A must-read for cross-border e-commerce companies going global: Pros and cons of deep cultivation and horizontal expansion in market segments

Cross-borderE-commerceHow to break through the involutionary trend? This article deeply analyzes the pros and cons of deep cultivation and horizontal expansion in the segmented market, helping you find the best overseas strategy, avoid pitfalls, and achieve market breakthroughs!

The "Question of the Year" in the foreign trade circle is in full swing:In the wave of globalization in the era of internal circulation, should companies going overseas stick to the depth of segmentation or choose to continue to expand horizontally?

• This topic even sparked a fierce war of words at the Foreign Trade Zhenniu Award debate held by Alibaba, with various big names exchanging sharp words, which made people think deeply.

As someone who has been observing foreign trade trends for a long time, I would like to share some profound insights and practical suggestions.

To answer this question, we need toPlatform selection, market environment, product strategyAnalyze from three dimensions.

Why is this issue so important?

Involution means that competition is becoming increasingly fierce, the cost of acquiring customers is rising, and profits are squeezed to the limit.

At the same time, globalization has made market expansion possible.

Sticking to the depth of segmentation is about striving for excellence, while horizontal expansion is about casting a wide net to catch fish.

Both routes have their pros and cons, but choosing the wrong one might be like going into a gunfight with a shield, with half the effort and twice the results.

Think about it, if you stick to a small category, but find that the demand is saturated and the bonus has disappeared, what will be the result?

Or, what kind of collapse will result from large-scale expansion in a rush for quick success while ignoring the stability of the supply chain and quality control?

The golden logic of deep cultivation of segmentation

First, let’s talk about “segment depth.” It’s like a climber choosing one mountaintop to climb to the top, rather than constantly changing mountains.

1. Focus brings expertise

Market segmentation means you can dig deep into user needs and make your product the best it can be.It’s not just about selling products, it’s about selling solutionsFor example, a company that makes small household appliances designed a small energy-saving heater for winter heating for the European market, which was very popular. Such cases show that segmentation can help you build core competitiveness and avoid head-on confrontation with generalized competitors.

2. Brand power is easier to accumulate

By focusing on a niche market, your brand will be more easily remembered by target users. Consumers may not remember the product model of a certain big brand, but they will definitely remember the heater brand that "understands Nordic users best". This is the charm of the depth strategy.

However, segmentation depth is not without risks. Limited market capacity and fast-changing demand will make your profit curve face huge uncertainty.

Opportunities and challenges of horizontal expansion

In contrast, horizontal expansion is more like casting a net in the ocean: new platforms, new categories, new channels, with the goal of quickly covering a wider range of markets.

1. Diversification reduces risk

If a platform policy changes, or a certain category suddenly loses popularity, companies that expand horizontally can make up for the losses in other areas. For example, a cross-border e-commerce company operates both home furnishings and outdoor products. When the epidemic breaks out and outdoor product sales decline, home furnishings experience a big boom.

2. Bonus of new platform

Emerging platforms often have low traffic costs and user loyalty has not yet been formed, which provides an excellent opportunity for horizontal expansion. For example, on platforms such as TikTok Shop, merchants who settled in early quickly gained first-mover advantage by distributing goods.

But horizontal expansion also has risks.The complexity of the supply chain has increased, the difficulty of controlling product quality has increased, and the brandPositioningEasy to blur, may become a stumbling block to horizontal expansion.

How to balance depth and expansion?

In actual operation, the choice of segmentation depth or horizontal expansion is not an either-or choice, but needs to be based onPlatform life cycle, market bonus period, and enterprise resource allocationBe flexible.

1. Large platforms are segmented, small platforms are generalized

For mature platforms, such as Amazon or eBay, it is more effective to focus on niche markets. Because competition is fierce, only extreme differentiation can stand out. For emerging platforms, such as Temu or TikTok Shop, casting a wide net can capture more opportunities.

2. Distribute products during the bonus period and optimize during the internal competition period

During the bonus period of a new platform or new category, they seize the market by distributing goods; when competition intensifies, they optimize the product structure and increase the profit margin of each product. For example, a cross-border e-commerce apparel company initially launched a variety of T-shirts, but after the bonus period, based on data feedback, it focused on designing a unique Nordic style series.

3. Data-driven decision-making

Exhibitions and data analysis are important sources of intelligence. At exhibitions in Shenzhen and Yiwu, you can observe the preferences of global buyers. Platform data can tell you which products have the potential to become hits.Don’t just blindly follow the trend, but instead upgrade and optimize existing popular products.

Personal opinion: The way to go overseas

I think the choice of overseas strategy essentially depends on the company'sGenes and resource endowment.

If you are a small business with a stable supply chain, vertical segmentation may be your inevitable choice; but if your team is good at responding quickly to market changes, horizontal expansion undoubtedly has more potential.

Imagine this: segmentation depth is a hammer that can hit the target accurately; horizontal expansion is a net that can capture more opportunities.

Which is more important, a hammer or a net? It depends on whether you want to build a building or catch fish for a living.

Final Thoughts

Going overseas in the era of involution,Sticking to segmentation depth and continuously expanding horizontally are not contradictory, but complementary.Deep cultivation allows you to take root, while expansion allows you to stretch. The choice and execution of the two depends on the specific situation.

So, what’s next? Don’t just look at those “cross-border monthly sales of millions” cases on WeChat Moments. Pick up your data, go to the exhibition site, and find the answers from the details. After all, only when the direction is right can you ride the wind and waves when going overseas.

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