Cross-border communication "leaves the team"

Recently, Aokia Technologies' successful listing on the Hong Kong Stock Exchange has once again sparked discussions in the cross-border circle about the big sales of a number of established cross-border e-commerce companies.

As the cross-border e-commerce industry has come to this day, the old cross-border e-commerce sellers have shown two extremes. Some of them have seen revenues rise year after year, such as Anker Innovations, Zhiou Technology, and Aoki Technology, while others have fallen into a growth bottleneck, with performance stagnating or even falling sharply, such as Cross-border Link.

In 2014, Cross-border E-commerce officially entered the cross-border e-commerce field by acquiring Global Easybuy. Subsequently, it developed rapidly, and its revenue quickly exceeded the 10 billion mark in 2017, reaching 14 billion yuan. Then, in 2018, after Cross-border E-commerce acquired a full stake in Paton and acquired Youyi E-commerce, its annual revenue reached a peak of 21.534 billion yuan.

Since then, with the bankruptcy of Global Easybuy and the sale of Paton, Cross-border Link has gradually declined. In 2023, its operating income was only 6.616 billion yuan. And it is gradually drifting away from the cross-border e-commerce export team.

Export business revenue in the first half of the year was less than 200 million

In 2018, KEIT's export business achieved revenue of 15.485 billion yuan, accounting for about 71.91% of the total revenue; import business achieved revenue of 5.98 billion yuan, accounting for about 27.77%. At that time, KEIT was undoubtedly a cross-border e-commerce company dominated by export business.

However, the situation has changed dramatically since 2021. This year, due to the bankruptcy and sale of the two major pillars of Cross-border's export business, Global Easy Shopping and Paton, the export business gradually shrank.

According to the financial report data, from 2021 to 2023, its export business revenue was 2.679 billion yuan, 470 million yuan, and 461 million yuan, respectively, accounting for 30.38%, 6.77%, and 6.97% of the total operating income. Obviously, since 2022, Cross-border Link has become a cross-border e-commerce company with an absolute dominant position in import business.

By 2024, the sales revenue of its export business has shrunk again. The financial report shows that in the first half of 2024, the operating income of Cross-border E-commerce export business of Cross-border Link was 192 million yuan, accounting for 6.57% of the total operating income. In the first half of 2023, cross-border exports achieved operating income of 252 million yuan, a year-on-year decrease of 23.77%.

In contrast, a number of established cross-border e-commerce companies in the same period showed a booming development trend when their cross-border export business gradually weakened.

For example, Savi Times, which also sells well in the clothing category, had a total operating income of 4.177 billion yuan in the first half of 2024, an increase of 1.404 billion yuan from the same period last year, a year-on-year increase of 50.65%. Net profit was 236 million yuan, an increase of 56.69% from the same period last year; non-net profit was 210 million yuan, a year-on-year increase of 47.21%.

This is especially true for Anker Innovations, a popular 3C brand. In the first half of 2024, Anker Innovations achieved operating income of 9.648 billion yuan, a year-on-year increase of 36.55%. Net profit attributable to the parent company reached 872 million yuan, a year-on-year increase of 6.36%; net profit attributable to the parent company after deducting non-recurring items was 766 million yuan, a year-on-year increase of 40.53%.

In 2018, when Cross-border Communication achieved its peak revenue, the annual revenue of Savitech and Anker Innovations was only 2.245 billion yuan and 5.232 billion yuan respectively. At that time, Cross-border Communication was far behind them in terms of total revenue and export business sales revenue. However, today, the revenue generated by these two sellers has exceeded 20 times that of Cross-border Communication (export business).

There is no doubt that Cross-Border Link has declined.

Self-operated websites are being abandoned

As the export business is weakening, Cross-Border Link's tendency to abandon its own brand website is particularly evident.

In its financial report for the first half of this year, KMT clearly stated that it had reduced its investment in the promotion of its own brand website (zaful.com), which resulted in a significant drop in its revenue. According to the financial report, in the first half of this year, its self-operated website (including mobile terminals) achieved operating revenue of only 26.1392 million yuan, compared with 118 million yuan in the same period last year, a year-on-year decrease of 77.93%.

As we all know, independent websites are very dependent on continuous promotion investment and traffic introduction. After Kuaishou tightened its control in this regard, the number of visits to its self-operated website immediately dropped drastically. According to similarweb data, in September this year, the total number of global visits to zaful.com was less than 350,000. In August-October last year, its average monthly visits were nearly 1.8 million. In one year, the traffic plummeted by more than 80%.

Founded in 2014, ZAFUL was a cross-border e-commerce brand for fashion under Global Easy Shopping. After Global Easy Shopping collapsed in 2021, ZAFUL, as the only remaining high-quality asset, was divested from Global Easy Shopping at a low price by Cross-border E-commerce and transferred to its subsidiary Saton.

It was from here that ZAFUL became the new pillar of Cross-Border's export business.

However, after the successful divestiture, ZAFUL did not push Cross-Border's export business to new heights like Global Easybuy did in the past. On the contrary, it fell into a bottleneck in its development.

By the end of 2021, the number of registered users on ZAFUL's self-operated website was 54.2684 million, the average number of monthly active users was 7.6867 million, the average monthly visits were 72.3809 million, and the number of online SKUs was 73,300.

By the end of 2023, the number of registered users climbed to 57.4787 million, but the average monthly active users were only 1.4717 million, and the number of online SKUs also fell to 28,500. Entering the first half of this year, the situation is even more severe. While the number of registered users is basically the same as at the end of 2023 (57.671 million), the average monthly active users plummeted to 323,800, and the number of online SKUs further dropped to 23,300.

At the same time, Google Trends also shows that the search popularity of the keyword ZAFUL has begun to decline sharply since May 2022, and the decline has accelerated in 2023. Today, it has almost dropped to the level of early 2015.

Perhaps because ZAFUL was sinking deeper and deeper into trouble, Cross-border Communication saw that its chances of turning things around with its help were becoming increasingly slim, so it had the idea of ​​abandoning it.

Find a way out on a third-party platform?

An interesting phenomenon is that while the revenue of self-operated websites has plummeted, the revenue from third-party platforms in Cross-Border's export business has shown an upward trend.

The financial report shows that in the first half of this year, the operating income of Cross-Border Link's export business from third-party platforms was 166 million yuan, compared with 133 million yuan in the same period last year, a year-on-year increase of 24.45%.

After the development of its own website suffered setbacks, Cross-Border Link decided to look for a breakthrough from a third-party platform?

A search revealed that there are a large number of ZAFUL brand products on sale on Amazon, and the order situation is good. This shows that Kuaishou has achieved good results in expanding the sales of its own brands on third-party platforms.

However, the sales revenue of third-party platforms does not all come from ZAFUL products. In its first-half financial report, Cross-border Communication pointed out that Baiyuan Pants Online also assists domestic clothing companies to sell various clothing products overseas through its subsidiary Yunxi through overseas third-party platforms. Currently, Yunxi's main business platforms are Amazon, Walmart, EBAY, etc., involving swimwear, skirts, men's clothing and other categories.

At present, when cross-border e-commerce sellers develop to a certain extent, they will consciously increase the construction of their own brands and independent websites, while reducing their dependence on third-party platforms. Cross-border is now obviously going against the trend, which may have good results in the short term, but in the long run, it is not a wise move.

Judging from the measures to increase its development on third-party platforms, Kuaishou is clearly unwilling to give up its export business. However, will this development approach of neglecting independent sites and focusing on third-party platforms make its path in cross-border e-commerce export business narrower and narrower?

Cross-border communication