With a loss of more than 200 million yuan, has the leading cross-border company also failed?

The fashion clothing category attracted market attention with SHEIN standing in opposition to ZARA. After that, Zibuyu also successfully entered the cross-border market and was hailed as the dark horse in Amazon's clothing category.

Zibuyu has always had a clear track record of success, taking advantage of every new platform's bonus period and quickly withdrawing from it during the downturn. From being the Chinese seller with the highest GMV in the North American footwear and apparel category to having a net worth of 3.8 billion after successfully listing, Zibuyu's achievements have made many cross-border sellers envious.

However, ZiBuYu has been on a downward trend since its listing, with declining revenue, bloody net losses, parasitic e-commerce, and dependence on Amazon. Today, ZiBuYu is highly controversial.

Amazon lost more than 200 million yuan, and it is difficult for the top

Recently, the first cross-border footwear and clothing company Bu Yu issued a profit warning, predicting that its company's net loss in 2023 will reach 240 million to 290 million yuan.

This is not the first time that Zi Buyu has issued a profit warning.

On Double 11 in 2022, Zibuyu was pushed into the spotlight and successfully listed on the Hong Kong Stock Exchange. However, in the 2022 performance released in March of the following year, its net profit decreased by 40% to 50% compared with 201 million yuan in 2021.

However, in the semi-annual report of 2023, the company's net profit fell by more than 80% to only 10.28 million yuan.

It can be said that Zibuyu has been losing money since its listing. This is not only due to the inventory impairment provision, increased employee welfare expenses, and market environment mentioned in the financial report, but also the platform and return rate are also important factors that cannot be ignored.

Since entering the cross-border market, Zibuyu has always focused on Amazon, Wish, and independent websites. On the Amazon platform alone, Zibuyu's revenue reached 1.672 billion yuan in 2021 and 1.157 billion yuan in the first half of 2022. It is doing very well on Amazon.

But in contrast, its main target Wish is not doing so well. In 2020, it accounted for more than 40% of the revenue and contributed 800 million yuan in revenue, but it has been declining since 2021, until the revenue in the first half of 2022 was only 21.75 million yuan, which may have a lot to do with the decline of Wish.

From 2018 to 2020, Zibuyu's reliance on third-party platforms was as high as 70%, or even 90%, which seriously damaged the company's autonomy. This may be the reason why even if the revenue on Amazon is soaring, it cannot save Zibuyu from going downhill.

Another common problem for sellers in the clothing category is the return rate, and Zibuyu is no exception. In the first half of 2022 alone, its return rate reached 25.5%, and the return rate of up to 1/4 of the products eroded most of the profit of the goods. In addition, the commission, FBA logistics fees, advertising fees and other expenses have aggravated Zibuyu's already unbearable situation.

However, as a top player in Amazon's apparel category, Zibuyu had always been an excellent student before its listing.

Annual revenue once exceeded 2 billion yuan, and Zibuyu owns hundreds of brands

When it was first established in 2011, ZiBuYu focused on the domestic Tmall market with the dropshipping model. Riding on the e-commerce trend at the time and benefiting from the rise of women's clothing on Taobao, ZiBuYu entered the top three categories on Taobao within two years, with sales reaching over 100 million yuan at one point.

But dropshipping is not a long-term solution, so Zibuyu sought transformation and sold its own designed clothing. However, at that time, the domestic women's clothing e-commerce competition had entered a white-hot stage, and Zibuyu faced a new transformation, that is, to try cross-border e-commerce.

In 2014, Zi Buyu turned to cross-border business and started to operate stores on platforms such as Amazon and Wish. With the support of Zhejiang home textile and clothing industry belt, Zi Buyu started to rise rapidly as soon as it entered overseas markets.

In 2015, Zi Buyu became the top-selling women's clothing brand on AliExpress in Brazil, with sales exceeding 300 million.

In 2016, Zibuyu’s sales exceeded US$100 million.

In 2017, Zibuyu’s sales reached 300 million yuan.

In 2018, Zibuyu’s sales exceeded 1 billion yuan.

In 2019, its revenue exceeded 1.4 billion yuan.

In 2020, its revenue reached 1.898 billion yuan.

In 2021, its revenue exceeded 2 billion yuan.

Not only revenue, but also profits are growing year by year, from 81.1 million yuan in 2019 to 201 million yuan in 2021. Looking at Zibuyu's sales before its listing, it can be said to be quite impressive, which is inseparable from the company's strategic focus on Amazon's North American market. But it is also an indisputable fact that Zibuyu relies on platforms such as Amazon and the US market.

To avoid risks, Zibuyu started operating its own website in 2018. However, at present, the revenue contribution of these channels is still relatively limited, accounting for a relatively low proportion, accounting for only 5.9% in the first half of 2022. Relatively speaking, Zibuyu is still highly dependent on third-party platforms.

Like Savi, Zibuyu is also very good at incubating brands and creating hits. It currently owns more than 300 brands, 87 of which are hits, with annual sales exceeding RMB 10 million. Therefore, Zibuyu also has a title in the industry, called "hit-making machine."

On Amazon, many products under Zibuyu are among the best-selling products on Amazon. Among them, the most popular one is the sweater brand Emily Bela, whose GMV in half a year exceeded 36.1 million yuan; the first ski suit of the sportswear brand Aurgelmir rushed to the top 5 of Amazon's best-selling brands as soon as it was launched; a men's shirt of the casual men's clothing brand Runcati once achieved a 7-fold increase in monthly GMV; the women's clothing brand Cicy Bell is the top of the best-selling list of similar products on Amazon, with sales of 470,000 pieces in half a year...

The brands owned by Zibuyu were once considered by industry insiders to be its new growth points. However, it will take time to prove whether Zibuyu can turn losses into profits in the future.

A trillion-dollar track, a dark horse in the apparel category is rising overseas

As the saying goes, industry capacity determines the ceiling of a company's development. In the process of cross-border e-commerce development, apparel and footwear are the categories that occupy the highest market share in cross-border e-commerce and are still growing rapidly.

In 2021, the market share of this category is 27.4%, and it is expected to grow to 33.2% by 2026. In terms of specific categories, the apparel market is larger and growing faster, increasing from 607.9 billion yuan in 2021 to 1,486.3 billion yuan in 2026, while the footwear market will grow from 142.4 billion yuan to 341.3 billion yuan.

From an integrated perspective, the scale of the apparel and footwear category will be close to 2 trillion by 2026, which is enough to show the future prospects of this track.

With such a large scale, Chinese sellers have a huge opportunity to rise overseas. Just like the dark horse in the apparel category that previously rushed into the "2023Q3 TOP30 E-commerce Overseas Brand Social Media Influence List" with SHEIN, whether it is Cider, a unicorn worth over US$1 billion, ZAFUL, which is comparable to SHEIN, Cupshe, which has become the No. 1 swimwear sales in the North American market, or Avidlove, an underwear brand under Savi that dominates the BSR list and has sales of over 1.5 billion.

In the red ocean field, there are always some opportunities in some sub-sectors.

Zi Bu Yu

Loss

Shoes and Clothing