia's partnership with the Paris 2024 Olympic Games coincides with the significant growth of the platform whose vision is to become the leading lifestyle shopping destination in Spain. Miravia now boasts more than 12,000 local and international brands and retailers, including local Spanish brands led by young entrepreneurs, which will gain great exposure thanks to the sponsorship.
Shein Unveils the New Initiative "Supply Chain As a Service" to Global Brands
The fast-fashion giant Shein will make its supply-chain infrastructure and technology available to global brands, marking a significant move in its business strategy while facing challenges in US market. Executive Chairman Donald Tang referred to the new initiative as “supply chain as a service” in a letter to investors.
The move is aimed to collaborate with global brands and designers where real-time data are utilized to quickly analyze demand, restock orders as needed, and discontinue items with low sales, allowing brands to test new fashion items in smaller batches and track the popularity among consumers.
AliExpress Launches Livestream Shopping in UK
Alibaba Group-owned AliExpress has debuted its livestreaming shopping service in the UK through a partnership with Vogue Business. This move is part of AliExpress’s plan of It Girls, an interactive service on its new mini shop which allows influencers to curate their own collections on the company’s website with a personalised shop front. And creators will earn a commission on every sale made via their streams.
Livestreams will also enable customers to make smarter shopping choices by directly voicing their preferences and requests, such as asking for demonstrations of the product being worn by the hosts, or showcasing specific details.
AliExpress has partnered with a number of influencers for the service including TV celebrities Olivia Attwood, Kady McDermott, Farah Sattaur, and social media creators Summer Botwe, Emma Vacchio and Sinead Biddlecomb.