Selling goods worth 2.9 billion but losing tens of millions, the joys and sorrows of big sales

As August draws to a close, major listed companies have announced their first-half financial reports. Those with good performance are all celebrating, while those with poor performance can no longer hold on to their stocks until the end of the month.

The former king of distribution now has unsatisfactory financial reports every year, while the dark horse that has been focusing on building a brand in a certain product field is selling well ... It's hard to share the joy and sorrow of this contrast and disparity.

Export business has been declining again and again, and it lost money selling goods in the first half of the year

Last night, Cross-Border Link released its financial report for the first half of this year, and its performance seemed to be still as "expected."

In the past six months, the total revenue of Cross-border Communication was 2.919 billion yuan, which was "only" a decrease of 16.13% compared with 3.481 billion yuan in the previous year . Why is it "only"? Because compared with the net profit, this drop in revenue seems insignificant.

During the same period, Cross-Border Link suffered a loss of more than 11.38 million yuan in total profit , compared with a profit of nearly 6.19 million yuan in the same period last year, a decrease of 284%; the performance of non-net profit was even worse, with a loss of 23.94 million yuan, a plunge of more than 1,273% from 2.04 million yuan in the same period last year.

Unlike other cross-border sellers, Cross-border Link's business includes both import and export. In the past, it relied on brands such as ZAFUL to make its export business flourish, but in recent years, the performance of its export business, mainly based on ZAFUL, has become increasingly unsatisfactory.

The financial report shows that in the first half of this year, Cross-border E-commerce's cross-border export business brought in 192 million yuan in revenue, accounting for only 6.57% of the total revenue . In the same period last year, the figure was 252 million yuan, a year-on-year decrease of 23.77%.

In 2022 and 2023, the revenue of Cross-border E-commerce export business of K-Link was 491 million yuan and 461 million yuan respectively, accounting for little difference in its total revenue, which were 6.77% and 6.97% respectively.

But if we look back a few years, cross-border e-commerce export business was actually the bulk of its revenue, especially after the acquisition of Global Easybuy and Paton.

Taking 2017 as the starting point alone , its export e-commerce business brought in more than 13 billion yuan in revenue that year. In the same year, Cross-Border Link’s total revenue was 14.017 billion yuan, accounting for nearly 93% .

In 2018, this revenue figure continued to soar, reaching 15.485 billion yuan for the whole year, but its import business was also growing. Therefore, in that year, Cross-Border Link's export business revenue accounted for about 72%.

Since then, from 2019 to 2021, the export business began to decline, with revenue plummeting from 11.4 billion yuan and 10.1 billion yuan to 2.7 billion yuan respectively, and its share in total revenue also dropped from 64% and 62% to less than 31% .

Since 2022, the revenue brought to Cross-Border Link by export business seems to be "very little".

When looking at the reasons for the decline in recent years, independent sites have been mentioned.

In the past, Kuaishou relied on several independent websites such as Gearbest, Zuful, Rosegal, Dresslily, etc. to run wild in the overseas market. In 2017, these independent websites contributed 57.25% of its export business revenue, exceeding third-party platforms.

But now, just in the first half of this year, its independent station revenue was 26.1392 million yuan, a year-on-year decrease of 77.93%. Although Cross-Border Link stated that the decrease in sales revenue was due to reduced investment in independent station promotion, it is an indisputable fact that its independent station traffic has declined in recent years.

On the contrary, its revenue from third-party platforms was 166 million yuan, a year-on-year increase of 24.45%.

In the past, it was well-known in the cross-border circle, and everyone knew it as the "number one cross-border company". However, in recent years, the bombs buried by Global Easy Shopping have made Cross-border Communication dizzy, its performance has repeatedly revealed pessimistic signals, its stock price has fallen again and again, and it is also dragged down by a pile of lawsuits. At a time when its peers are not burdened with the cross-border overseas circle, Cross-border Communication has a harder time saving itself.

