Traffic plummets, is ZAFUL, a cross-border e-commerce company, also in danger?

On November 24, Cross-Border Link stated on the investor interaction platform that according to the 2023 semi-annual regular report, the company's cross-border e-commerce import business accounted for 92.11% of total operating income, and cross-border e-commerce export business accounted for 7.23% of total operating income.

In the first half of this year, Cross-Border Link's total revenue was 3.48 billion yuan, which means that the import business achieved operating revenue of 3.205 billion yuan, while the export business achieved operating revenue of only 252 million yuan.

In 2018, KGI's total revenue reached a peak of RMB 21.5 billion, of which cross-border e-commerce export business accounted for more than 70% (RMB 15.5 billion). With the collapse of Global Easybuy and the sale of Paton, KGI's cross-border e-commerce export business has continued to shrink, and now the operating conditions of ZAFUL, which it has managed to save, have repeatedly given the green light.

The number of visitors in the peak season has dropped sharply, and ZAFUL is in danger

Although the peak season this year is not so busy, all platforms and independent websites have ushered in the peak traffic of the year. However, the situation of ZAFUL is completely opposite. Similarweb data shows that from August to October, the number of visits to ZAFUL has continued to decline. In October, when sellers were flooded with orders, the number of visits was only 1.18 million, which was directly cut in half compared with August. The total number of visits in three months was only 5.27 million, with an average of less than 1.8 million per month.

Google Trends data also reflects a similar situation. As early as the beginning of June, the global search popularity of "ZAFUL" had begun to decline , while in the previous few months, the search popularity was relatively stable.

This timing inevitably reminds people of the incident in June this year when Global Easybuy suppliers went to ZAFUL's Shenzhen office to ask for overdue payments. At that time, dozens of suppliers took turns on duty and tried to prevent employees from working to get Cross-border Link to come out and solve the problem.

In addition, there is a phenomenon worth noting. The editor found that in the related queries of the keyword "ZAFUL", the search volume of Temu soared, and compared with the global search popularity of the two in the past 12 months, the decline of ZAFUL coincided with the rise of Temu.

Of course, ZAFUL cannot blame Temu for its current situation. Compared with Temu, ZAFUL itself has bigger problems.

Through the financial report query, it was found that ZAFUL's traffic has dropped drastically in recent years. From 2019 to 2023, the number of registered users of ZAFUL has been growing, but the average number of monthly active users and the average monthly visits have been falling. At the end of 2019, the average number of monthly active users was 23 million, but by the end of 2021, it was only 7.6867 million, only one-third of the original. By the end of June this year, the average number of monthly active users was even lower, only 4.8199 million.

The average monthly visits also plummeted. At the end of 2019, the average monthly visits were still 165.66 million, but by the end of 2021, it was only 72.3809 million, less than half of what it was two years ago.

By comparing three years of data, it can be found that ZAFUL's real traffic collapse began in 2021. Although there was a decline before that, the decline was limited, and this time coincided with the collapse of Global Easy Shopping.

This shows that the collapse of Global Easy Shopping has still affected the operation of ZAFUL. After the collapse of Global Easy Shopping in 2021, ZAFUL, as the only remaining high-quality asset, was divested from Global Easy Shopping at a low price by Cross-Border Link and transferred to its subsidiary Saten.

However, judging from the current situation, ZAFUL has not followed the path that KGI had expected. And the situation is getting worse.

In fact, ZAFUL's starting point is not low. Previously, it and SHEIN were once called "the two most outstanding fast fashion brands" and had a very high reputation in the fast fashion field. But now, SHEIN has become a unicorn with a valuation of more than US$66 billion, while ZAFUL is worried about its average monthly visits of less than 1.8 million.

After two consecutive years of losses, ZAFUL cannot help Cross-border Link turn around

In 2018, Cross-Border Link's total revenue reached its peak (21.5 billion yuan), of which cross-border e-commerce export business accounted for more than 70% (15.5 billion yuan). At that time, Anker Innovations, now a popular A-share listed company, had an annual revenue of only 5.235 billion yuan.

2021 was a year of major turning point in Cross-Border E-Commerce's performance. In this year, the two major components of its cross-border e-commerce export business: Global Easybuy and Paton, one went bankrupt and liquidated, and the other was sold, and total revenue plummeted to 8.818 billion yuan.

The proportion of export e-commerce business, which previously occupied an absolute position in revenue, has also rapidly dropped to single digits. In 2020, Cross-border e-commerce business of Cross-border Export achieved operating income of 10.079 billion yuan, accounting for 59.21% of total operating income. However, in 2021, cross-border export e-commerce business achieved operating income of 2.679 billion yuan, a decrease of 73.41% compared with 2020, accounting for 30.38% of total operating income. By 2022, the total revenue of cross-border export e-commerce business was only 470 million yuan, accounting for only 6.77% of total revenue.

At this time, ZAFUL, which was spun off from Global Easybuy at a low price , became the only remaining cross-border e-commerce export business of Cross-Border Link.

Before this, ZAFUL's performance has always been excellent. Even though Cross-Border Link suffered huge losses for two consecutive years in 2019 and 2020, it still remained profitable. Industry media have estimated that in 2020, ZAFUL's annual revenue may reach 5.613 billion yuan.

But it started to go downhill in 2021. In addition to the traffic mentioned above, its performance also plummeted. This year, Sateng achieved operating income of 608 million yuan and a net loss of 429 million yuan. In 2022, it shrank again, with total revenue of only 470 million yuan and a net loss of more than 80 million yuan. In the first half of 2023, Sateng achieved operating income of 249 million yuan and a net loss of more than 15 million yuan.

At present, it is unlikely that Cross-Border Link will make a comeback with the help of ZAFUL.

Now, KET has become a cross-border e-commerce company that focuses on imports and supplements exports , which is a complete reversal of the previous situation.

Now its cross-border e-commerce import business accounts for more than 90%, which is mainly completed through its subsidiary Youyi E-commerce. Previously, Kuaidongtong stated on the interactive platform that Youyi E-commerce has obtained the recognition and commercial agency authorization of internationally renowned brands and is the only agent of Danone Group for online transactions in China. The company's import cross-border e-commerce provides one-stop full-industry chain services around brand development for maternal and infant categories. Currently, it includes Danone's milk powder brands such as Aptamil and Nutrilon.

In the first half of this year, the import business of Cross-border E-commerce achieved operating income of 3.206 billion yuan, accounting for 92.11% of Cross-border E-commerce's operating income, and a net profit of nearly 80 million yuan. It is reported that the brands imported from overseas by Youyi E-commerce mainly include clothing, home furnishings, maternal and child products, health products, and beauty products.

Although internationally renowned brands are easier for retailers to distribute, from the perspective of corporate development, private brands are the future. Private brands are independent and unique to companies, and can bring brand premium and brand loyalty to the company.

In addition, the authorized brands have a time limit, and after the expiration, whether the brand will continue to be authorized is still unknown. Previously, some suppliers have said that Youyi E-commerce has this risk. Therefore, in the long run, there is also uncertainty in the cross-border e-commerce import business of Kuaishou.

The export business is shrinking continuously and the import business does not see a good future. Can Cross-Border Link turn around and become the super seller it once was?

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