Another big seller is coming to market!

Young people's constant pursuit of a refined life has given rise to additional storage needs, and related storage tools are also showing a trend of explosive popularity. Taili Technology, which mainly sells storage bags, has an annual revenue of 600 million yuan and has now applied for listing. Its popular products have monthly sales of over 1,000 and have been selected as Amazon's best-selling products and new products. However, Taili Technology also admitted that it had operated multiple stores to fake orders.

Taili Technology is going public, with monthly sales of over 1,000 products

The seemingly insignificant little thing has already pushed Taili Technology to the stage of listing. As the leading brand of Amazon storage products, Guangdong Taili Technology Group Co., Ltd. (hereinafter referred to as "Taili Technology") recently updated its prospectus and is currently in the "inquiry" status and will soon be listed on the Shenzhen Stock Exchange.

The main driving force that pushes Taili Technology into the capitalization stage is its storage bag products.

In 2022, Taili Technology's annual revenue was 638 million yuan, of which vacuum storage bags contributed 277 million yuan, accounting for 43.93% of the company's total revenue. On the Amazon platform, Taili Technology's storage bags, wall-mounted storage and other products have been selected as Amazon's best-selling products, Amazon's choice, and the first place on the new product list . Among them, the monthly sales of popular items exceeded 1,000.

Unlike some big sellers who focus on primary categories, Taili Technology mainly makes money quietly in subcategories. Its products include vacuum storage bags, vertical wall storage products, vacuum food and file bags, other household items, and outdoor products, which are very popular on both domestic and foreign platforms.

Taili Technology, which focuses on mid-to-high-end home storage products, has accumulated strong R&D capabilities. It owns several self-owned brands, including Taili, LEVERLOC, and Yishang. In addition to selling its products on platforms such as Amazon and Tmall, it also provides ODM/OEM services to well-known retail giants such as IKEA and Walmart. However, Taili Technology's OEM business revenue has been declining overall, while its own brand sales revenue has been growing.

The relationship between Taili Technology and Amazon can be traced back to 2019, when Taili Technology had just begun to explore cross-border e-commerce B2C business, and its revenue on Amazon accounted for only 8.44%. In 2021-2022, the proportions were 11.85% and 12.14% respectively.

Although the business on Amazon accounts for a small proportion, the product sales have been good. The subsequent business did not expand on the platform, perhaps based on the information mentioned by Taili Technology before: from 2019 to 2020, the company had a small number of fake orders and used people around it to register multiple stores.

"The company had employees, close relatives and friends place orders on the platform to purchase products, and then sent gifts to the purchasers. The company then returned the funds from the fake orders to the people who participated in the fake orders," Taili Technology said in its prospectus. Relevant data shows that the company's fake orders involved amounted to 398,000 yuan and 895,500 yuan in 2019 and 2020, respectively.

Not only that, Taili Technology also offers rewards to consumers such as cash back for positive reviews and cash back for posting pictures. Between 2019 and 2021, the company paid out cash back amounting to more than 100,000 yuan.

At the same time, the company also registered multiple store companies in the name of employees and their immediate family members, and operated multiple stores on the Amazon platform. Although Taili Technology mentioned that the above-mentioned behavior has been stopped, the store companies have been deregistered, and the corresponding Amazon stores have been closed, but according to Amazon's habits, it is very likely that there will be a situation of post-event accountability.

The product gross profit margin is as high as 60%, and the segmented home furnishing market has great potential

Looking at Taili Technology's products, they all have a high gross profit margin. Take the vacuum storage bag, which contributes the most to the company's revenue, for example. The unit price increased from 5.18 yuan per piece in 2019 to 7.21 yuan per piece in the first half of 2022. In 2022, the gross profit margin of this product reached more than 50%.

Another hot-selling product, vertical wall storage products, has gradually increased its annual revenue share, currently reaching 29.46%, and its gross profit margin has reached 61.99%, much higher than vacuum storage bags. Its product price has also been increasing. The unit price in 2019 was 7.02 yuan/piece, and the price in 2022 increased to 12.53 yuan/piece.

On domestic platforms such as Tmall, the number of repeat customers of Taili Technology's products accounts for 19% of the total number, which means that users have a high degree of loyalty to their products. The hot sales of products, high interest rates and certain degree of user loyalty are closely related to the current development of the industry.

As we all know, the home furnishing market has always been a stronghold for Amazon sellers. In the US home furnishings market, Amazon's annual sales growth rate is as high as 35%, far exceeding the overall US market growth rate, and sub-category storage is also a blue ocean market favored by many sellers.

In the home best-selling list on Amazon US, storage products with high frequency of use and wide range have always been standing firm, which also shows that Americans have a strong and stable consumer demand for storage products. Hanger bags, housing racks, storage baskets, jewelry boxes, storage boxes, etc. are all hot-selling products in the storage category on Amazon. Sellers who want to enter the same category can use them as a reference.

However, Taili Technology itself has some problems that sellers also need to avoid.

As of June 30, 2022, Taili Technology had mortgaged fixed assets with a book value of RMB 80.4997 million and land use rights with a value of RMB 8.7001 million. The total book value of the mortgaged self-produced assets accounted for approximately 61.1% of the book value of the company's total fixed assets and intangible assets.

The mortgage of products also means that the company has problems with capital turnover. In the use of funds raised in this IPO, Taili Technology will invest 100 million yuan to supplement the company's working capital in addition to using it for R&D center construction, upgrades, logistics center construction, and information system upgrades.

Although Taili Technology mentioned that the company's cash flow has improved after the company switched to an online sales model, the company's debt ratio is still higher than the industry level. According to the data, in the first half of 2022, Taili Technology's debt-to-asset ratio dropped to 52.12%, the lowest in the reporting period, which is much higher than the industry level.

One thing that cannot be denied is that Taili Technology has been strengthening its own R&D capabilities. In 2003, when the company was first established, its main products were insulation bags and compression bags. In 2007, the company gradually explored independent product research and development, and successively developed three-dimensional compression bags, vacuum compression boxes and other products, and also took advantage of the opportunity to enter the top suppliers such as Walmart. After 2018, the company relied on its R&D strength to move towards a multi-channel and multi-category development stage.

With the development of home furnishing subcategories in the future, I believe that Taili Technology's market share will further increase.

Home

IPO

Amazon