Amazon's gross profit margin is extremely high! Jiangsu's big sellers, which are sprinting for IPO, have something special

Nowadays, more and more sellers in niche areas are embarking on the IPO road, such as Huabao New Energy, which is a big seller of portable energy storage, Ruilian Technology, which is a big seller of cameras, and Zhiou Technology, which is a big seller of home furnishings.

On December 4, Jiangsu Kangliyuan Sports Technology Co., Ltd., the parent company of Amazon's fitness equipment brand JXFitness, submitted its registration application, and is just one step away from a successful listing. Like the above companies, Kangliyuan is also a leader in the field of fitness equipment.

Gross profit margins are all above 60%, and cross-border e-commerce business has become a profit growth point

Kangliyuan is sold both domestically and overseas, with overseas sales accounting for the majority. The prospectus shows that from 2019 to June 2022, Kangliyuan's export revenue was RMB 270 million, RMB 540 million, RMB 570 million and RMB 266 million, respectively, accounting for 71.12%, 80.16%, 81.60% and 82.58% of the main business revenue, respectively.

Overseas sales are divided into two sales methods: offline and online. Overseas online sales are mainly on the Amazon platform. At the end of 2017, Kangliyuan opened a store on the Amazon platform and started its cross-border e-commerce business.

It mainly operates its own brand JXFitness on Amazon , and sells mainly small and light products such as dumbbell benches and weightlifting beds . It is also gradually exploring the online sales of aerobic equipment such as exercise bikes and treadmills.

With the rapid development of cross-border e-commerce, Kangliyuan's Amazon store performance has also continued to rise. From 2019 to June 2022, its sales revenue through Amazon was RMB 16.1304 million, RMB 70.6245 million, RMB 63.1646 million and RMB 22.2218 million respectively.

And these revenues are contributed by tens of thousands of "gods". The prospectus shows that from 2019 to June 2022, the number of customers who purchased products in Kangliyuan's Amazon store was 14,883, 92,519, 88,391, and 37,461 respectively.

Kangliyuan's cross-border e-commerce business is generally on the rise and has gradually become an important profit growth point.

The prospectus shows that after excluding shipping costs and other miscellaneous expenses, Amazon's gross profit margin has generally increased from 2019 to 2021 , reaching 68.64%, 75.16%, and 74.24% respectively . As can be seen from the table below, this figure is much higher than the comprehensive gross profit margin of the main business, and is also the highest among offline direct sales, dealers, traders, and online direct sales models such as Tmall and JD.

The "eye-catching" gross profit is supported by high quality and good reputation. By checking Kangliyuan's store on Amazon, it is found that its products are indeed recognized by consumers, with a general rating of more than 4.5 and many of them have obtained the Amazon's Choice label.

For example, a dumbbell rack launched in 2020 has accumulated 385 product reviews, of which nearly 70% are 5-star reviews, and only 11% give 1-3 stars. The latest review is from a consumer in the United States, who feels very satisfied with the product at the price of $139.99.

Currently, this product ranks 16th in the dumbbell rack BS list and is sold out.

Fitness is not just for young people, the elderly also have related needs. Based on the needs of specific groups such as the elderly and teenagers, Kangliyuan is also actively exploring the integration of the fitness equipment industry with other industries.

Seize the potential market of the elderly and form a new business model of "sports and health care"

With the development of the global economy, the quality of life of residents has gradually improved, health awareness has continued to increase, and the sports industry has expanded rapidly, gradually becoming an important pillar of the global economy. In 2013, the global sports output value was 7.5 trillion yuan. According to PwC statistics, the average growth rate of the global sports industry from 2014 to 2019 was 7.4%. The industry growth has stabilized, and the global sports industry is expected to grow by 6.4% from 2020 to 2025.

Among them, the elderly care market has huge development potential . In response to the rehabilitation and exercise needs of the elderly, Kangliyuan integrates fitness equipment with the elderly care and rehabilitation industry to form a new business model of "sports and health care integration".

On the one hand, sports APP is used to develop exercise plans for the elderly, enhance physical fitness, improve frailty syndrome and decreased physical function in the elderly, and realize the integration of physical fitness, medical care and nursing; on the other hand, starting with basic elderly care community services, electric isokinetic trainers and electric treadmills designed specifically for the elderly are equipped with hand-sensing heart rate monitoring systems and extra-long armrests.

