Banggood CEO Zou Xin: "Bankruptcy" is a false rumor

Yesterday afternoon, the news that Banggood filed for bankruptcy spread widely in the industry, and as time went on, the trend became more and more intense. Almost everyone was asking, "Has Banggood gone bankrupt?"

Some people say that this is fake news. They believe that Banggood has been developing steadily and has a good cash flow and will not suddenly go bankrupt. But others say that the news is true because under this year's market conditions, there are many sellers that have gone bankrupt and some big sellers have also been hit hard.

What is the truth? Last night, Yien.com rushed to Banggood's Guangzhou headquarters and interviewed its chairman Zou Le and CEO Zou Xin.

"Filing for bankruptcy" is a false rumor

"That's not true. It's all nonsense." Zou Xin said in response to Bangalore's bankruptcy filing.

Before accepting the interview with Yien.com, Banggood also released a statement on its official WeChat public account "Banggood". In it, Banggood also clearly stated that Guangzhou Banggood Technology Co., Ltd. and its affiliated companies were operating normally recently, and the news of "applying for bankruptcy" and so on were all false rumors.

At the same time, the statement expressed strong indignation and condemnation for the fabrication and spreading of false rumors on the Internet platform, and warned the relevant parties to immediately stop the suspected infringement. It stated that if necessary, legal proceedings will be initiated against the parties suspected of serious infringement.

In the economic downturn, single-day off can bring more benefits

Earlier than the bankruptcy news, Bangko will implement a one-day-off work system starting September 13. The notice shows that Bangko will adjust the original two-day-off system (Monday to Friday 9:00-12:00; 13:30-18:30) to a one-day-off system (Monday to Friday 9:00-12:00; 13:30-17:30 Saturday 9:00-12:00; 13:30-15:30).

Many people interpreted this adjustment as Bangalore's operations being under pressure, or as a disguised way of driving employees out.

Zou Xin admitted that Banggu is indeed under great operational pressure this year, and that is why it hopes to improve employees' work efficiency by adjusting the work system. However, in terms of weekly working hours, the original two-day weekend system and the one-day weekend system that will be implemented soon have not changed, both of which are 40 hours.

At the same time, Zou Xin said that the external conflict between Russia and Ukraine has not ended, inflation in Europe and the United States is serious, and people's purchasing power has declined. Internally, Bangalore began to transform into a product-based e-commerce company at the end of last year, focusing on the strategy of high-quality products + fine stores, and SKUs are actively shrinking. All these have directly affected Bangalore's revenue.

However, the transformation process is a big challenge, which will inevitably involve personnel changes, organizational changes, process changes and upgrades in the awareness of managers and employees.

Zou Le analyzed that in this process, the new business has put forward new requirements for employees, which will bring some negative emotions to people. In addition, in the current economic environment, both management and grassroots employees are very anxious. The combination of a series of factors has led to this "bankruptcy incident" that was speculated out of thin air by outsiders.

Actively seek change and transform into a product-based e-commerce

Like other sellers in the industry, Banggood was under tremendous operational pressure in the first half of the year. In order to achieve a better transformation, while actively introducing product talents, Banggood decided in April this year to lay off 30% of its employees overall and optimize its employees in accordance with the "731 Environmental Impact Assessment Law". Loss-making departments will lay off 70% of their employees, unprofitable departments will lay off 30% of their employees, and profitable departments will lay off 10% of their employees.

"Although we wanted to keep as many employees as possible, we were under great pressure under the circumstances at the time." However, Banggu also compensated the dismissed employees in accordance with the Labor Law. "We spent more than 30 million yuan on layoff compensation alone," said Zou Xin.

But transformation is not achieved overnight. It requires a process of climbing up and time. Unlike the original distribution model where products can be bought from suppliers and then resold, it takes a long time to make products. First of all, it takes several months from market research, product design, to product development and production. This year, the supply chain is very disordered, and the products need to go through a long shipping cycle. Therefore, it was not until August that a series of products developed by Banggu began to be launched on the market.

"We predict that the global economic situation will not improve before the second quarter of next year, but as the prices of sea and air freight fall and transit time becomes more stable, the advantages of cross-border e-commerce in supply chain and products will be released again, ahead of the market," said Zou Le. "In this case, we are thinking about speeding up the productization and branding, and improving work efficiency through the "single day off" system to accelerate the transformation process."

"Under the current economic situation in Europe and the United States, we should actually move towards this type of product, the mid-range, or even high-end market. Only then can we ensure profits and competitiveness, increase employee incomes, and upgrade industries," Zou Xin told Yien.com.

Banggood's decision to transform can be said to be influenced by both subjective and objective factors. In terms of objective factors, in addition to the economic downturn in Europe and the United States and the weakening of people's purchasing power, they also observed that their revenue this year has shrunk significantly due to the lack of product competitiveness.

Revenue in the first half of the year declined year-on-year, mainly due to the iteration of old products and inventory clearance

It is estimated that Banggood's revenue in the first half of this year was 2.5-3 billion. Its performance has declined rapidly, with revenue in the first half of this year slashed by 40% compared with last year.

"Although the external environment is not optimistic, thanks to the launch of new products and years of accumulated marketing capabilities, the internal situation will improve significantly starting from the fourth quarter. We are now in a transitional stage, and it will take some time to solidify the internal change process and iterate cognition." Zou Le said that under this objective environment, it is necessary to adhere to the long-term value orientation and take the product and branding route.

“For employees, we hope that they can understand future changes and trends, actively embrace changes, iterate their own capabilities, and understand the company’s long-term development strategy. We hope to develop together with like-minded people. For partners, we jointly build a value chain, create high-quality products and share product premiums, and get rid of the low-price homogeneous competition model. To put it simply, if we can make good products and sell them at a good price, we can all make money.

From the interviews with Zou Le and Zou Xin, three points are clear: First, the "bankruptcy application" is a rumor; second, Bangalore confirmed that it had carried out a round of layoffs in April this year, and all compensation has been made in accordance with the Labor Law; third, Bangalore is trying to transform from a distribution-type seller to a product-based e-commerce, and is currently in a transition period. There will be corresponding changes in the personnel structure and performance appraisals.

Since the beginning of this year, there have been constant reports of layoffs and bankruptcies in the cross-border e-commerce industry, and the chill has reached everyone. Therefore, at the slightest sign of trouble, many people's sensitive nerves will be touched. It is understandable that everyone pays attention to the dynamics of the industry, but Yien.com believes that the more times like this, the more you need to treat these news calmly and not let them hijack your emotions and make yourself anxious.