Just waiting for the bell! Another A-share IPO hits the list

The list of A-share cross-border e-commerce sellers is about to add a new member!

On June 21, the China Securities Regulatory Commission approved the registration application for the initial public offering of Shenzhen Santai E-Commerce Co., Ltd. (hereinafter referred to as "Santai Shares"). The two-year road to listing has finally taken the last step, and it will be successfully listed after the bell rings.

San Tai Co., Ltd. is a typical seller of goods distributed by merchants. The industry generally believes that the distribution model is now outdated, and a group of cross-border e-commerce sellers who survive purely on the distribution model will gradually exit the stage of history. In this context, San Tai Co., Ltd. still successfully opened the door to the capital market. Does it have any "secret weapon"?

The longest new product development cycle is 7 days, and self-developed systems play a big role

Distribution sellers rely on operations to win with efficiency , and San Tai Holdings can be said to have a precise grasp of this aspect. Unlike other cross-border e-commerce companies that focus on the development of their own brand products, it focuses on the research of cross-border retail efficiency, and its self-developed system is widely used in various links such as product development, supply chain management and operation management.

Among them, in the product development stage , Santai Co., Ltd. independently developed an intelligent product selection application to obtain multimodal features including search trends, product sales, marketing copy, illustration style, etc., and used a variety of machine learning algorithms to screen out products that are more in line with market preferences from a large number of Chinese-made products.

Its prospectus shows that the cumulative 90-day sales rate of development teams that use intelligent product selection models to assist in product selection is 17% higher than that of development teams that do not use them.

Of course, in addition to relying on system screening, its sales specialists will also track the market trends of various categories of goods, capture changes in demand of consumers on different sales platforms, in different countries and regions, pay attention to the types of goods that are hot-selling recently, and recommend them to the product development team. After integrating the above recommended information, the product development team will make manual decisions and finally determine the new products to be developed. In 2022, its product development team can develop more than 600 SKUs on average every day.

Once the new product to be developed is determined, relevant preparations are completed and the infringement review is passed, the company will rely on its self-developed software system to combine the different requirements of different platforms and countries to generate the product information format, language category and other elements with one click, and finally complete the development and listing of the new product. It is reported that the development cycle of a new product is 3-7 days.

As for the effectiveness of product development, it is measured by the profitability index of the past three months. At the same time, for products that have not had a single sale for more than 90 days, inventory clearance measures will be implemented, including price cuts, discounts or sales on other platforms.

In the supply chain management link, in response to the business characteristics of massive SKU procurement and a large number of suppliers, Santai Co., Ltd. independently developed a procurement automation system and supplier management system to carry out refined management and control of key process nodes.

Specifically, in terms of automated procurement, it connects with the online procurement platform through the business system to establish a data transmission channel. It can automatically create purchase orders and execute procurement processes based on procurement warnings. In terms of intelligent procurement, it analyzes the product's past sales performance to infer its sales trend in the future period, comprehensively considers delivery cycle, ordering cost and storage cost, and calculates the optimal inventory and current order quantity of each product. In terms of supplier management, the system automatically integrates domestic supply chain resources, conducts regular comprehensive evaluation of supplier performance, and assists manual dynamic adjustment of the list of qualified suppliers.

According to the prospectus, after the procurement automation system was launched in 2018, the proportion of automatic orders triggered by the system's procurement warning increased significantly from less than 5% to more than 70% without human intervention. In addition, the late shipment rate of goods on major e-commerce platforms has remained at a low level for a long time, and the average delivery days for each period on the entire platform are less than 1 day.

In the operation and management link, Santai Co., Ltd. has developed application modules such as intelligent editing, intelligent pricing, and intelligent customer service for business nodes such as product promotion and traffic, product pricing and marketing, and customer inquiry services.

Among them, after the launch of the smart editing application, the average number of products edited per person per day increased from 7.4 in July 2020 to 17.4 at the end of 2021, and remained at 16-17 per day in the second half of 2021. After the launch of the smart customer service application, the automatic reply rate of customer inquiries on major platforms further increased from about 55% at the beginning of 2021 to more than 60% at the end of the year.

The products cover 17 categories and the layout platforms are up to more than 30

Unlike many sellers, Santai Co., Ltd. is a comprehensive seller whose business includes cross-border e-commerce and cross-border logistics. However, cross-border e-commerce revenue accounts for the majority, accounting for 69.78%, 80.40% and 82.80% of the total revenue in 2020-2022, with revenues of 1.391 billion yuan, 1.822 billion yuan and 1.315 billion yuan respectively.

There are currently 830,000 SKUs on sale , with nearly 100 subcategories, and sales channels include more than 30 major global and regional e-commerce platforms. Among them, Amazon and eBay are its main sources of income. From 2020 to 2022, the sales revenue of goods on these two platforms will account for 58.19%, 56.11% and 46.94% respectively.

It is worth noting that its merchandise sales revenue from platforms such as Lazada and Shopee, which are mainly for Southeast Asia, has continued to rise, accounting for 13.7%, 17.39% and 20.59% in 2020-2022, respectively. However, the merchandise sales revenue from Wish has plummeted, accounting for 7.38%, 2.18% and 0.48% in 2020-2022, respectively.

At present, the products sold by Santai Co., Ltd. through third-party platforms include 5 major categories and 17 subcategories, namely fashion (clothing accessories, personal care products, beauty products), tool accessories (industrial and commercial tools, auto and motorcycle accessories), home life (pet supplies, kitchen and bathroom appliances, wedding ceremonies, home decoration, home gardening), digital technology (computer games, consumer electronics), and hobbies (creative handicrafts, outdoor activities, leisure and entertainment, music and art, sports and fitness) .

As a cross-border e-commerce seller of general categories, there are hundreds of thousands of SKUs in each category. Overall, the gross profit margin of digital technology products is relatively low, while the gross profit margin of home life and fashion products is relatively high.

As of the end of 2022, Santai Co., Ltd. has 96 wholly-owned category store companies . Since their establishment, these companies have not actually carried out any other business except holding category stores on third-party e-commerce platforms.

Overall, the success of Santai Co., Ltd. is mainly attributed to two aspects: first, the intelligent algorithm of massive data has built an important driving force for its survival and development in the rapidly iterating cross-border e-commerce market; second, the multi-category and multi-regional refined operation model enables it to have risk resistance.

However, the distribution model cannot form a solid foundation after all, and the business model of "earning the difference" has become increasingly difficult to survive. Under such a model, San Tai shares lack growth potential. It is obvious that it has also realized its own problems. The information disclosed in the prospectus shows that it is seeking transformation. At present, product development has gradually shifted from the traditional "distribution model" to the "fine distribution model." However, transformation cannot be completed overnight, especially for a behemoth like San Tai shares. It will take a long process from distribution to fine distribution, to independent research and development, and finally to the formation of a brand.

Three State Shares