What are the chances of success for platform-based companies going global?

In recent years, internet enterprises have faced stagnation in the domestic market, prompting them to shift their focus overseas.

For example, Alibaba's cross-border e-commerce platform, AliExpress, which has been competing overseas for many years, has significantly accelerated its business expansion in the past two years. Although Alibaba's logistics platform, Cainiao, has paused its plans for independent listing, its international business continues to strengthen.

ByteDance's overseas e-commerce platform, TikTok Shop, is expanding globally, while Pinduoduo's overseas e-commerce platform, Temu, has rapidly entered multiple markets worldwide.

Last year, domestic e-commerce enterprises made significant strides in their overseas business. The "Four Dragons of Overseas Expansion," consisting of AliExpress, TikTok Shop, Temu, and SHEIN, have dominated the cross-border e-commerce battlefield.

In the logistics field, which is closely related to cross-border e-commerce, some companies have taken the lead. Companies like Cainiao, Jitu, and Huo La La have established themselves as leaders in overseas logistics markets such as Southeast Asia, forming a situation dubbed the "Three Musketeers of Logistics Expansion" and accumulating considerable market size and achievements.

It's worth noting that most of these internet companies emphasizing the overseas market are platform-based companies. They hold significant shares and industry positions in related domestic business areas, undoubtedly providing strong support for their respective overseas businesses.

However, opportunities and challenges coexist in the overseas market. For these enterprises, going global presents both opportunities and risks, with many encountering difficulties during the process.

So, what are the odds of success for internet platform-based companies going global?

1. From the "Four Dragons of Overseas Expansion" to the "Three Musketeers of Logistics Expansion"

Meituan has accelerated its overseas layout since last year. In May of last year, Meituan launched the food delivery platform KeeTa in Hong Kong, competing with local giants Deliveroo and Foodpanda. In November of the same year, Meituan officially entered the Southeast Asian market, and news about Meituan considering acquiring Foodpanda's Southeast Asian business spread.

Meituan's overseas journey started in 2016 when Meituan Travel established an overseas accommodation project team, cooperating with several well-known overseas hotel suppliers to enter the overseas hotel market through agency distribution. In November of the same year, Meituan Travel acquired Shenzhen Hanglu, integrating international flight ticket resources to improve its flight ticket supply chain. When the internationalization sector truly appeared in Meituan's business framework in 2018, Meituan had already listed on the Hong Kong Stock Exchange and initiated a series of new businesses.

However, for a diversified platform-based company like Meituan, focusing solely on overseas hotel and travel businesses and investing in overseas lifestyle service platforms is not enough. Meituan is continuously exploring more possibilities for going global and improving its overseas paths.

Among the platform-based internet companies that have accelerated their global expansion in the past two years, e-commerce platforms undoubtedly play a leading role.

As a platform that has long been deeply rooted in overseas markets, AliExpress launched its fully managed mode at the beginning of 2023 and introduced the Choice channel. Half a year later, in August 2023, it launched the semi-managed mode for trial operation, and fully launched the semi-managed mode in January this year. To attract more merchants to join the semi-managed mode, AliExpress has continuously enhanced its incentives for semi-management, including introducing various cash subsidies and other preferential policies. Recently, AliExpress also held multiple clothing investment promotion conferences, targeting cross-border clothing sales and attracting sourcing factories.

If AliExpress is a veteran in cross-border e-commerce, then TikTok Shop under ByteDance and Temu under Pinduoduo are newcomers and disruptors in the cross-border e-commerce market.

TikTok Shop was officially launched in February 2021. Despite facing numerous difficulties and resistance overseas, it has been actively exploring different markets and has achieved good results in many countries and regions.

Temu, although it started later and was officially launched in September 2022, showed Pinduoduo's characteristic high efficiency and strong execution from the beginning. It has experienced rapid growth in the past two years, not only greatly impacting the existing pattern of cross-border e-commerce but also intensifying competition among e-commerce platforms. To quickly expand into the US market, Temu spared no expense, sponsoring the Super Bowl, the annual championship of American football, twice. Reports indicate that Temu's products are now sold in 48 countries worldwide, and in the third quarter of 2023, its global monthly active users reached 114 million.

