Three more Zebao brands have been discontinued, and 70% of Amazon stores have been closed

Yesterday, Xinghui Precision released a major announcement. Following the closure of Zebao's main brands such as RAVPower in June, the company's other three brand stores, including Anjou, were also suspended one after another. The total number of suspended sites reached 330, exceeding 70% of the company's existing sites. Affected by this, Zebao's sales revenue fell by more than half.

In response to the account suspension incident, Zebao began to accelerate the layout of online multi-platforms and offline channel promotion in Japan, the Middle East and other places. Even good wine needs to be hidden in a remote alley. How to do a good job in cross-border marketing? The marketing cases of Anker Nano and Anker Flow can be used as a reference; the popular Lechuang, which was labeled as a "He Tongxue concept stock", was also popular, with its stock price rising by 14%.

The rapid development of cross-border e-commerce channels has attracted much attention. At the same time, the industry policy dividends are constantly released, and more powerful merchants are beginning to test the waters. For example, Aokai Technology, a 3C manufacturer that supplies Mophie and Apeman Innovation, has its own brand listed on Amazon. With the entry of powerful sellers, the industry competition is becoming more and more fierce.

Three more Zebao brands have been discontinued, and 70% of its sites have been blocked

Yesterday, Zebao’s parent company, Xinghui Precision, issued an announcement on the progress of major matters concerning its subsidiaries.

The announcement mentioned that some stores under the three brands RAVPower, Taotronics, and VAVA of Shenzhen Zebao Innovation Technology Co., Ltd., a subsidiary of Xinghui Precision , were suspended from selling on the Amazon platform on June 16, 2021. Afterwards, as the Amazon platform further increased the intensity of supervision of operating rules, the company's Anjou, Sable, and Hootoo brand stores were also suspended from selling one after another.

As of the date of disclosure of this announcement, the total number of sites where Zebao Technology has been suspended from selling on the Amazon platform is 330, accounting for 70.21% of the company's total existing sites.

(Screenshot of Xinghui Precision’s announcement)

Affected by the account blocking, Zebao Technology's sales revenue in the first three quarters of 2021 fell 24.83% compared with the same period last year, and the frozen funds of related stores were equivalent to RMB 60.0346 million.

More than 70% of the stores were closed. In order to minimize the losses, Zebao took the following measures:

1. The company has set up a special emergency response team to continue communicating, coordinating and appealing with the Amazon platform, striving to restore normal sales of related brands as soon as possible.

2. Accelerate the promotion of online multi-platform business strategy. The company continues to increase its resource investment in e-commerce platforms such as Ebay and Walmart, and strives to build the company's own platform (independent station). From July to September 2021, the sales revenue of the self-operated platform was equivalent to approximately RMB 39.23 million, an increase of 152% over the same period last year.

3. Increase offline channel promotion efforts and continue to expand offline markets in Japan, the Middle East, Latin America, Eastern Europe, etc. From July to September 2021, offline channels achieved revenue equivalent to approximately RMB 112 million, an increase of 63.52% over the same period last year.

4. Optimize personnel and organizational structure. On the one hand, the company optimized the Amazon operation team according to the actual operating conditions and promoted a group of passionate and management potential personnel to key operation positions; on the other hand, in order to cooperate with the implementation of the multi-platform operation strategy, the company recruited talents who are good at operating other e-commerce platforms. As of September 30, 2021, the number of employees in Zebao Technology was 757, a decrease of 201 from 958 on June 30, 2021.

After the account was blocked, Zebao urgently launched multi-platform and multi-channel sales to save itself. However, it was too dependent on Amazon sales, and the large-scale account blocking meant that its largest source of income was intercepted.

Previously, Zebao mainly sold its own brand of consumer electronic products such as power supplies, Bluetooth audio, small appliances, computer and mobile phone peripherals, personal care and health products through platforms such as Amazon . According to Xinghui Precision's annual report last year, Zebao Technology achieved operating income of 4.774 billion yuan in 2020, an increase of 68.57% over the same period of the previous year. Among them, sales on Amazon exceeded 4.5 billion, and channel revenue accounted for more than 94%, which is very high.

Because of this, the current main brand has been blocked and more than 70% of the sites have been closed by Amazon, which is a disaster for Zebao. This brand born out of Amazon has suffered a huge backlash.

