Since the beginning of the year, platform recruiters have uniformly promoted a new business model called semi-fulfilment. Following launches by AliExpress and Temu, SHEIN’s semi-fulfillment model officially went live earlier this month.
As soon as the new platform policy was implemented, cross-border sellers and platform “mentors” fiercely debated the future of semi-fulfillment. The arguments were so intense that even dogs passing by could join in.
However, most people’s initial reaction was: What is semi-fulfillment?
It’s no wonder sellers are confused. Six months ago, recruitment fairs and seller discussion groups vigorously promoted another term: full fulfilment.
Full fulfilment was once recognized as the standard answer for cross-border e-commerce. Temu, with its rapid overseas growth, saw its January sales increase by 805% year-on-year, with global independent visitors second only to Amazon. AliExpress’s latest financial report showed a 45% year-on-year growth in international digital commerce, with 70% of orders coming from the Choice model (full fulfilment).
The strength of full-fulfillment was so overwhelming that even Amazon’s recruitment team had to defend itself on a podcast, stating that the Amazon VC account (Vendor Central), which helps sellers with sales and shipping, is the original full-fulfillment model.
Now, the sudden shift in platforms has left sellers puzzled. With an all-encompassing full-fulfillment model already in place, why start a new semi-fulfillment model?
Full-Fulfillment Has Its Limits
The intensive launch of semi-fulfilment across major e-commerce platforms signals one thing: full fulfilment might not be the cure-all it was thought to be.
Full fulfilment means sellers only need to supply goods while the platform handles marketing, logistics, after-sales, and more.
In this model, e-commerce platforms, which control pricing and profit from price differences, act more like large cross-border sellers, making the actual sellers invisible workers.
Platforms aren’t ramping up efforts to become self-operated e-commerce entities but to address many issues in traditional cross-border e-commerce.
Firstly, there’s the problem of quality control. Wish, known as the “American Pinduoduo,” is a cautionary tale. As Wish fell into the trap of inferior products and imposed fines, platforms like Temu learned from this and intervened in product selection and inspection to avoid issues like fake goods.
Platforms that aggregate large orders can also use their scale to negotiate lower prices with service providers, spreading out the high costs of cross-border fulfilment.
Platforms have also found that many cross-border sellers fail due to unsold inventory. Thus, even though platforms take on many seller tasks, the key difference between full fulfilment and self-operation is that the goods still belong to the sellers, so inventory risk is borne by the sellers, allowing the platform to operate freely.
Despite full fulfilment being a well-designed system, practical experience over the past year has revealed two significant shortcomings.
Firstly, fulfilment speed is still not fast enough. In the full-fulfillment model, goods are shipped directly across borders through domestic warehouses, international logistics, and local delivery before reaching the consumer. This process often takes a week, even with optimized efficiency and air transport.
Secondly, product categories are severely limited. Since most international transport is by air, platforms mainly deal with lightweight items like digital accessories and small goods. High-value, heavy, or bulky items and some electronics are hard to sell due to high shipping costs.
Additionally, even if platforms focus solely on small goods, they will face another issue: the limit of air freight capacity.
Platforms’ maximum GMV (Gross Merchandise Volume) can be estimated based on available air freight capacity. Over recent years, the increase in cargo aircraft capacity by foreign airlines in China has been slow. According to the Civil Aviation Administration, international routes are expected to recover to 80% of 2019 levels by 2024.
Platforms like Temu are now facing problems that Amazon encountered years ago. Amazon’s solution was straightforward: pre-ship goods to local warehouses before consumers placed orders.
Shortcut of Overseas Warehouses
In Christmas 2013, UPS’s Worldport logistics center was paralyzed by a surge in orders and bad weather, leaving hundreds of thousands of Amazon packages undelivered. Wired magazine mockingly remarked that Santa Claus was more reliable for holiday deliveries.
At that time, Amazon’s warehousing and distribution network was small and located in remote areas, relying heavily on third-party logistics like UPS. Facing a mountain of complaints, Amazon apologized and issued gift cards while secretly planning to develop its logistics network.
Amazon invested heavily in logistics, driven by the 2013 Christmas debacle and the unique conditions in the US. Deindustrialization created the Rust Belt and reshaped US commodity flows, concentrating imports at central ports, especially on the West Coast, which is closer to manufacturing hubs in Asia.
In contrast, the East Coast is the population center. The 5000 km distance between the coasts, twice that of Beijing to Xinjiang, results in low efficiency and long transport times of 4-5 days.
These characteristics make the US naturally suited for the warehouse and distribution model, which involves centralized transport, pre-stocking, and local delivery upon order placement.
Shopify, known as the “weapon of Amazon rebels,” invested billions in logistics between 2019 and 2022, including a $2.1 billion acquisition of logistics service provider Deliverr.
Amazon’s FBA (Fulfillment by Amazon) warehouses also require sellers to pre-ship goods to US warehouses, enabling local delivery.
This approach brings goods closer to consumers, speeding up delivery. Amazon can deliver within 1-2 days, or even the same day, maintaining a competitive edge with six times the market share of Walmart.
For large or heavy items, overseas warehouses can reduce shipping costs. Shipping a 0.75 kg auto part from Guangzhou to the US West Coast costs the same whether shipped directly or from a warehouse, but for a 3 kg small appliance, warehouse shipping costs only half as much as direct shipping.
With FBA, Amazon overcame the challenges of timeliness and product categories, offering 30-60 million SKUs, ten times more than Temu, with nearly 50% of best-selling items from Chinese sellers.
Some sellers, like Lege and Zhiou, have aggressively built their own overseas warehouses, transforming into service providers for others needing overseas fulfilment.
Following Amazon’s example, platforms like Temu are optimizing their overseas warehousing strategies.
Semi-Fulfillment: Converging Paths
In January, AliExpress introduced semi-fulfilment, followed by Temu’s US site pilot in March and SHEIN in early May.
Unlike full-fulfillment, semi-fulfillment gives back some logistics and operational responsibilities to sellers, using platform simplification to address two issues:
Firstly, category restrictions. With semi-fulfilment, large items like home decor and lighting began to accelerate their presence on AliExpress, and Temu announced all-category recruitment, even including high-difficulty categories like food.
Secondly, fulfilment efficiency. For Temu, semi-fulfilment can reduce delivery time from 7-14 days to 4-9 days for items that cannot be directly shipped cross-border and must be delivered locally.
However, despite the common name “semi-fulfillment,” each platform offers different aspects. Temu and SHEIN focus on logistics, allowing sellers with local inventory to handle shipping, while AliExpress grants more operational autonomy but manages logistics.
These differences align with each platform’s strengths. AliExpress relies on Cainiao’s logistics support, with over 20 overseas warehouses in 11 countries. Temu and SHEIN, as heavy operators with light assets, still rely on third-party logistics.
These differences are temporary for these platforms. Temu and SHEIN rely on mature sellers with overseas inventory and fulfilment capabilities, but their growth is limited to subsets of larger players like Amazon. AliExpress, strong in logistics, is also expanding its local seller base in regions like the Middle East, Korea, and Europe.
This business overlap inevitably leads to direct competition, with even minor shortcomings potentially becoming fatal. The narrative of cross-border e-commerce has always been akin to a business epic. Millions of sellers once dominated Amazon, with SHEIN and Temu closely following. AliExpress quietly became Alibaba’s fastest-growing business unit, while TikTok sold small items in live streams and engaged in regulatory battles worldwide.
In reality, there’s no such thing as an effortless business. Being constantly pushed out of our comfort zones by fierce competition is the norm we are all familiar with.
