Huge changes across borders, the peak of former sales has passed!

The peak of the famous sellers in the past has passed! An era has come to an end ...

Some time ago , Huakai Yibai issued an announcement on the signing of the "Equity Acquisition Agreement", indicating that it would acquire Tongtuo Technology for 700 million in cash. This is a typical case of "big fish eating big fish" in the cross-border circle .

Huakai Yibai's wholly-owned subsidiary Yibai Network is a well-known seller in the industry, currently supporting the majority of the parent company's revenue. The acquired party Tongtuo Technology is also well-known. In its early peak years, it was even dubbed one of the "Four Young Masters of South China City" by industry insiders...

Along with Tongtuo, Aoji, Youkeshu and Savi are also on the list . In addition to the "Four Young Masters of South China City", the five tigers of Bantian, the thirteen wolves of Longhua, the three heroes of eBay, and the three heroes of Amazon are also well-known in the cross-border e-commerce world.

It is said that wherever there are people, there are rivers and lakes . Cross-border e-commerce also has its own rivers and lakes as described by Jin Yong. However, the words "Four Young Masters of South China City" are rarely mentioned in the industry now. Instead, many brands represented by Anker and SHEIN are used.

"During the epidemic, there were a lot of discussions about these companies, but now I seem to have hardly heard of them..." Xiao Zhang, an old cross-border player, said that under the heavy blow of Amazon's account ban in 2021, many big sellers were seriously damaged. Their products used to be the top customers in major categories, but now is different. Among the new sellers who have entered the market in the past two years, few know who the "Five Tigers" and "Four Young Masters" are. Even the new employees within one of the "Five Tigers" are not clear about the company's glorious past!

New forms and models of cross-border e-commerce are emerging rapidly. With the gradual establishment of scale and traffic advantages of cross-border e-commerce exports, the improvement of domestic cross-border e-commerce supply chains, and the country's attention and support for new quality productivity, the trend of "branding" of cross-border e-commerce exports is becoming more and more obvious...

In the unprecedented era of change, the former big sellers represented by the Four Young Masters of South China City and the Five Tigers of Sakata have felt the impact of the industry more deeply. They went from being the king of cross-border businesses to suffering huge losses overnight in just a moment.

After the transition from the old to the new, can they get out of the quagmire and be reborn? One of the most concerned topics now is: How are the former cross-border kings doing now?

The past glory of big sellers: Frequent customers of top categories on major e-commerce platforms, waiting for listing

In 2010, Youkeshu was officially established and began to engage in online cross-border e-commerce trade. Well-known cross-border sellers such as Baoshijia and Tongtuo were all established around 2010.

At that time, cross-border e-commerce was unanimously described as the "money-making era". The overseas market space was huge, but customers were mainly price-sensitive and had a strong demand for cost-effective products, so sellers mostly pursued low costs to obtain excess profits.

"The product with a purchase price of 8 yuan is priced at 14.99 US dollars on eBay. Without advertising, orders can be placed quickly, and the monthly income is more than twice the income from part-time jobs." Some people accidentally entered this industry and found that the income was far beyond their imagination - earning 100 million yuan, a dream that was once out of reach, is now so achievable...

Backed by China's supply chain resources, purchasing goods in Shenzhen Huaqiangbei, and conducting cross-border e-commerce business based on platforms such as eBay and AliExpress, they meet the needs of overseas consumers for cost-effective products. Sellers such as Youkeshu have caught the first wave of dividends in China's cross-border e-commerce industry, and have risen rapidly, creating a series of impressive results!

Baoshijia was founded in 2007, when eBay just opened to Chinese sellers. It was at its peak right from the start. Starting from that year, Baoshijia has been among the top ten sellers on eBay for three consecutive years. Baoshijia has also achieved remarkable results on other platforms: in 2014, it entered the top ten of Aliexpress and Lazada, and then continued to make efforts to become the top five sellers on Amazon, Aliexpress and Wish.