Closely related to e-commerce is the logistics business. While cross-border e-commerce is rapidly developing, logistics companies are also thriving overseas, especially represented by logistics platform enterprises such as Cainiao, Jitu, and Huo La La. They have formed the "Three Musketeers of Logistics Expansion," expanding their territories overseas and developing their international business rapidly. Cainiao has accelerated the construction of its own network overseas since this year, and has launched the "Global 5-day Delivery" international express fast line product, which has now expanded to 11 countries. Recently, Cainiao signed a cooperation agreement with the B2B cross-border trade distribution channel Spotter, indicating substantial progress in its overseas market.

Jitu originally made its mark in overseas markets, with its business spanning the Middle East, North Africa, Latin America, and other regions. Data shows that in Jitu's revenue in 2023, the revenue from Southeast Asia and other overseas markets accounted for 41%.

Among the "Three Musketeers of Logistics Expansion," Huo La La is more experienced in overseas development. Since its establishment, it has been laying out overseas markets. In the past decade, Huo La La has rapidly promoted its internationalization process and grown rapidly in overseas markets.

Recent reports show that in 2023, Lalamove's performance increased by approximately 30% compared to 2022, while its overseas market size grew nearly fivefold over the past five years.

It is understood that Lalamove will continue to explore new paths for internationalization in the future, planning to expand into new markets and further penetrate existing markets in Southeast Asia and Latin America.

Overseas battlegrounds: a struggle between fire and ice

Although going global is a vast market with many business opportunities, risks and opportunities coexist.

People in different countries and regions have different consumption habits, market demands, and purchasing power, and policies also vary, leading to many uncertainties in overseas markets.

Internet companies face difficulties in various aspects such as market, culture, technology, law, and policy during the process of going global. The experience of TikTok Shop proves that the risks in overseas markets are omnipresent.

Since its launch in 2021, TikTok Shop initially intended to enter the US market. However, the then-US President Trump declared his intention to ban TikTok Shop, forcing a change in plans to pilot markets in the UK and Indonesia.

However, progress in the UK was not smooth. Due to the lack of habits among European users and merchants for live shopping, there were few local merchants willing to join in the early stages. Eventually, TikTok Shop had to rely on Chinese merchants to sell cross-border goods.

Although the situation in the Indonesian market was better than in Europe, with high acceptance of live streaming among anchors and users and relatively low difficulty in local business development, restrictions by the Indonesian government on local trade meant only local merchants could open shops on TikTok Shop. Eventually, TikTok Shop had to abandon cross-border e-commerce and attract local merchants with zero commission.

Just as TikTok Shop was rapidly developing in the Southeast Asian market and preparing for a major move, the Indonesian government, citing a ban on social media platforms conducting direct sales transactions, directly banned TikTok e-commerce in September 2023.

In fact, as early as 2020, TikTok Shop had been investigated by multiple places such as the US, EU, and Australia on the grounds of data security, leading TikTok Shop to establish data centers in Europe, the US, and other places since 2020 and accept local regulations.

Even so, the risks did not stop there. In March of this year, the US House of Representatives introduced a bill requiring ByteDance to sell its short video app TikTok, otherwise TikTok would face a US ban.

To prevent the implementation of this bill, TikTok launched a fierce direct counterattack, but the risk has not been resolved yet.

Meituan's overseas expansion is relatively cautious, but operating in Hong Kong, China also faces multiple tests. On the one hand, in terms of dining habits, restaurants and supermarkets are densely distributed in Hong Kong, and residents have a fast-paced life. Compared to high delivery fees, residents prefer to dine in or pick up meals at the store.

On the other hand, in terms of costs, labor costs in Hong Kong are relatively high, and there are also some restrictions on electric vehicle travel, which is different from the mainland situation. For Meituan, it needs to continuously improve management capacity and maintain extremely high operational efficiency.

Overseas markets are fraught with risks. Companies expanding overseas not only need to understand the consumption habits and demands of the target market but also need to pay attention to the competitive situation in the local market and formulate effective competitive strategies.

At the same time, as an Internet company, when going global, it also needs to consider how to integrate resources globally, improve efficiency, and reduce costs, as well as strengthen technological research and development and innovation to enhance the technical level and competitiveness of products.

In this regard, Lalamove, which has developed overseas for many years, has accumulated considerable experience.

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