According to Xinghui Precision's third quarter report, in the third quarter, Xinghui Precision's revenue was 587 million yuan, a year-on-year decrease of 58.44%. The net profit attributable to shareholders of the listed company was -139 million yuan, a year-on-year decrease of 282.73%. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -143 million yuan, a year-on-year decrease of 293.24%.

In the first three quarters, Xinghui Precision's revenue was 3.013 billion yuan, a year-on-year decrease of 13.05% from 2020. The net profit attributable to shareholders of the listed company was -35.0781 million yuan, a year-on-year decrease of 117.31%. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -55.9943 million yuan, a year-on-year decrease of 128.86%.

Judging from the data disclosed in the financial report, Xinghui Precision's performance in the third quarter and the first three quarters of this year was in a loss-making state. The main reason for the loss was that a large number of accounts of its subsidiary Zebao Technology were banned on the Amazon platform.

Xinghui Precision said in the announcement that since the account blocking incident, although the company has carried out rapid emergency public relations and actively reduced the adverse impact on operations from aspects such as resource investment, channel substitution, and personnel optimization, the Amazon platform is the world's largest online platform with huge natural traffic and high user stickiness. Other third-party platforms and self-operated independent stations have relatively small traffic and relatively weak customer acquisition capabilities. In the short term, they cannot effectively hedge the losses caused by the Amazon channel.

Frustrated on Amazon, independent website + multi-platform becomes a life-saving straw

In the face of the current situation, Xinghui Precision stated that in the next stage, the company will adhere to its established goals, continue to operate in multiple channels and platforms, and take all necessary measures to mitigate the adverse effects of this incident.

The account blocking wave in June and July brought down many of Amazon's top sellers. In September, Amazon's global vice president Cindy Tai responded to the account blocking wave, saying that in the past six months, Amazon has closed the sales rights of about 600 Chinese brands, involving about 3,000 seller accounts, including some large sellers. In addition to the previously widely concerned abuse of reviews and false reviews, the reasons for account blocking also include non-compliant behaviors such as forging identities, bribery (cooperation with third-party gray industries), and selling illegal products.

"For these 600 brands, (Amazon) had a lot of communication with them before. Some accounts were deactivated and then restored. They provided specific plans to avoid violations again, but we found that they did not keep their promises, so we decided to terminate our cooperation with them," said Cindy Tai.

Judging from the current situation of many sellers whose accounts have been blocked, the revenue from Amazon, which they have always relied on, has been cut, and the offline sales channels are weak, so multi-platform + independent website has become a life-saving straw. For other sellers, if their strength allows, independent website has become an important part that cannot be ignored.

Data company Marketplace Pulse believes that as competition among Amazon sellers intensifies and profits continue to decline, they are beginning to look for new opportunities, and this opportunity is private brands. Many sellers are waiting for a market that can challenge Amazon so that they can diversify their operations. Now it is confirmed that this new market is not a company with high hopes such as Walmart and Wish, but DTC. In 2020, Shopify's market size is close to 40% of Amazon.

The market is also optimistic about the prospects of independent sites. According to Marketing Weekly, most UK chief marketing officers expect that DTC channels will drive at least 20% of sales in the next five years, and the vast majority (97%) said that DTC channels have become a better choice since the start of the pandemic, with 47% of brands selling more products through their own channels than before the COVID-19 pandemic.

Sellers who once relied on Amazon are now looking for new ways out, and independent websites are one of them.

At the end of September, Wudi Industrial, a major seller in East China, received nearly 100 million yuan in Series A financing. The company's GTRACING is the brand with the highest global sales in the Amazon gaming chair category. In 2020, GTRACING was selected as one of Amazon's "30 Global Preferred Brands."

According to the company's recruitment information, Wudi Industrial has been growing at a rate of more than 150% per year and has quickly integrated platforms such as Amazon, eBay, Newegg, and Shopify within two years. Its products are currently being sold to more than 50 countries in Europe, America, and Asia through its own website and multiple third-party platforms.

The multi-platform layout reduces the potential risk of over-reliance on a single platform. Sales on third-party platforms are gradually improving, but GTRACING feels the limitations of the platform and decides to focus on DTC independent sites.

In 2019, the company bought back the domain name of gtracing.com at a high price and built an independent website. Although the website was not built for a long time, the sales volume and brand awareness have increased significantly. The sales volume of the independent website in the US market has reached 20%, and it took only a few months to increase from 5% to 20%, which is a rapid growth. With the first shot fired, GTRACING began to expand the independent website to Europe.