Compared with Baoshijia, Zehui entered the industry later and only began to enter major cross-border e-commerce platforms in 2012. At that time, cross-border e-commerce was still a blue ocean, and Zehui's performance maintained a rapid growth year after year: sales increased by 300% in 2013 , sales increased by 280% again in 2014 , and sales increased by more than 300% in 2016. From 2017 to 2019 , sales continued to grow .

Youkeshu's performance also soared. In 2015, Youkeshu's revenue reached 1.079 billion yuan and its profit was 64.8672 million yuan. In 2016, Youkeshu's revenue reached a new high of 2.486 billion yuan, a substantial increase of 140.74% , achieving a growth of more than 100% for three consecutive years , and its profit also entered the "100 million yuan club", reaching 105 million yuan.

In addition to eBay, more platforms have seen the potential of Chinese sellers and have invested in the Chinese market. Wish, known as one of the four major cross-border e-commerce platforms (AliExpress, Amazon, eBay and Wish), established a wholly-owned subsidiary and its China headquarters in Jing'an CBD, Shanghai, China as early as 2014, and vigorously recruited Chinese sellers. As of November 2015, Wish's merchants are mainly from China, with about 100 million users and more than 100,000 merchants.

Gonglang, founded in 2011, is a Wish merchant. In 2016, Gonglang won the first place on the Wish platform. Lens Technology has also reaped great rewards on Wish and is known as the seller with the largest sales volume on the Wish platform. It is said that many of the products with the highest sales volume of 1+1 free shipping worldwide on the platform are from Lens Technology.

"Look at Shenzhen for China's cross-border e-commerce, and look at Longgang for Shenzhen's cross-border e-commerce." Shenzhen Municipal Bureau of Commerce announced that the import and export volume of Shenzhen's cross-border e-commerce will reach 326.53 billion yuan in 2023, a year-on-year increase of 74.4%. The number of Shenzhen's cross-border e-commerce export companies exceeds 150,000, accounting for almost half of the Chinese sellers on Alibaba International Station, AliExpress, Lazada, eBay and other platforms. One-third of Amazon's Chinese sellers are from Shenzhen.

Sellers in Shenzhen are mainly concentrated in Bantian near Shenzhen North Station and South China City in Pinghu. Among them, Shenzhen Longgang has gathered more than 3,600 cross-border e-commerce companies, including leading companies such as Aoji Technology, Saiwei Times, Tongtuo Technology, Youkeshu, Lens Network and Baseus Technology.

As a result, the names of the Five Tigers of Bantian (Lens Technology, Zehui, Baoshijia, Gonglang, and Jiandan.com) and the Four Young Masters of South China City (Aojie, Youkeshu, Tongtuo, and Saiwei) began to spread. At the same time, various titles such as the Thirteen Wolves of Longhua, the Three Heroes of eBay, and the Three Heroes of Amazon resounded throughout the cross-border circle.

At first glance, these titles are full of the flavor of Jin Yong's martial arts novels. Although a bit exaggerated, they also convey the prominent characteristics of early cross-border e-commerce to a certain extent: the situation in the rivers and lakes is uncertain, and the grassroots heroes are competing for supremacy ...

How simple was cross-border e-commerce in the early days? The sellers’ rhetoric would be drowned out by countless criticisms if it were put into the present: people with junior high school graduation and no English advantage can also do cross-border business! Sellers do not need to stock up or carefully select products. They only need to find the hot-selling products on major e-commerce platforms, copy their product descriptions, and they can immediately place orders as soon as the products are put on the shelves.

In the golden age of cross-border e-commerce, for sellers like the Five Tigers of Bantian , making money is as easy as picking up money. Even small and medium-sized sellers can easily achieve a grassroots counterattack with the help of platforms such as Amazon. Everyone is having fun on a seemingly smooth road!

The seller's wealth is revealed in all aspects: the boss spent 100 million yuan in cash to buy a villa; at the annual summary meeting, employees' year-end bonuses were as high as millions ... Even employees who came out of the companies of the "Five Tigers" and "Four Young Masters" were gilded, and it was said that their operational capabilities were comparable to those of employees from large companies such as Tencent.