Big sale raises a "good news bird" and makes a net profit of 172 million yuan in half a year

Compared with Cross-Border Link, which entered the capital market early, Zhiou only started to write its history in the A-share market last year. Judging from its early prospectus and subsequent financial reports, it is galloping overseas like a steed.

In the first half of this year, Zhiou's performance was still impressive, with revenue of 3.721 billion yuan, a year-on-year increase of 40.74%. However, its profit fell slightly by 7.73% to 172 million yuan .

The decline in profits was attributed to: decrease in product unit prices and increase in marketing costs; increase in freight costs and storage fees; exchange gains and losses; and incentive share expense expenditures.

Founded in 2010, Zhiou entered the German Amazon site with its brand SONGMICS in 2012, officially starting its overseas expansion. Since then, its main brand SONGMiCS HOME has been refined into three major matrices: home brand SONGMICS, style furniture brand VASAGLE and pet home brand Feandrea.

Over the past decade, Zhiou has continued to deepen its presence in the overseas home furnishing market, and its own-brand products have entered more than 70 markets including Europe and North America, serving more than 20 million global consumers. Its products have also dominated the top of the BS list on multiple third-party platforms.

The financial report shows that as of the first half of this year, there were 507 ASINs of Zhiou products ranked within the TOP20 in the subcategories of Amazon Germany , 533 on the French site, and 163 on the American site .

Marketplace Pulse 's statistics on "Top Amazon Marketplace Sellers" show that Zhiou's products rank first in the home furniture category on Amazon sites such as Germany, France, the United Kingdom and Italy .

From the perspective of different products, Zhiou’s home furnishing products performed the best, with a year-on-year increase of 50.21%, and its share in the main business revenue increased to 36.35%, becoming the main contributor to the growth in the first half of the year.

The furniture and pet series achieved rapid growth of 39.42% and 37.31% respectively , accounting for 51.62% and 8.41% of the main business income, and sports and outdoor products accounted for 3.62%.

Although it started to go overseas early, Zhiou is different from most sellers. It does not advocate barbaric distribution of goods. It focuses on the home furnishing field and divides products into four levels: Basic, Essential, Mainstream, and Selected according to specific positioning .

Different product levels also mean different management methods and goals. For example, basic models need to increase sales, efficiency models need to seize market share, mainstream models need to achieve profit margins, and selected models need to be branded and differentiated.

Under such strategic management, Zhiou has clearer guidance for the research and development and investment in new products.

In the past six months, Zhiou has added 166 appearance patents, 12 utility model patents, and 1 invention patent. As of the end of June, it has accumulated 832 global patents and won 70 international authoritative design awards such as the German iF Design Award and the Italian A'Design Award, with 21 new awards in the past six months.

Another aspect that makes Zhiou stand out from other big sellers is its market layout.

Most overseas sellers have always used the United States as their base, after all, the United States has strong spending power and a high degree of acceptance of online shopping. But over the past few years, Zhiou has "done the opposite" and taken root in Europe.

From 2020 to 2023, Zhiou's revenue from the European market reached 2.391 billion yuan, 3.575 billion yuan, 3.065 billion yuan and 3.729 billion yuan respectively, accounting for 60.26%, 60%, 56.99% and 62.31% of its total revenue.

In the first half of this year, its revenue in the European market reached 2.279 billion yuan, accounting for 62.06% .

However, Zhiou has been making frequent moves in North America and seems to be paying increasing attention to this market.

It is reported that in the past six months, it has focused on launching a large number of new products in the United States, and added three third-party cooperative warehouses in the East, Central and South of the United States, forming a five-warehouse layout covering the East, West, South, North and Central United States.

In addition, it has actively developed new platforms such as Temu, Target, and Tik Tok Shop. Thanks to various strategies, Zhiou's revenue in the North American market increased by more than 41% year-on-year.

Although Zhiou entered the A-share market later, it insisted on branding and focused on a certain product area, and now its financial reports are frequently good; while in the early years, Cross-border Communication was crazy about selling products and its branding was not obvious, and now it is in prison...

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