Tongtuo and Zebao's half-year results are out, both affected by the account suspension incident...

This year's cross-border industry has been turbulent, and many small and medium-sized sellers have not been able to escape the disaster. The experience of big sellers is even more regrettable. As the end of August approaches, the semi-annual reports are released one after another. What kind of answers will the big sellers who have encountered the "disaster" hand in?

The closure of stores had a huge impact, and Zebao's net profit fell sharply in the first half of the year

Yesterday evening, Zebao's parent company Xinghui Co., Ltd. disclosed its 2021 semi-annual report. The company achieved operating income of 2.427 billion yuan in the first half of the year , a year-on-year increase of 18.16%, and realized a net profit attributable to shareholders of the listed company of 104 million yuan, a year-on-year decrease of 17.33%. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 87.98 million yuan, a year-on-year decrease of 26.38%.

During the reporting period, its subsidiary Zebao Technology achieved operating income of 1.925 billion yuan, an increase of 8.4% compared with the same period last year. Among them, Zebao Technology's online sales revenue was 1.756 billion yuan, sales revenue through the Amazon platform was 1.705 billion yuan, accounting for 97.13%, and sales revenue through its own website was 0.41 billion yuan.

Xinghui shares mentioned in its semi-annual report that starting from the first half of 2021, Amazon suspended sales of a number of Chinese sellers' products, including some products of its subsidiary Zebao Technology, on the grounds that "sellers were suspected of violating Amazon platform operating rules", which had an adverse impact on Zebao Technology's operations. On June 16, 2021, the Amazon platform suspended sales of some of Zebao Technology's products. If the relevant products fail to resume normal sales on Amazon online, it will have a significant impact on Zebao Technology's full-year operating performance in 2021.

The net profit of Zebao Technology in the first half of the year was 115 million yuan, which was more than 30 million less than last year's 148 million yuan. It is worth mentioning that the deadline for the semi-annual report announcement was June 30, only half a month after the store was closed on June 16!

Affected by the account blocking trend? Tongtuo Technology's net profit in the first half of the year exceeded 76 million

In addition, recently, Tongtuo Technology's parent company Huading Holdings also released its 2021 semi-annual report.

The financial report shows that during the reporting period, the company achieved operating income of 5.082 billion yuan, a year-on-year increase of 6.90%, and total profit of 226.0059 million yuan, a year-on-year increase of 125.91%. The net profit attributable to the parent company was 172.0109 million yuan, a year-on-year increase of 149.54%. The reason for the performance growth is the increase in nylon prices and sales.

According to the announcement of Huading Holdings, its 100% holding company Shenzhen Tongtuo Technology Co., Ltd. had a net profit of RMB 76.804 million during the reporting period.

Tongtuo Technology's product range includes dozens of categories such as computer accessories, clothing, toys, outdoor, home furnishings, and photographic equipment, with a total SKU of more than 550,000. According to Huading's second quarter main operating data announcement, the details of cross-border e-commerce sales revenue by major categories from January to June (10,000 yuan) are as follows:

The operating income of digital products was approximately RMB 595 million, an increase of 3.44% over the same period last year; the operating income of apparel products was approximately RMB 43.01 million, an increase of 12.22% over the same period last year; the operating income of home products was approximately RMB 2.892 billion, an increase of 13.09% over the same period last year.

Among them, the operating income of Tongtuo Technology's self-operated export website (including mobile terminal) is as follows:

The operating income of digital products was approximately RMB 17.4 million, a decrease of 10.93% compared with the same period last year; the operating income of clothing products was approximately RMB 6,200, a decrease of 94.25% compared with the same period last year; the operating income of home products was approximately RMB 32.64 million, a decrease of 27.62% compared with the same period last year.

In addition, the report also revealed key export operating data of Tongtuo Technology . Its export order volume from January to June 2021 exceeded 19.58 million, the number of ordering users reached 13.69 million, the average order amount was 194 yuan, the GMV exceeded 3.798 billion yuan, the number of active buyers was 540,000, and the number of visits to the self-operated platform reached 30.5 million.

In the announcement, Huading Co., Ltd. stated that Tongtuo Technology’s other platform stores and self-operated websites were not affected, but because the sales of the affected stores accounted for a large proportion, the development of its cross-border e-commerce business this year will inevitably be adversely affected to varying degrees.

The fifth large-scale account suspension event in history, all major sellers suffered heavy losses

Since the end of April, former industry leaders have suffered heavy losses. Many cross-border sellers with revenues exceeding tens of billions have encountered rectification on the Amazon platform, with their main brands blocked, all products removed from the shelves, and funds frozen.

In early August, Huading Holdings announced that since mid-to-late July, multiple brands of Tongtuo Technology have had their stores suspended from selling by Amazon and their funds frozen. As of the announcement date, 54 stores of Tongtuo Technology were banned from selling and closed, with a suspected frozen fund of RMB 41.43 million, accounting for 4.27% of the company's monetary funds at the end of 2020.

However, under heavy pressure, Tongtuo Technology has not given up. Tongtuo Technology said it will increase the sales share of other platforms such as AliExpress, Lazada, and Walmart, increase investment in Tongtuo Technology's own website, and expand offline physical store channels in Europe and the United States.

The impact of the account suspension wave on big sellers is obvious. In fact, it is not just Tongtuo and Zebao. This year, Amazon's platform rectification has indeed caught many sellers off guard.

Since 2015, Chinese sellers have experienced four major account suspension incidents, all of which were caused by user complaints . However, this time Amazon's suspension is different from the past. The probability of those who sell goods in bulk being suspended is lower, but well-known Chinese brands are more likely to become "targets". The bigger the "target", the more illegal evaluation behaviors, and the greater the possibility of being suspended.

A practitioner said that this is the fifth time in Amazon’s history that it has closed stores targeting Chinese sellers, but this time it can be clearly felt to be different, the intensity of the rectification is no joke!

Some sellers also said that in order to reduce the company's operating costs, they have already started to clean up the goods in overseas warehouses. Those that can be returned will be returned as soon as possible, and those that cannot be returned will have to be thrown away.

Final Thoughts

In fact, Amazon’s banning of accounts may not be a whim, but there was a “warning” as early as May. At that time, Amazon officials clearly required sellers not to abuse reviews, but most Chinese sellers laughed it off and did not take it seriously at all, only regretting it after being banned.

For many Chinese sellers, positive review cards, text messages asking for positive reviews and other similar methods are very common in the industry. Today, Amazon, which has always been accustomed to "repaying the debt after the event", has once again struck hard, with a zero-tolerance attitude towards all violations, and sellers who are caught "small braids" can only suffer the consequences.

This wave of account bans also directly scared off some sellers, and some sellers "sold their accounts" overnight and quit Amazon. Of course, some sellers still have small ideas and want to continue to get a share of the platform. Some big sellers even changed their brands immediately after their brands were banned and continued to sell the original products . This is also one of the ways for sellers to save themselves.

Under the wave of account suspension, price involution, intensified competition, soaring advertising costs, and tightened platform policies, Amazon has undoubtedly become a "time bomb" for the remaining sellers . This suspension has also made sellers realize once again the disadvantages of single-channel development. It is time to break the outdated business concept and pay more attention to multi-channel operation and development.

At the same time, sellers should also realize that the cross-border e-commerce industry is full of uncertainties. The greater the seller's dependence on the platform, the greater the potential risk. Therefore, even if sellers choose to develop on other platforms, they must always bear in mind the importance of compliant operations and abide by the survival rules of the platform.

Zebao

Tongtuo

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