The semi-managed model was first proposed by AliExpress, a subsidiary of Alibaba. In August 2023, AliExpress launched a trial run of the semi-managed model and fully implemented it in January 2024, with significant financial support for its execution.
Not long ago, Alibaba released its financial report for the third quarter of the fiscal year 2024 (October 1 to December 31, 2023). It showed a robust 60% increase in orders for AliExpress, and Alibaba’s international e-commerce revenue grew by 44% to 28.516 billion yuan, exceeding market expectations for six consecutive quarters.
The strong growth of AliExpress was mainly driven by Choice（a program designed to highlight and promote high-quality products and sellers through fully managed and semi-managed service models). In January 2024, orders from Choice accounted for about half of the total order volume. On AliExpress, it was continuing to achieve rapid order growth.
Characteristics of AliExpress Semi-managed Model
Currently, operating a store on AliExpress can be simply categorized into three types: Merchant self-operated, also known as POP stores (without Choice badge); Fully managed (with Choice badge); and POP semi-managed (with Choice badge).
Under AliExpress’s semi-managed mechanism, sellers can independently set prices and sell products while maintaining control over the critical rights of goods. As the platform provider, AliExpress offers “semi-managed” services such as logistics and warehousing, exclusive marketing activities, solutions for returns, and other reverse logistics.
In essence, AliExpress’s semi-managed service allows sellers to concentrate on the commercial flow (such as product selection and operations) and leave the platform’s more challenging aspects of logistics and information flow (traffic) to handle.
The support Behind Semi-managed Model
AliExpress dares to invest heavily in its semi-managed model because a “utilities” infrastructure backs it. This infrastructure is provided by Cainiao Logistics, which is Alibaba’s logistics arm. In cross-border e-commerce, Cainiao Logistics supports AliExpress by addressing the challenging issue of logistics efficiency.
With the support of Cainiao Logistics, AliExpress achieved “global delivery within five days” in the Eurasian countries (the United Kingdom, Spain, the Netherlands, Belgium, South Korea) as of last September. The list of these countries continues to grow.
Cainiao’s cooperation with AliExpress aligns with Alibaba’s overarching strategy. In the e-commerce ecosystem, Alibaba optimizes information flow, capital flow, and logistics (with commercial flow managed by factories and sellers). Alibaba’s capital flow is concentrated on Alipay (Ant Group), information flows on platforms like AliExpress, Lazada, Trendyol, Taobao, and Tmall, and logistics responsibilities fall on Cainiao.
Therefore, with the support of Cainiao Logistics, AliExpress’s semi-managed model can be more open, allowing more sellers (including brand sellers) to participate, activating the supply side, significantly increasing the number of SKUs, and enriching and invigorating the entire platform’s ecosystem. The power of the masses is immense, allowing sellers to independently select products, set prices, and operate, which can lead to a flourishing effect of diversity.
This approach can compensate for the shortcomings of the traditional fully managed model and aim for a higher GMV ceiling.
Policy Supports
At the earnings analyst meeting, Alibaba International stated that the AliExpress Choice business is in its early stages and needs to scale up before pursuing the convergence of long-term losses. The next period will be a phase of significant investment for Alibaba International. Especially for the Choice business, it will be the top priority for growth moving forward.
At the same time, the semi-managed model of AliExpress not only helps POP merchants gain the Choice label but also provides a series of traffic support, such as search recommendations, and offers various cost subsidies. For example:
Commission reduction: Semi-managed products entering the warehouse are entirely exempt from fees. JIT shipments also enjoy a 50% commission reduction.
A kind of guaranteed sale with advance payment: for popular semi-managed products entering the warehouse, 60% of the fee is advanced
Exemption from warehouse fees: for semi-managed products entering the warehouse, pickup fees are entirely waived, in-warehouse operation fees are waived, and warehouse rent is waived.
The strategic direction and support policies of a platform are certainly complementary. As a merchant on the platform, opting for an operating model with policy support naturally makes it easier to gain traffic and orders.
3 Comments
Emily Brown
The policy supports for semi-managed products, such as commission reductions and warehouse fee exemptions, are really enticing. It’s clear that AliExpress is committed to helping sellers succeed on their platform. I’m curious to see how this will evolve and what other innovations they might introduce next.
Obila Doe
Great read! It’s impressive how AliExpress has leveraged Cainiao Logistics to achieve such rapid delivery times. The 60% increase in orders and 44% revenue growth are no small feats. This model could be a blueprint for other e-commerce platforms looking to scale efficiently.
Riva Collins
The semi-managed model sounds like a game-changer for small businesses on AliExpress. By taking care of logistics and warehousing, AliExpress allows sellers to focus on what they do best – creating and selling great products. I’m excited to see how this will impact the e-commerce landscape in the coming years!