"Distribution of goods" is one of the typical characteristics of early cross-border e-commerce.

Gonglang's product categories include clothing, accessories /ornaments, consumer electronics, toys, home furnishings, health and beauty, outdoor leisure and sports products, etc. At present, the company's SKUs have reached tens of thousands, which can be said to be a typical seller of distribution. Zehui's products cover hundreds of thousands of categories such as clothing, shoes and hats, beauty and cosmetics, 3C electronics, maternal and child toys, pet products, outdoor sports, home furnishings, etc.

ANKER, which is now famous , was not favored by many people in the industry at that time. "ANKER used to be the one upstairs. People often laughed at what kind of company it was and what kind of fake power bank it was..." A seller said that the vision was too narrow at that time.

In fact, although a small number of cross-border players at that time dabbled in high-quality products and branded operations, on the whole they were still mainly focused on distribution. The Four Young Masters of South China City and the Five Tigers of Sakata expanded rapidly with the help of the distribution model , grabbing land on major e-commerce platforms and exchanging for increasingly higher sales.

Along with the soaring performance of cross-border e-commerce sellers, the amount of cross-border e-commerce financing has also soared. Public data shows that the amount of cross-border e-commerce financing increased 25 times in 2014. Many industry insiders revealed that at that time, it was not the capital but the sellers who dominated the conversation. Many well-known sellers were surrounded by several investors, chasing after their companies to invest.

The period around 2016 can be called the peak period of capital operation in the cross-border e-commerce industry. Saiwei and Aoji were listed on the New Third Board, and sellers such as Youkeshu started a wave of "backdoor listing". Youkeshu was merged into Tianze Information with 3.4 billion yuan, and Huading shares acquired 100% of Tongtuo Technology at a super high valuation of 2.9 billion yuan, and signed a three-year gambling agreement with Tongtuo's original shareholders Tongwei Investment, Zou Chunyuan, and Liao Xinhui.

Zehui almost succeeded in its IPO. In 2019, Qibuli shares planned to purchase 88.57% of the equity of Zehui Technology held by Liu Zhiheng, Ma Xiuping, Shenzhen Changyu and Longyan Haojia by issuing shares, convertible bonds and paying cash. The transaction price was initially determined to be 1.594 billion yuan.

According to Zehui Technology's performance commitment, the company's audited net profit in 2019 and 2020 will not be less than 150 million yuan and 200 million yuan respectively, otherwise it will be compensated accordingly. Data shows that Zehui's operating income and net profit in 2017 were as high as 1.756 billion yuan and 76.15 million yuan respectively. From January to September 2018, the company achieved operating income of 1.278 billion yuan and net profit of 78.6798 million yuan.

Big sellers continue to sign similar bet agreements.

Soon, the major transaction between Zehui and Qibuli fell through. Looking at the subsequent experiences of many listed big sellers who failed in their bets, people in the industry believe that Zehui's "failure to go public" was a blessing in disguise, and it seems that it successfully escaped a disaster.

If the bet fails, a group of big sellers will lose money or even be in danger. After Tongtuo Technology lost the bet with Huading Shares, the founder of 349 million yuan of debt was to be repaid with mortgaged stocks; Gan Qingcao and Zhu Ling, the founders of Jiazhilian, were unable to complete the bet with the listed company Xunxing Shares and fled to the United States. They were eventually investigated by the parent company in the name of "contract fraud" and had to pay 1.014 billion yuan in compensation to the listed company. When talking about Jiazhilian, the most common question asked by industry insiders is: Have Gan Qingcao and his wife returned from the United States?

It seems that only Youkeshu is the winner in the game with capital. In August 2020, the actual controlling shareholder of Tianze Information changed, and the chairman of Youkeshu successfully took the helm of the listed company.

Hidden dangers follow like a shadow, Amazon's "massacre" becomes a turning point for the industry

There was a tree that was once very popular, but it had a final craze during the epidemic, and has actually been on a downward trend since then.

