From earning 700 million yuan a year to earning 17 million yuan a year, the cross-border big brother is in debt of 2.5 billion yuan!

Delisting risk warnings, sale of high-profit subsidiaries, constant friction with suppliers, high-level clashes ...all of these have happened to Cross-Border E-Commerce Link, the "first cross-border e-commerce stock". Now, this cross-border big brother is busy cleaning up the mess, and the good news about revenue and profits is no longer there.

Net profit dropped from 670 million to 17.8 million, and Cross-border e-commerce export business was difficult to stabilize

Yesterday, Cross-Border Link released its 2022 annual financial report.

As expected, its revenue and profit results are not good. Last year, Cross-border Communication's annual revenue was 7.254 billion yuan, and the net profit attributable to shareholders of listed companies was 17.8423 million yuan . Both revenue and net profit are declining. In 2021, its revenue reached 8.818 billion yuan and its net profit reached 673 million yuan.

Unlike other cross-border companies, KEEP not only relies on Global Easybuy and Paton to expand into overseas markets, but also relies on Youyi E-Commerce to make huge profits in the domestic market.

In 2018, Cross-border Link acquired a wholly-owned stake in Paton and acquired Youyi E-commerce, building a complete cross-border import and export business ecosystem. In 2019, Global Easybuy, a subsidiary of Cross-border Link, had a revenue of 8.5 billion yuan, accounting for 47.59% of the total revenue; Paton's revenue reached 3.4 billion yuan, accounting for 19.24% of the total revenue; and Youyi E-commerce's revenue reached 5.8 billion yuan, accounting for 32.85% of the total revenue .

Obviously, at that time, Cross-border export business still accounted for the majority of Cross-border Communication's business, but the import business for the domestic market also performed very well. With the dual-wheel drive of export and import, Cross-border Communication managed to balance the two very well.

The export e-commerce business revenue scale is tens of billions, which is the envy of many cross-border enterprises. But once a big change happened, this cross-border star began to fall.

Since a few years ago, the revenue of Cross-border e-commerce export business has been declining year by year. In 2019, it was 11.4 billion yuan, a year-on-year decrease of 26.27%; in 2020, it was 10.1 billion yuan, a year-on-year decrease of 11.72%; in 2021, it was 2.7 billion yuan, a year-on-year decrease of 73.41%.

The sharp drop in 2021 was related to its sale of Paton. In March of that year , Cross-Border Link announced that it would transfer 100% of the shares of its wholly-owned subsidiary Paton to Paton Investment, Xiaomi, SHEIN , etc. for RMB 2.02 billion.

In the same year, Cross-border Communication’s stock was delisted, and its share price fell to the limit. Its core subsidiary Global Easybuy was filed for bankruptcy and liquidation many times ...

Therefore, the sharp decline in Cross -Border Link’s revenue in 2021 was mainly due to the basic stagnation of its export e-commerce business, mainly including Global Easybuy and Paton .

Until last year, the title of "leading cross-border e-commerce export enterprise" was becoming increasingly weak, as the revenue of its e-commerce export business only accounted for a single-digit percentage of its total revenue.

The financial report shows that in 2022, the cross-border import business achieved revenue of 6.7 billion yuan, accounting for 92.44% of the total revenue; the cross-border export business achieved revenue of 490 million yuan, accounting for only 6.77% of the total revenue . In 2021, the revenue share of this segment reached 30.39%.

With Youyi E-Commerce as the main operating entity in the domestic market, through "online + offline" omni-channel sales such as flagship stores, Alibaba distribution, e-commerce platform operations, and vertically selected offline channels, the net profit of this business segment under Cross-Border Link reached 164 million yuan in 2022.

The business balance began to become unbalanced, but this does not mean that Cross-Border Link will give up its export e-commerce business.

The number of monthly active users of independent sites declined, and the ZAFUL business segment suffered a net loss of 80 million

Focusing on fast fashion categories, Zaful, a subsidiary of K-Link, sells its own brand ZAFUL products through its independent website (www.zaful.com), while also expanding to overseas third-party platforms such as Amazon, Walmart, and eBay.

