I find that placing mailboxes on hold in Exchange Online, with the new Retention Policies or in-place/litigation hold in Exchange, is the preferred method for journaling and backup and recovery in Office 365. Placing mailboxes on hold retains all email. If an email is deleted it is moved to the recoverable items folder and it stays there depending on the configuration of policies in play.

This is great, until the recoverable items folder reaches maximum size.

When a mailbox is place on hold or has an archive enabled the recoverable items folder size is increased from the default of 30GB to 100GB. Now this may sound like a lot but we all have users who receive too much email and even if they delete it all, it is retained. Over a period of years, this may eventually reach the current limits on the user mailbox and you may want to use the user’s archive to store recoverable items. To do this, you will need to enable the auto-expanding archive feature and apply a retention policy that moves items from recoverable items folder in the user mailbox to the archive. The link below will help you achieve this.