The annual loss is 7.7 million, and this big seller has been losing money for three consecutive years

Affected by Amazon's account suspension, platform policy changes, and fierce competition in the European and American markets, the performance of many cross-border sellers in the industry has declined sharply in recent years, and they have suffered heavy losses. Recently, Zeshang Technology's "difficult birth" 2023 annual report has finally come out, with a net loss of more than 7.7 million yuan. Years of losses have made the former Jiangsu cross-border seller no longer glorious, and today's miserable talk is a pity.

Net loss of 7.7 million in 2023 , Zeshang Technology has suffered losses for three consecutive years

According to the annual report data released by ZeShang Technology on June 27 , from January 1, 2023 to December 31, 2023, the company achieved operating income of 16.324 million yuan, a year-on-year decrease of 66.80%, and a net loss of 7.7388 million yuan, a year-on-year decrease of 24.96% .

The company suffered a loss of more than 7.7 million yuan in one year . The reason for this was a sharp decline in its main business and the need to repay debts.

Zeshang Technology is a Jiangsu cross-border seller known as the "East China version of SHEIN". It mainly engages in cross-border export e-commerce retail business, and the company's revenue is mainly from e-commerce platform business. The company sells through self-built websites and stores on third-party e-commerce platforms such as Amazon and eBay. Its self-operated fast fashion brand is CHOIES, and its e-commerce product line includes women's fashion, outdoor, home furnishings, office stationery and other categories.

The company's main source of profit is the difference between buying and selling prices of products, just like most cross-border e-commerce sellers.

Affected by changes in the policy environment of the Amazon platform and fierce competition in the European and American markets, Zeshang Technology's operating income in 2023 decreased by 66.80% compared with the previous year. Due to the decline in sales, operating costs decreased. In 2023, its operating costs decreased by 72.49% compared with the previous year. At the same time, due to fewer shipments, the reduction in freight costs also reduced operating costs.

Last year, the company's sales expenses were 4.3326 million yuan, a decrease of 65.80% from the previous year. This was mainly due to a significant decline in independent station business and advertising service business, and a simultaneous reduction in platform fees. This is probably because Zeshang has no money for advertising. At the same time, Zeshang Technology's research and development has also stagnated directly. The research and development expenses in 2023 were 0, a decrease of 100.00% from the previous year.

In fact, the company has been losing money not only in 2023, but also for three consecutive years since 2021. As of December 31, 2023, the accumulated losses have reached 39.5075 million yuan.

Under the situation of increasing losses, relevant personnel have "taken refuge", the company's major shareholders have transferred their equity, and the company's employees have resigned. As of June 30, 2023, the number of employees of the company has dropped to 10. On March 1, 2024, Han Lingling was hired as the company's general manager, secretary of the board of directors, and financial director, and presided over the company's daily affairs; On March 21, 2024, Han Lingling was elected as the company's chairman and presided over the company's governance affairs.

The “difficult” annual report was disclosed the day before the company faced the risk of delisting

Other peers released their annual reports around April, but ZeShang Technology's annual report was delayed until June 27. Why was this "difficult-to-deliver" annual report so late?

Since May 6, Zeshang Technology's shares have been forcibly suspended by the National Equities Exchange and Quotations for Small and Medium Enterprises because it failed to disclose its 2023 annual report before April 30, 2024. It is reported that Zeshang Technology failed to release its annual report as scheduled because the progress of its annual report preparation and auditing work did not meet expectations.

If the company fails to disclose its 2023 annual report before June 28, 2024 ( inclusive ) , the company's shares are at risk of being delisted. Therefore, the company chose to publish it before the deadline of June 27.

The suspension on May 6 this year was not the first time that Zeshan Technology was suspended. In September 2022, Zeshan Technology was already facing the risk of having its stock delisted due to its failure to disclose its first-half financial report on time.

In September 2023, ZeShang Technology issued an "Acquisition Report" announcing that the company had been acquired. Qingdao Olive Tree Intelligent Manufacturing Co., Ltd. spent only more than 1 million to buy the actual control of ZeShang Technology.

This price does not seem to be surprising. Years of losses have made this company worthless. It is understood that in 2016, Zeshang Technology's revenue was 302 million yuan. In 2017, the revenue dropped by 59.41% to only 123 million yuan. It was no longer profitable and suffered a loss of 4.03 million yuan.

From 2018 to 2022, the company only made a net profit of 1.63 million in 2019, and the rest were losses. From 2020 to 2023, it suffered losses for three consecutive years.

The glory is gone, and the road to transformation is difficult

The glory of the past big sellers is gone, and the crowded cross-border e-commerce track seems to be accelerating the process of survival of the fittest in the entire industry.

In recent years, with the rapid development of cross-border e-commerce, a large number of companies have poured into this track, prices have risen, internal competition has intensified, and some products with large sales volumes and large profit margins have become seriously homogenized.

According to data from the Ministry of Commerce, the scale of China's cross-border e-commerce trade has increased more than 10 times in the past five years. In the first quarter of 2024, cross-border e-commerce imports and exports reached 577.6 billion yuan, an increase of 9.6%, of which exports reached 448 billion yuan, an increase of 14%.

According to Qichacha data, there are 20,000 cross-border e-commerce related companies in China. In terms of registration volume, the number of registered cross-border e-commerce related companies in China has fluctuated in the past decade, from 156 registered in 2014 to 5,827 registered in 2023. In terms of corporate stock, there are 6,824 cross-border e-commerce related companies in Guangdong Province, accounting for more than 30% of the national total, of which Shenzhen, Guangzhou and Foshan in Guangdong have 3,157, 1,432 and 1,018 related companies respectively, taking the top three city distributions.

As competition intensified, like many sellers, ZeShang Technology's product prices and gross profit margins gradually declined, and the company's profitability was severely impacted.

In recent years, the cost of raw materials has continued to rise, and the increase in the cost of various production factors has also led to the squeezing of profits for garment processing companies, and even losses. As a result, many foreign customers have turned to Southeast Asia, where manufacturing costs are lower, and have taken away a considerable number of orders, hindering the company's clothing export business.

In addition, it also faces the risk of increased marketing costs for vertical e-commerce websites represented by internet celebrity communications, as well as increased regulatory requirements for third-party e-commerce platforms represented by Amazon.

Faced with this situation, the company's management plans to take measures to improve its operating and financial conditions. The company expects to implement business transformation starting in 2024, and its main business will gradually shift from clothing trading, computer software and hardware, and electronic product technology development to the new energy industry, mainly to provide core components processing and manufacturing for the hydrogen equipment industry chain, thereby improving the company's performance and reversing the loss situation.

The transition from a fast-fashion clothing company to the new energy industry is a big turn, and it is destined that the road ahead will not be easy. In the future, there are still major uncertainties in the continued operation of Zeshang Technology.

At present, in the increasingly fierce competition, if ZeShang Technology fails to improve its product quality, brand, variety and operating model innovation, the market competition risks it faces will further increase.

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