On the evening of April 29, Cross-border Tongbao E-commerce Co., Ltd. (hereinafter referred to as "Cross-border Tong") issued a revised announcement of its 2020 performance forecast. The announcement showed that Cross-border Tong is expected to lose 3-3.8 billion in 2020, of which Global Easy Shopping is expected to lose 2.5 billion, reverse the deferred income tax assets of 460 million yuan, and make an impairment provision of goodwill of about 700 million yuan. The main reasons for the loss are the impact of the external epidemic and the lack of internal funds, which directly affect the market business performance and internal operations.
It is worth noting that although the funding problem still looms over Cross-Border Link, its internal structure has begun to change for the better: the company is further analyzing its operating conditions, sorting out actual data, and finally presenting the operating data in a true and comprehensive manner, and will strictly manage the subsequent internal control, finance, and data management. The three major subsidiaries , "Global Easy Shopping", "U1 E-Commerce", and "ZAFUL/ZAFUL", will usher in a new development positioning and structure.
Behind the strategic change is a change in business thinking
The downward revision announcement stated that the reason for the performance revision was that due to the impact of the global epidemic and capital shortage in 2020, the company's wholly-owned subsidiary Shenzhen Global E-Commerce Co., Ltd. (hereinafter referred to as "Shenzhen Global") had a total of 3,353 employees at the beginning of 2020, but only 885 employees at the end of 2020, a reduction of about 3/4. The reduction in staff and the closure of some businesses led to low management efficiency of Shenzhen Global and a sharp decline in business.
In the past year, we can see that in response to historical problems on the business side, Cross-border Communication has sold businesses to "cut off its arms to survive" while independently operating high-potential high-quality businesses that are trapped by financial pressure to seek better development conditions for them. Cross-border Communication has successively sold the import business of Global Easybuy and Paton, and the funds obtained were used to repay bank loans and transfuse business. After the company's business was "slimmed down", Cross-border Communication gave its high-quality businesses greater autonomy. The independent operation of "ZAFUL" is a good example. It is reported that the company is called "Shenzhen ZAFUL Commercial Co., Ltd." and officially moved to Shenzhen Qianhai No. 1 on April 26.
Take "ZAFUL" as an example. It has its own DTC brand, a large market, high gross profit, deep brand accumulation and influence, and huge development space, which gives the industry enough imagination. Previously, SHEIN, an e-commerce upstart with a valuation of tens of billions of dollars, had reportedly announced its IPO in the United States. According to the "BrandZ™ Top 50 Chinese Global Brands" list jointly launched by Google, WPP and Kantar, ZAFUL ranked second in the fast fashion field, second only to SHEIN. After independent operation, ZAFUL will also have the opportunity to be revalued and enter the "table" with a brand new attitude.
Another high-quality asset under Cross-Border Link, Youyi E-Commerce, has strong business capabilities, stable performance, and good cash flow. It can still maintain steady development and help boost the group's performance.
As for the loss-making protagonist Global Easy Shopping, it will arrange for capital inflow after Cross-border Link sells Paton, and its business is expected to resume healthy operation. After the independent operation of "ZAFUL" and the sale of its import business, Global Easy Shopping has achieved business slimming and focus. The strength of its self-operated comprehensive platform Gearbest should not be underestimated.
Let's focus on what possibilities Gearbest has for its subsequent efforts. First of all, the Gearbest platform model focuses on promoting high-quality products and creating hot products, and also provides sellers with "one-to-one" shop assistant guidance services. This model is relatively unique among the current mainstream cross-border export e-commerce platforms. Previously, the official also announced that it had incubated multiple VIP sellers, with the highest sales revenue of a single store being 5 million. It is believed that after the subsequent funds are in place, the platform's potential can be stimulated again to help more brands go overseas. As for third-party platform stores, Cross-border Communication will adopt a steady strategy in the future, select category brands, and adopt a boutique model to form complementary advantages with self-operated platforms, solid operations, not pursue scale, and focus more on profit performance.
The negatives are gone, but the foundation of cross-border communication is still there
According to the disclosed information, the main problems of Global Easy Shopping, the main loss-making company, are "attacked from both inside and outside": externally, the change in consumer demand under the epidemic in 2020 led to sluggish sales of some categories of the company's layout, while global logistics and warehousing costs continued to increase; internally, due to tight capital chain and continuous bank loan withdrawal, huge arrears of commodity procurement, logistics and warehousing and other fees necessary for business operations have led to an increase in overall supply chain costs; coupled with a huge reduction in staff and poor business operations, it is difficult to complete orders after the promotion costs have been invested, resulting in losses in promotion costs; and a large number of users have been lost and accounts have been closed, resulting in the conversion of originally saleable products into defective products. At the same time, logistics and warehousing operating expenses have increased significantly. In order to reduce the further warehousing and operating management costs that may be incurred by defective products, the company has adopted measures such as promotional clearance and scrapping for such products to ease the pressure on cash flow and inventory management, but it also results in a large loss of profits.
In addition to the strategic deployment errors, the funding issue was the last straw that broke the camel's back, and the domino effect it produced cannot be ignored. After sorting out the problems, the next step is to make drastic reforms. After the subsequent management and rectification, the above problems may gain new solutions and practices.
In the post-epidemic era, cross-border e-commerce is in full swing. According to iiMedia Research data, as of July 31, 2020, there were 24 investment events in the cross-border e-commerce field, with an investment amount of more than 5 billion yuan, and the number of investments has exceeded 45 in 2019. From the perspective of investment targets, capital prefers leading companies. In January this year, the General Administration of Customs stated that it will continue to focus on the development of new formats and corporate concerns, continue to strengthen supervision, optimize services, further improve supervision and statistical systems, and continuously promote the high-quality development of new formats of cross-border e-commerce.
The industry as a whole is thriving, with good news coming one after another. After sorting out its own problems, Cross-border E-commerce's high-quality businesses are still competitive, and its huge user base and brand reputation are something that newcomers in the industry cannot surpass in a short period of time. The various problems encountered during the development of Cross-border E-commerce also provide warnings and references for cross-border e-commerce peers. I hope that Cross-border E-commerce will win the turnaround battle in the future! Cross-border communication, loss |
<<: Indonesian social commerce startup Super completes $28 million Series B funding
>>: Wig giant Rebecca's annual revenue was 1.33 billion, and its net profit fell by more than 80%!
Some money is easy to make, but the risks are hig...
Crazy! Woman received a "house full of Temu&...
In recent years, various e-commerce and social me...
The survey shows that these nearly 100,000 third-...
The Indian Ministry of Consumer Affairs had previ...
According to the latest cross-border news, the Ge...
Shenzhen Lianke Technology Co., Ltd. was officiall...
Recently, two more brands filed infringement laws...
Recently, Amazon UK issued a new announcement, st...
Since the establishment of Shenzhen Nippon Paint I...
eBay Australia has updated its seller protection ...
Sellers using misleading store labels will be pun...
Multiple sellers sued, Adidas takes large-scale l...
According to the latest data from Polish research...
According to news on November 12, during the Tmal...