AliExpress Turned Profitable, and It Didn’t Need Sales Growth to Do It
AliExpress achieved operating profit in the quarter ended June 30, 2026, Alibaba confirmed in its own earnings release, attributing the improvement directly to logistics optimization and cost efficiency rather than to growing sales. That distinction matters more than it might sound. AliExpress didn't grow its way to profitability. It cut its way there, and the strategy behind that cut looks increasingly like the fulfillment model Amazon, Walmart, and Temu have all converged on.
The Numbers Behind the Turnaround
Here's the detail worth sitting with before assuming this is a straightforward growth story: Alibaba's International E-commerce segment, which houses AliExpress, actually posted revenue of RMB27,761 million for the quarter, down 1% from RMB28,177 million a year earlier. Revenue was essentially flat to slightly negative. Profitability came entirely from spending less to move the same amount of goods, not from selling more of them.
That's a meaningful shift in how AliExpress is being run. For years, the platform's growth strategy leaned on subsidized cross-border shipping and thin margins to compete on price against Temu and Shein. Turning a profit while revenue is flat means the cost side of the business finally started working, specifically the logistics side.
Why Local Warehousing Is the Real Story Here
Alibaba's release specifically noted that the share of AliExpress sales fulfilled from local product supply increased significantly year over year, and the data from earlier in the quarter shows exactly how fast that shift happened. During AliExpress's 2026 overseas 618 sale, which launched June 1, orders fulfilled from local European warehouses surpassed cross-border direct-shipping orders for the first time in key markets including Spain, France, and Poland, accounting for more than half of orders on the very first day of the sale.
That's the same structural shift Amazon made with FBA, Walmart made with Walmart Fulfillment Services, and Temu is now attempting with its own local seller program: moving inventory physically closer to the customer before an order is even placed, rather than shipping every individual order internationally after the fact. Local fulfillment is faster for the customer and cheaper for the platform to operate at scale, which is exactly the combination that produces the kind of margin improvement AliExpress just reported.
The Infrastructure Behind the Shift
AliExpress's overseas managed-service model, the program that lets sellers hand off fulfillment to AliExpress-operated infrastructure rather than shipping individual orders themselves, now covers more than 30 countries and regions. Its official European warehouse network currently spans Spain, France, and Poland, with a German facility under construction, part of a broader Cainiao-operated network that already includes additional warehouses across Belgium, the Czech Republic, the UK, and Italy.
The brand side of the platform is scaling alongside the fulfillment side. AliExpress's Brand+ program has pushed active brand buyer penetration on the platform above 30%, and during the same 618 sale period, 383 brands generated daily GMV surpassing Amazon's, with more than 70% of partner brands posting multi-fold performance growth. Small and medium Chinese brands have used that infrastructure specifically to enter European markets at a pace that wasn't previously realistic without AliExpress handling the logistics layer for them.
Why This Matters Beyond Alibaba's Own Numbers
The broader context here is that the old model of cross-border ecommerce, cheap, subsidized, direct-shipped parcels moving individually from Chinese warehouses to international customers, has hit real limits. The elimination of de minimis exemptions in major markets made that model considerably more expensive to run everywhere it previously worked. Every major China-linked platform, AliExpress, Temu, and Shein, is converging on the same answer at roughly the same time: build local fulfillment infrastructure and stop relying on customs-exempt, small-parcel shipping as the core cost advantage.
That convergence is worth watching closely if you compete with any of these platforms in Europe specifically, since Spain, France, and Poland are now the proving ground for whichever platform builds the fastest, cheapest local fulfillment network first.
What This Means If You Sell in Europe
If you sell into European markets and you've watched AliExpress mainly as a source of cheap, slow-shipping competition, that competitive picture is changing. A platform offering local warehouse fulfillment with delivery times measured in days rather than weeks is a structurally different competitor than the AliExpress most Western sellers grew up competing against, and the margin improvement Alibaba just reported suggests this shift is financially sustainable for the company, not a subsidized experiment.
Watch specifically whether AliExpress's German warehouse comes online and whether the local-fulfillment share climbs in additional markets beyond Spain, France, and Poland. If that expansion continues at the pace suggested by the 618 sale data, AliExpress could become a considerably more viable, faster-shipping channel for brands to test in Europe, while simultaneously becoming a tougher competitor for any seller relying on price alone to win against Chinese-manufactured goods in that market.