The 2020 epidemic inadvertently pressed the growth engine of China's foreign trade. Under the dividend, Youkeshu's performance expanded rapidly, and the net profit attributable to the parent company's shareholders after deducting non-recurring gains and losses reached 399.4967 million yuan (about 390 million yuan).

2020 was also a bumper year for other big sellers.

Suntech Power's profits reached the highest peak in recent years. During the period, the company achieved operating income of 5.253 billion yuan, a year-on-year increase of 82.47%; net profit and non-net profit were 451 million yuan and 438 million yuan respectively, a year-on-year increase of 733.3% and 435.66%.

Employees of Baoshijia and other companies revealed that the company made a lot of money during the epidemic and began to expand its scale further, hiring people frantically to distribute products. "Every day when I open BOSS Direct Hiring, almost all the emails are from these HRs..."

The ability to create wealth across borders was once again mythologized, and rumors began to circulate: all the houses in Shenzhen Bay One were snapped up by people working for Amazon!

After the frenzy, the situation is in a mess. In 2021, the fierce side of cross-border e-commerce began to show. The business conditions of the seemingly established big sellers began to take a sharp turn for the worse!

Affected by the "account blocking incident" on the Amazon platform , a large amount of Youkeshu's store funds on the Amazon platform were frozen. According to the announcement released in July 2021, Youkeshu's restricted funds on Amazon increased significantly, and the known suspected frozen funds among the restricted funds were approximately 130 million.

In 2021, a total of 367 ZEBO stores on Amazon were closed. As of the end of 2021, the balance of funds in the frozen stores was equivalent to approximately RMB 32.2301 million. ZEBO’s six major brands, RAVPower, VAVA, Taotronics, Anjou, Sable, and Hootoo, were banned from selling on Amazon, and the related Amazon stores were also suspended.

Tongtuo Technology has been banned from selling and closed a total of 54 stores, and is suspected of freezing funds of RMB 41.43 million, accounting for 4.27% of the company's cash and cash equivalents at the end of 2020.

The first Amazon top-selling brand, Mpow, which was owned by Paton , was blocked and suffered heavy losses.

Along with the "account suspension incident", in addition to the decline in revenue, there are also layoffs, wage arrears and other turmoil. At its peak in 2020, Youkeshu's cross-border e-commerce business staff exceeded 3,000, but by March 2022, there were only more than 500 people left. In addition, there are rumors that a super seller, one of the Sakata Five Tigers, is going to lay off 6,000 employees to 1,000...

The same is true for big sellers, and the situation of countless small and medium-sized sellers is equally bad. As news of Amazon sellers announcing their bankruptcy continues to come out, suppliers who are closely connected with the sellers will inevitably be affected.

In July 2022, Dongguan Cooper Electronics Co., Ltd., which mainly produces electronic products and manufactures Bluetooth headsets for cross-border brands, announced that it would stop production and close down. Cooper is an important supplier behind the industry's top seller Zebao. One of the main reasons why it could not hold on was that it was owed money by cross-border sellers such as Zebao.

Amazon publicly stated that it has closed the sales rights of about 600 Chinese brands, involving about 3,000 seller accounts. Chinese sellers have had to resort to collective lawsuits against Amazon to protect their own rights and interests, including well-known sellers such as Tongtuo, Zebao, Zehui, Paton, Lens Technology, Baoshijia, Wantuo, Youkeshu, Huanjin Technology, Colash, Rafael, Monzhituo, Hangya E-commerce, Anbo Technology, Detuo, Ai Yason, and Guangmian Technology.

This sudden blow has taught cross-border e-commerce a costly lesson. Looking at the barbaric development of cross-border sellers, many sellers with awakened brands believe that this major industry reshuffle will come sooner or later.

As cross-border e-commerce continues to advance, the industry environment is actually becoming increasingly chaotic!