It is understood that in 2022, ZAFUL was once again selected in the "MeetBrands China Overseas Brand Value List Report" jointly released by Feishu Shenno and iResearch Consulting. This is the fifth consecutive year.

Heading into the fast fashion market, ZAFUL has accumulated many advantageous categories including swimwear, women's wear, men's wear, home furnishings, accessories and other fashion derivatives, and its business covers major markets such as Europe, America, the Middle East, and Southeast Asia. Last year, Cross-border Link also stated on the investor interaction platform that ZAFUL is actively exploring new tracks such as shoes, bags and wigs , and is also actively developing markets such as Brazil .

However, the export e-commerce business, mainly ZAFUL, is in obvious decline.

As of the end of 2022, ZAFUL's self-operated website had 56.192 million registered users and 6.677 million monthly active users . In 2021, the number of registered users of the independent website was 54.268 million, and the number of monthly active users was 7.687 million. Although the number of users is still growing, it has increased by less than 2 million in a year, and the number of monthly active users has dropped by 1 million, which shows the weak development of the independent website.

ZAFUL also tried to boost its business through the most popular live broadcasting format. It is reported that it has realized regular live broadcasting business on multiple platforms such as Instagram , TikTok and ZAFUL APP. However, judging from the financial report, this move has achieved little effect.

In terms of the number of online SKUs and average customer unit price alone, there has been an increase. In 2022, the number of SKUs on ZAFUL reached 116,000, with an average customer unit price of US$64.5; in 2021, the number of SKUs was only 73,300, with an average customer unit price of US$62.67.

But these growths failed to save its performance. The financial report shows that in 2022, the export e-commerce revenue of Cross-Border Link, mainly ZAFUL, was 470 million yuan, and the net loss reached 81.6218 million yuan .

The decline has left Cross-Border Link with a debt of 2.5 billion yuan

At that time, Kuaishou was very successful. When cross-border e-commerce giants such as Youkeshu and Jiazhilian were still seeking financing, it successfully went public on the A-share market through a backdoor listing, becoming the "first cross-border e-commerce stock."

From 2014 to 2018, the revenue of Global Easybuy, a subsidiary of Cross-Border E-Commerce, increased from 1.4 billion yuan to 12.4 billion yuan, and its net profit also climbed steadily, making it a leading company in the cross-border e-commerce industry.

But after 2019, Cross-border Communication seemed to have been "cursed", its heyday ended abruptly , its performance declined all the way , and its revenue turned from profit to loss .

In 2018, the company's revenue reached 21.5 billion yuan, with a net profit of 623 million yuan;

In 2019, the company's revenue reached 17.9 billion yuan, and its net profit began to lose money, reaching 2.7 billion yuan.

In 2020, the company's revenue was 16.4 billion yuan and its net loss reached 2 billion yuan;

In 2021, the revenue was no longer in the tens of billions scale, but the company turned losses into profits, with a net profit of nearly 700 million yuan;

In 2022, the revenue scale will decrease again and the net profit will begin to decline again.

Over the past five years, Cross-border Link has continued to go downhill. Inventory backlogs and goodwill impairment have caused performance losses. Its core subsidiaries, Paton and Global Easybuy, have been sold or liquidated, and many independent websites have been closed. Not only that, its senior executives have been constantly at odds with each other and embroiled in lawsuits. Both the senior executives and the company have faced multiple lawsuits.

Although Cross-Border Link removed the "ST" label last year, its losses are still continuing and its debt situation is still very serious. The financial report shows that its total debt reached 2.539 billion yuan in 2022 .

In addition, Cross-Border Link also faces the problem of inventory backlog , which has also led to a decline in its profits. Last year alone, it set aside 22.4683 million yuan in inventory impairment provisions .

Looking ahead to 2023, Cross-Border Link said it will improve the company's operational efficiency and promote business growth through digital technology; continue to adhere to the brand development strategy, and create product quality and brand characteristics around ZAFUL that are more in line with the brand image; expand business in all directions, while consolidating the original market, expanding into markets such as the Middle East, Eastern Europe and South America, and introducing more supplier resources for shoes, bags and home accessories; expand the user base, cover a more comprehensive range of advantageous categories, and establish a deeper business moat.

If Cross-border Communication wants to return to its peak, I'm afraid it will be a long journey...

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