Shenzhen Dashao's revenue dropped by 40 million, but its gross profit margin increased instead of decreasing

Bestec's revenue declined, but its gross profit margin rose to 31.09%

The products sold by Besty include car accessories, safety sockets, home appliances, personal care and health, etc. Last year, Besty's revenue was 185.5 million yuan, down 18.52% from the previous year. Among them, overseas sales revenue was 182 million yuan, accounting for about 98.15% of the total revenue; the revenue realized through Amazon was 155 million yuan, accounting for 83.53% of the total revenue.

It is worth noting that while total revenue fell by 40 million, Bestec's gross profit margin did not fall but instead increased from 24.9% to 31.09%, and each sub-category saw varying degrees of growth.

The report pointed out that this situation occurred because of the decline in sales, which led to a corresponding reduction in costs; and in the past year, Besty upgraded and optimized its product structure and eliminated a number of products with lower gross profit margins . In fact, since 2019, Besty has eliminated some low-profit products every year.

As far as the latest situation is concerned, the production and sales of automotive electrical products are currently the main source of income for Bestec . In 2021, the sales of automotive electrical products achieved revenue of 77.89 million yuan, accounting for about 41.98% of the annual revenue. Household electrical products, home medical products, and travel electrical products accounted for 17.67%, 16.27%, and 10.38% respectively.

The inverter in car supplies is one of the main products of Bestai. The main function of the car inverter is power conversion. After using the inverter, the car owner can install many electrical devices in the car, which is equivalent to a household power strip, and can charge mobile phones and use laptops in the car.

Among the TOP15 best-selling inverters on Amazon US, BestEasy inverters occupy three places. Among them, the 300W car inverter ranks the highest, ranking second (data on May 2). There are more than 25,000 reviews about this inverter, and 70% of them are five-star reviews; there are also more than 1,000 product questions and answers.

In addition to inverters, Bestek power strips are also very popular on Amazon. The number of reviews for Bestek vertical power strips is over 3,600, with a rating of around four and a half stars. It can be said that the BESTEK brand is now well-known in overseas markets such as the United States, Japan, and Europe.

Moreover, after its inverters, power strips and other products gained a firm foothold overseas, Bestec also began to develop in the direction of big health and medical devices .

In 2020, Bestec changed its name from "Guangdong Bestec E-Commerce Co., Ltd." to "Guangdong Bestec Medical Devices Co., Ltd.". In the same year, Bestec reaped a wave of dividends in mask sales, with revenue from epidemic prevention materials reaching 18.28 million yuan. In addition, Bestec is also working on other medical devices. According to Qichacha information, at the end of 2020, Bestec applied for a utility model patent for an anti-short-circuit finger-type pulse oximeter.

In fact, Bestai's research and development has never stopped. In the past year, Bestai has added 37 patents, including 2 invention patents, 20 utility models, and 15 designs. As of December 31, 2021, the company has obtained a total of 419 patents, including 38 invention patents, 112 utility models, and 269 designs.

From the perspective of rising gross profit margin, Bestec still has some competitiveness. However, it remains to be seen whether its medical devices can hold up the market. In addition, Bestec's high reliance on Amazon for revenue has also caused concerns. At present, in addition to Amazon, Bestec also distributes on eBay and independent websites, and has also expanded offline channels. But in general, Amazon's influence is still very large, accounting for 80% of revenue.

Optimizing product structure, Li Deming expands charger business

Compared with Best Buy, Li Deming, also a Shenzhen seller, relies more on the Amazon platform. In 2021, Li Deming's total revenue reached 604.8 million yuan, of which 596 million yuan came from Amazon, accounting for 98.59% of the total revenue.

Li Deming is mainly engaged in the research and development and sales of peripheral products for computers, communications and other electronic equipment. Its main products include data cables, chargers, audio cables, etc.

The company's products mainly adopt the "independent brand R&D and design + outsourced processing and production" model, and it has its own brands including Syncwire, UNBREAKcable, ATUMTEK, addsfit, wawo and many other brands.

With the widespread application of smart products, people's demand for data cables is also growing. Data cable revenue has always accounted for the largest proportion of the three major product revenues of Li Deming.

In 2018, the revenue amount was 162 million yuan, accounting for 63.94% of the operating income; in 2019, the revenue amount was 204 million yuan, accounting for 49.30% of the operating income; in 2020, the revenue amount was 213 million yuan, accounting for 34.75% of the operating income.

However, we can also find that the proportion of data cables is decreasing year by year. By 2021, the revenue of data cables was 120 million yuan, accounting for only 19.84% of the operating income.

In the past year, Li Deming upgraded its data cable business, and stopped producing relatively low-priced and low-profit products after they were sold out, focusing more on high value-added products. At the same time, it also expanded other categories, especially charging products. In 2021, the revenue from chargers was 25.85 million yuan, a year-on-year increase of 31.35%.

It is worth mentioning that although both Li Deming and Bestec have optimized their product structures, Li Deming's gross profit margin has not increased, but has slightly decreased from 52.87% to 50.83%. Its operating income has dropped from 612.7 million yuan to 604.8 million yuan. However, overall, its performance is still stable.

In recent years, Li Deming has developed rapidly, with revenue increasing year by year from 38.13 million yuan in 2015 to a record high of 612.7 million yuan in 2020. Today, Li Deming is expanding its charger and other businesses to find new demands, perhaps to find a new focus.

Behind this is the support of Li Deming's R&D capabilities. In 2021, Li Deming's R&D expenses increased by 27.04% from the previous year to 17.1 million yuan. At the same time, it also obtained the "High-tech Enterprise" and provincial (municipal) level "Specialized and New" certification.

From the actions of Li Deming and Besty in the past year, we can see that after gaining a certain degree of popularity overseas, these companies are seeking to develop multiple categories, which can not only create the second and third growth curves, but also disperse risks. Of course, this must be based on correct decisions, otherwise it will only have a counterproductive effect. At the same time, they are also shrinking low-profit product businesses in order to focus their greatest efforts on useful areas. In addition, some sellers will use their accumulated operating experience to build cross-border e-commerce service platforms, inject capital into potential companies, and so on.

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