“Some big sellers are very aggressive in brushing orders. They even used to use the order volume as part of the operational assessment. If the number of orders is not met, the base salary will be deducted.” An Amazon operator said that during the years he worked at a big seller company, apart from learning a lot of black technology, the remaining operational skills that could be used were actually very rough.

Public information shows that Youkeshu’s Amazon account was blocked for violating 12 platform rules, including suspected publishing or selling counterfeit or fake, infringing, unsafe or deceptive goods; suspected of "abusing ratings, feedback or reviews", "abusing sales rankings" and "abusing search and browsing"; suspected of publishing a certain brand of goods without sales permission, etc.

These tactics are prevalent in all categories of the Amazon platform. A group of sellers who stick to white hat operations are miserable and constantly complaining. So much so that when the listing news of many well-known big sellers is announced, there are always doubts below: Companies selling "junk goods" can actually go public!

But people gave Anke great tolerance and praise.

Among cross-border e-commerce export sellers, the main participants include low-priced white-label companies, factories transformed into cross-border e-commerce companies, and independent brand companies with R&D and design. Against the backdrop of increasing uncertainty in global trade policies, stricter supervision of platforms such as Amazon, and accelerated market changes, some industry participants have shrunk in scale or exited the market.

Branded sellers have demonstrated strong risk resistance and the speed to respond to market changes. Anker is an excellent student of branded operations. In 2023, Anker's net profit reached 1.615 billion yuan, a year-on-year increase of 41.22%.

The End or the Beginning? The Current Status of the Top Sellers in the Past

The endings of Tongtuo and Youkeshu are in sharp contrast to Anke.

It is understood that in 2022 and 2023, the net profit attributable to the parent company's owners after deducting non-recurring gains and losses was -340.9416 million yuan and -106.6179 million yuan respectively, both in a loss state. Some time ago, Tongtuo officially "sold itself" to the big seller Huakai Yibai at a price of 700 million yuan.

From 2021 to 2023, Youkeshu suffered losses for three consecutive years. After experiencing initial contraction and adjustment, in the first quarter of 2024, the operating income of its cross-border e-commerce business stabilized and its operating profit finally turned from loss to profit.

Saiwei Times, one of the four young men in South China City, has taken a different path : it successfully landed in the capital market in 2023 (stock code: 301381), becoming the first cross-border e-commerce stock in the A-share market in Guangdong Province , with a total operating income of 6.564 billion yuan in 2023, a year-on-year increase of 33.70%; net profit attributable to the parent company was 336 million yuan, a year-on-year increase of 81.62% . The company's men's clothing brand Coofandy and homewear brand Ekouaer's annual sales exceeded 1 billion yuan for the first time .

"There are also some unlisted sellers. Although they were badly hurt by the closure, the epidemic and the money they earned before are enough for them to spend . Now even if the market is not good, it is only a difference of more or less profit ," said one of the "Five Tigers." The company's performance also plummeted during the closure period, and the turnover rate soared. As various departments began to save themselves, such as transforming into a refined store and successfully achieving certain results, the company began to resume expansion this year.

Observations show that the development paths of big sellers are full of similarities. They made their fortunes by distributing products, sought to go public, and made huge profits during the epidemic. However, the differences began to emerge after their accounts were blocked: some people tried to save themselves from the quagmire, while others soared all the way.

"When big sellers caught up with the early bonus period of the industry, quickly occupying the vacancies in product categories was the primary task , and distribution of goods became a product of the times ; in the capitalization stage, increasing turnover became the top priority, and sellers continued to expand product categories through distribution of goods, frantically grabbing land in each sub-category. However, the massive inventory is like a time bomb that can destroy the illusion of prosperity at any time. " Industry insiders analyzed that for the big sellers who are unable to turn around, they made mistakes and their initial choices had already doomed them to different outcomes.

The peak has passed, and the era of many big sellers has long gone. Branded sellers represented by Anker have taken the "C" position in the industry, and an era of higher quality and fairer industry rules has arrived.

Cross-border e-commerce is still developing rapidly with a new attitude.