The average annual salary of employees is 260,000 yuan. Zebao did not reduce their salary after the account was banned.

After the "Amazon account suspension" incident , all the big sellers were hit hard, and the regulatory authorities are particularly concerned about their operating status and sustainable operating capabilities. Recently, ZEBAO's parent company Xinghui Co., Ltd. responded to the annual report inquiry letter received from the Shenzhen Stock Exchange, fully presenting its internal status.

Zebao has always been heavily invested in Amazon channels and has a serious imbalance in subjects. Because of this, it was obviously affected by the account ban . In the first quarter of this year, Zebao's Amazon revenue dropped from nearly 1 billion in the same period last year to about 180 million, a drop of more than 80%. Zebao needs stable team support to save the situation, so it did not reduce staff or implement salary cuts. In 2021, the average salary of its employees reached 260,000 yuan, which increased instead of decreasing compared with the previous year, which was beyond the expectations of the industry.

After the account was blocked, Zebao’s Amazon revenue dropped by 80% year-on-year

In June last year , Amazon suspended sales in some stores of six brands including RAVPower under Zebao, and the frozen funds amounted to RMB 60.0346 million. It has been a year since then.

Prior to this, Zebao was very dependent on the Amazon platform, and its revenue from this channel was also growing steadily. In the fourth quarter of 2020, sales of all its products on Amazon reached 1.7 billion, accounting for about 94% of its total revenue.

But after the account was blocked, the revenue from this channel declined rapidly. In the peak season of the fourth quarter of 2021, Zebao's sales on Amazon were only 159 million, a 90% decrease from the same period of the previous year ; in the first quarter of this year, Zebao's Amazon sales were 179 million, a 80% decrease from 975 million in the same period last year, and the revenue share of the Amazon channel also dropped to 56%. The problem of partiality was forced to be cured.

The company's affected products mainly include power supplies, Bluetooth audio, small household appliances, and computer and mobile phone peripherals. In 2021, the sales of these four categories of products accounted for more than 80% of the total revenue of the e-commerce business. With the account being blocked, its sales revenue has dropped sharply.

In the first quarter of this year, the sales of Zebao power supplies, Bluetooth audio, small household appliances, and computer and mobile phone peripherals were 37.65 million, 24.19 million, 124 million, and 76.66 million, respectively. In the same period last year, the sales amounts were 129 million, 164 million, 466 million, and 125 million, respectively, which can be said to be a cliff-like drop.

At the same time, due to inventory accumulation, the procurement volume of these products dropped sharply. Among them, the procurement volume of power supplies dropped from 1.28 million pieces in the second quarter of last year to 605,000 pieces in the first quarter of this year, the procurement volume of Bluetooth audio products dropped from 500,000 pieces to 30,000 pieces, and the procurement volume of small household appliances dropped from 1.34 million pieces to 39,000 pieces.

In 2021, Xinghui's cross-border e-commerce business revenue was 2.577 billion yuan, a year-on-year decrease of 46.02%; the gross profit margin was 26.85%, a decrease of 13.6 percentage points from the previous period. Although both revenue and profit declined, Zebao's employee salary expenditure was higher than the previous year.

The average annual salary of employees is 260,000 yuan. Zebao did not reduce their salary after the account was banned.

Zebao's parent company has two main businesses: precision hardware and cross-border e-commerce. In 2021, Xinghui Co., Ltd. paid 380 million yuan in cash to and for employees, an increase of 18 percentage points year-on-year, and the average number of employees receiving salaries was 2,064.

After the Amazon account suspension incident in June, the company continued to actively develop its business, and there was almost no reduction in employees at that time. However, since the fourth quarter, Zebao's employees have been reduced. By the end of 2021, the total number of employees of Xinghui Co., Ltd. was 1,778, a decrease of 148 from the previous period.

This year, Xinghui Co., Ltd. had a total of 920 employees in its cross-border e-commerce business . The average salary increased from 217,500 yuan in 2020 to 260,000 yuan in 2021, an increase of 42,500 yuan, or nearly 20%.

Many of Zebao’s accounts were blocked by Amazon, but the salaries of its employees did not decrease but increased. The main reasons are as follows:

1. The R&D cost is relatively high . In 2020, it transferred RMB 14.1002 million to "cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets" due to R&D capitalization;

2. Cross-border e-commerce business employees received bonuses for 2020. In 2021 , the cross-border e-commerce business received bonuses of RMB 16.9987 million for 2020, and RMB 4.0872 million for 2019.

After excluding the above two factors, the average salary of the company's cross-border e-commerce employees decreased slightly, from 260,000 to 241,500.

Judging from the adjusted situation, the average salary of cross-border e-commerce employees has increased significantly compared with the previous year. This is mainly because the salaries of employees increased compared with last year before Amazon banned their accounts. After the ban, many sellers in the industry took the two steps of reducing staff and reducing salaries, but Zebao did not lay off employees on a large scale. Considering the stability of the team, the company did not reduce the salaries of employees, which is still worthy of praise.

Zebao is trying hard to stabilize the situation, but it is undeniable that this huge change has indeed put it in a deep quagmire.

Inventory impairment exceeded RMB 400 million, and Zebao's bad debts reached more than RMB 30 million.

After the Amazon incident, Xinghui Co., Ltd. made an impairment provision of 680 million yuan for the goodwill formed by the acquisition of Zebao Technology and 416 million yuan for inventory. Zebao's revenue fell sharply in the third and fourth quarters. In the fourth quarter, it adopted a discount to clear inventory sales, resulting in a sharp drop in gross profit margin and a significant decrease in net profit.

After the store was closed, Zebao had a large number of returns and the goods could not be sold normally, so they had to be sold at a price reduction. While reducing product prices, expenses such as sales fees, shipping costs, warehousing and manual sorting fees also increased.

When Zebao's store was closed, a large amount of inventory was placed in Amazon's warehouse. After the closure, Amazon continued to deduct its storage fees, inventory return fees, customer refunds, and first- and second-leg logistics fees from Amazon logistics providers, etc. The store's receivable balance also shrank day by day. With the superposition of various factors, the loss gradually expanded.

Since the account blocking incident, Zebao has not received any funds from the blocked stores, and it is not expected to receive any in the future. In this case, the company has made full provision for bad debts for the accounts receivable of the blocked stores as of the end of 2021.

The amount of these bad debts is not small! The frozen funds of Zebao's related stores amounted to 60.03 million yuan. At the end of 2021, the company fully provided for bad debt reserves for the frozen funds of 32.23 million yuan.

The account ban has seriously damaged Zebao's vitality. In 2021, its purchasing volume, sales volume, inventory, sales revenue, net profit and other indicators have all declined. However, Zebao has subsequently taken some measures to reduce the impact, such as accelerating the layout of multiple platforms.

In 2021 , Zebao achieved revenue of 605 million yuan through non-Amazon channels such as independent sites , Walmart, and offline channels , a year-on-year increase of 92.03% from 315 million yuan in 2020; its share of total cross-border e-commerce revenue was 23.46%, a year-on-year increase of 16.87 percentage points from 2020, gradually reducing its dependence on Amazon's single platform.

In addition, Zebao is also rapidly expanding the offline and online markets by acquiring other brands, optimizing costs and increasing profit margins. With these multi-pronged measures, its operating conditions have gradually improved.

In the first quarter of this year, the sales revenue of Zebao's main products was 262 million, which was basically the same as the 270 million in the peak season of the fourth quarter of last year, and the sales situation did not show a trend of further decline. After this "recovery period", the inherent operational capabilities of the big seller may help it return to its position.

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