"Independent websites do not need to pay platform commissions, nor are they restricted by platform rules. For example, a company can only have one store on the platform, or two products cannot be listed repeatedly. Such rules do not exist on independent websites. Relatively speaking, independent websites can create their own websites more freely according to their own needs." Wu Peng said. In addition to retaining users and operating freedom, the biggest potential of independent websites is still to increase sales.

More and more sellers are starting to make plans, and the independent websites of sellers who entered the market earlier have begun to benefit from it. Take the home furnishing giant Leckey as an example. In the first quarter, the independent website accounted for 36% of cross-border e-commerce sales ; in the first half of the year, the sales of independent websites increased by nearly 4 times year-on-year, with revenue reaching 255 million yuan, accounting for 19.48% of the total revenue, and the number of buyers reached 130,000. According to statistics from professional website analysis tool Google Analytics, the monthly visits to Leckey's global independent website have reached 600,000-700,000.

(Photo source: Lege semi-annual report)

In addition to the top sellers, ordinary sellers are also seeing results in setting up independent websites.

A cross-border seller specializing in ski equipment has built and run an independent website for more than a year, which can currently support more than 20% of sales. A wooden crafts team in Guangzhou focuses on the outdoor gardens of European and American families. In 2021, the DTC market of vertical categories has grown by more than 100%, achieving an impressive monthly sales volume of more than 1,500 orders on the website.

Market value surges by over 500 million! He Tongxue's video makes Lege popular

Even the best wine needs to be hidden in a remote alley. Whether it is an independent website seller or a platform seller, how Chinese brands can be recognized abroad is the top priority for sellers. Especially for independent website sellers, marketing is crucial to whether the brand can attract attention.

In recent years, excellent cases have emerged in the process of Chinese brands going overseas. Recently, brands such as Anker and Leckey that have emerged in the cross-border e-commerce track have achieved remarkable results in marketing.

Yesterday, many technology websites reported that the video of "Mr. He" went viral, and the total market value of A-share company Levo soared by 500 million. The video "Mr. He" released, "I made a product that Apple gave up...", was played more than 20 million times on Weibo alone, and was the hot search on Weibo, the number one on Bilibili, and the number one on Zhihu.

In the video, He made an extra-large ultimate version of "AirPower", which can realize functions such as automatic charging, lifting and lowering of table legs, and reminding people to drink water. Afterwards, netizens said that they all wanted to buy this table, but the table could not be mass-produced for the time being. At the end of the video, there was an advertisement for Leggau's "lifting table".

This wave of advertisements was quite impressive, and subsequently Lechuang attracted great attention. When the market opened on October 18, Lechuang shares, the sponsor of the video, saw a sharp rise. By the close of the market, Lechuang shares reported 25.20 yuan per share, a surge of 13.51%, and the market value increased by nearly 590 million yuan to 4.576 billion yuan.

Just as netizens commented, Levo is really good at marketing, and its sponsorship of Mr. He was really accurate.

Friends in the cross-border e-commerce circle are familiar with Lechuang. Lechuang is a well-known seller in the industry, and has flourished on Amazon and independent websites. Its main products are healthy and smart office/home products such as linear drive smart office lifting systems and smart lifting workstations , with a market share of 1st in China and 2nd in the world. The company was listed on the Shenzhen Stock Exchange's Growth Enterprise Market on December 1, 2017, and is the first stock in the ergonomic health industry and the first stock in cross-border e-commerce.

Loctek has two R&D centers around the world . Since its establishment, it has obtained 333 patent authorizations, including 5 inventions, 78 utility models and 231 appearance patents.

The last time Lechuang attracted attention was in August last year , when its chairman angrily criticized the fund manager who came to conduct research, saying that "young people don't do their homework, and the third and fourth graders are the same." Subsequently, the incident continued to ferment, and Lechuang shares have been in a state of continuous decline.

Unlike the last time when it attracted attention, this time Lechuang is back in the public eye and its stock price is rising against the trend. After the video went viral, Lechuang products will surely be a big hit.

In addition to Levo, Anker, a top student in the cross-border circle, has obvious marketing capabilities and brand influence abroad.

Recently, Anker’s official website updated good news that Anker Innovations won the gold medal of the "2021 Golden Investment Awards Commercial Creativity Award" at the "14th Golden Investment Awards International Creativity Festival".