The global aging trend is irreversible, and the market prospects for elderly rehabilitation and fitness equipment are broad . Data show that in 1960, the global population aged 65 and above accounted for 4.97% of the total population. In 2019, the proportion of the global elderly population reached 9%. According to relevant data from the United Nations, by 2050 , the global elderly population aged 65 and above will exceed 1.5 billion, accounting for 16% of the total population .

As we all know, the aging population in many developed countries in Europe and America is already very serious. Some people even say that Europe is about to become a nursing home.

According to international standards, when the elderly population aged 60 and above in a country or region accounts for 10% of the total population, or the elderly population aged 65 and above accounts for 7% of the total population, it means that the population of this country or region is in an aging society.

The data for the sellers’ main target markets, the UK, Germany, and France, have far exceeded this figure . The proportion of the population over 60 years old in the UK is 23.51%, and the proportion of the population over 65 years old is 18.12%. The proportion of the population over 60 years old in France is 25.04%, and the proportion of the population over 65 years old is 18.94%. The proportion of the population over 60 years old in Germany is 27.35%, and the proportion of the population over 65 years old is 21.12%.

Unlike many Amazon sellers, Kangliyuan is not a "young" company that has only been established for a few years, but an old enterprise with decades of history.

Started as an Olympic champion brand, established for more than 40 years and sprinting towards the GEM

Kangliyuan was founded in the 1970s (1973), and has a history of nearly 49 years. In more than 40 years, it has successfully embarked on the IPO path ( application in 2021) from a local national enterprise . Now it is only one step away from the capital market.

At present, Kangliyuan is mainly engaged in the research and development, manufacturing and sales of fitness equipment. Its products cover seven major series, including treadmills, exercise bikes, strength trainers, free weight trainers, outdoor paths, group activity equipment, etc., with more than 100 kinds of products.

As early as 1989, Kangliyuan began to produce and export sporting goods and fitness equipment. Now, in addition to supplying internationally renowned fitness equipment manufacturers or large department store retail chains with strong brand effects such as Impex, Nautilus, Argos , it also operates its own independent brands: "JX", "Junxia", "Kangliyuan", etc.

It is worth noting that Kangliyuan’s own brand is inextricably linked to one person, that is Wang Junxia, ​​the long-distance running champion of the 1996 Atlanta Olympics.

The prospectus shows that in 1998, Xuzhou Fitness Equipment Factory ( established in 1973 ) , the Xuzhou Fitness Equipment Factory Trade Union Committee and other natural persons borrowed the effect of a sports celebrity (Wang Junxia) to jointly invest in the establishment of Xuzhou Junxia Fitness Equipment Co., Ltd. , and registered the "JX" and "Junxia" brand trademarks under this name.

These trademarks have been used to this day, and the brand JXFitness currently sold on Amazon also originated from them.

For many years, Kangliyuan has been deeply engaged in the field of fitness equipment and has achieved rapid development. The growth rate of a company's main business income can largely reflect the growth of its business. From 2019 to June 2022, the main business income was 379 million yuan , 673 million yuan , 699 million yuan and 323 million yuan respectively, with an annual compound growth rate of 19.37%, maintaining rapid growth .

The prospectus shows that based on the market environment and Kangliyuan's current operating conditions, preliminary estimates show that the operating income in 2022 is expected to be between 605 million yuan and 670 million yuan , and the net profit attributable to shareholders of the parent company in 2022 is expected to be between 82.5 million yuan and 111 million yuan , a year-on-year increase of 5.39% to 41.80%; the non-net profit is expected to be between 78 million yuan and 84 million yuan .

From the perspective of the fitness equipment consumer market, the fitness industry in the United States and Europe started earlier, and the scale of the fitness equipment consumer market is in a leading position in the world . According to the " 2021 PwC Sports Industry Survey Report", it is estimated that the growth rate of the sports industry in North America will reach 7.4% in the next 3-5 years.

China is an important fitness equipment manufacturing country in the world. According to data from iMedia Research and Huajin Securities Research Institute, fitness equipment manufactured in China accounted for 53% of the global fitness equipment market in 2017.

There is still great potential in the sports equipment market in the future .

Kangliyuan

Sports Fitness Equipment