The "Golden ROI Business Creativity Award" is one of the most influential business creativity awards in Asia. Its gold content is well-known in the industry, and each gold award work represents a benchmark for business creativity in the industry.

Anker Innovations' Anker Nano and Anker Flow stood out from 4,012 entries and won the gold medal in the overseas group and the silver medal in the brand company group of the "14th Golden Investment Awards Commercial Creativity Award" respectively.

The strong popularity of its products abroad is inseparable from good marketing. In its marketing case sharing, Anker mentioned that through consumer insight research, it has put forward corresponding strategies in a targeted manner:

1. Make the product advantages explicit so that consumers can understand them immediately;

2. Use a large number of third-party recommendations to enhance trust;

3. Localize global marketing to adapt to local culture and trends;

4. Increase consumer purchasing touchpoints and make products within reach.

Anker accurately positioned the core target group of the iPhone and carried out saturation marketing. Anker Nano ultimately achieved: single product sales increased more than 13 times, becoming the world's best-selling charger product; in the fourth quarter of 2020, the brand share surpassed the category average, with a growth rate 1.5 times higher than the market, and the purchase conversion rate was 5 times that before the marketing campaign.

Today, Anker's products consistently top the sales charts in multiple categories on overseas e-commerce platforms.

In terms of brand, Anker has established a strong connection with the iPhone, creating an association of "iPhone = Anker Nano" in the minds of consumers. It has carried out precise advertising and a large number of third-party promotional recommendations from influencers and media. Ultimately, Anker has established brand awareness in the minds of 130 million consumers in the United States; the official website's natural traffic has increased by 70%, and the brand word search volume has increased by 300%.

Large companies are trying their hand at cross-border e-commerce

Anker's success has promoted the development of the cross-border e-commerce industry to a certain extent. Some large manufacturers with supply chain advantages have entered the market to test the waters and hope to create a place for themselves in the cross-border arena.

The strength of these large manufacturers should not be underestimated, such as Aokai Technology and Muhi.

Aohai Technology is an important supplier of well-known cross-border e-commerce companies such as UGREEN and Apeman Innovation. In 2019, Apeman Innovation purchased more than 4 million yuan of smart sockets through Aohai, while UGREEN purchased more than 2 million yuan of mobile power supplies, wireless chargers and fans. It also does OEM for mobile phone brands such as Xiaomi, Meizu, Transsion, Coolpad, Hisense, Gionee, Alcatel, and TCL.

Aokai's business started out as an OEM business, with products such as 2.5W integrated chargers for various feature phones, assembled phones, digital products, etc. Later, with the rapid global popularity of smartphones, Aokai's fast charger products began to grow explosively.

Mogodi is a listed company in Ningbo, a well-known high-quality tent ODM enterprise, and a professional outdoor travel equipment company. After ten years of development, Mogodi has independently designed and developed professional equipment for outdoor adventures, hiking, travel, camping, cross-country running and other outdoor sports, and launches nearly a thousand new products every year. The company's revenue last year was 643 million yuan, and its revenue in the first half of this year was 538 million yuan.

A large company with a half-year revenue of over 500 million yuan is also going to engage in cross-border e-commerce this year. Currently, Mobi products are already available on Amazon.

These large companies with outstanding performance have strong supply chain support behind them. As they enter the cross-border e-commerce retail market one after another, it will be difficult for sellers in the industry to compete!

While the overseas track is popular, various national policies are also stimulating the development of the industry, such as subsidies for independent sites, a new batch of cross-border comprehensive pilot zones in Guangdong, and various intellectual property and trademark subsidies.

Earlier, Assistant Minister of Commerce Ren Hongbin introduced at the regular policy briefing of the State Council that the scale of China's cross-border e-commerce has increased nearly 10 times in 5 years, and the scale of market procurement trade has increased 5 times in 6 years. There are more than 1,500 foreign trade comprehensive service enterprises, more than 1,900 overseas warehouses, and about 130 processing trade bonded maintenance projects have been completed. New formats and new models have become new driving forces for the transformation and upgrading of foreign trade and high-quality development.

The cross-border e-commerce market is booming, and Chinese brands are gradually going global through this market. However, various industry practices are also gradually being standardized, and compliant operations are the cornerstone for Chinese brands to successfully go global.

Zebao

Amazon

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