After the big seller cut 230 Amazon stores...

After the big seller cut 230 Amazon stores...

"Refined" and "Branded". After the account blocking wave, the big sellers are more and more eager to pursue these two labels. If Amazon blocks a large number of stores, loyal users will be lost quickly, and the revenue and net profit will be suddenly cut.

 

With the lessons learned from Youkeshu and other companies, cross-border sellers began to consciously or unconsciously treat their Amazon addiction. They tried to deepen user impressions through brand building, thereby increasing the revenue of independent sites; at the same time, they gradually reduced their Amazon stores. But things did not seem to go as expected by the sellers ...

 

From 661 to 430, Savitech has reduced the number of Amazon stores year after year

 

Two months ago ( July 12), Suntech Power Technology Co., Ltd. ( hereinafter referred to as "Suntech" ) was officially listed on the Shenzhen Stock Exchange's Growth Enterprise Market . By issuing 40.1 million shares at a price of RMB 20.45 per share, Suntech plans to raise RMB 820 million.

 

But once the market opened, the share price of Silvi soared to 30.18 yuan, and the highest price of the day reached 44.1 yuan, more than doubling ( 115.11%) . In the two months since its listing, the share price of Silvi has been higher than the issue price, reaching a maximum of 53.27 yuan per share. Today, its market value remains at 13 billion yuan , and as of the time of writing, its market value exceeds 1.31 billion yuan .

 


 

Why is Savi favored by the market when cross-border e-commerce is in a downturn? Perhaps the answer can be found in its financial report.

 

In the first half of this year, Savi's revenue reached 2.773 billion yuan, an increase of 26.39% over the same period last year. More importantly, while many cross-border sales saw their net profits plummet, Savi achieved a 24.72% increase in net profit, earning 150 million yuan in the first half of the year.

 

Through third-party e-commerce platforms such as Amazon and Walmart and vertical independent sites such as Retro Stage, Savi sells its products in markets such as Europe and the United States.

 

As a popular product, Savi has many stores on various third-party platforms.

 

In 2020, the total number of Savi stores on various third-party platforms reached 1,405, including 661 Amazon stores , 357 Wish stores, and 293 eBay stores; by 2021, the total number of its stores decreased to 933, and by 2022 it decreased to 722. During this period, Savi fled Wish, and the number of stores decreased from 357 to 4 .

 

Its layout on Amazon has also adopted a streamlined and focused strategy in recent years. The number of stores has been reduced from 661 to 430 in the first half of this year. In three years, 231 Amazon stores have been cut, and all stores have been cut in half . Savi has always been following the route of "refinement" and "branding".

 

Unfortunately, despite reducing the number of Amazon stores, Savi is still overly dependent on Amazon, just like other large-scale mass-marketers. In the first half of this year, its revenue from Amazon accounted for 88.32% of its total revenue, compared with 88.58% in the same period last year, which is basically unchanged.

 

The risks brought by deep dependence refer to the Amazon account blocking wave in 2021. Therefore, Savi also admitted that there is a risk of the company's stores on third-party platforms being closed. Although it has never been punished by Amazon for multiple accounts, the risk cannot be completely ruled out. If Amazon and other third-party e-commerce platforms change the current rules in the future, it may lead to the closure of a large number of the company's stores, and the adverse impact on the overall performance can be imagined.

 

However, no major seller in the cross-border industry has been able to completely reduce its reliance on Amazon. According to the financial report data for the first half of this year:

 

Zi Buyu , another clothing brand, earned RMB 1.304 billion from third-party platforms , accounting for 95% of its total revenue (RMB 1.375 billion), mainly from Amazon .

 

Huakai Yibai achieved sales revenue of 2.276 billion yuan through Amazon, accounting for 76.05% of its operating income. It even added 54 more Amazon stores , reaching 720 ;

 

Anker's revenue from Amazon still accounts for 55.87% of its total revenue ;

 

Zebao's parent company Xinghui Holdings' revenue from Amazon accounted for 56.90% of its total revenue, an increase from last year.

 

Perhaps it is for this reason that Savi pays more attention to brand building in order to improve the success of independent sites from a strategic perspective.

 

With outstanding brand incubation capabilities, Savi has 2.3 billion-level revenue brands

 

Different from other big-name brands that sell goods in bulk, although Savi also has other categories such as department stores and home furnishings, sports and entertainment, digital automobiles and motorcycles, its main product is clothing, covering multiple subcategories including men's clothing, women's clothing, home clothes, underwear, children's clothing, etc.

 

The financial report shows that in the first half of this year, the revenue of clothing and accessories under Savi has reached 1.954 billion yuan, a year-on-year increase of 35.49%, accounting for 70.75% of the total revenue.

 

In the clothing category, Savi attaches great importance to brand building. With such persistence, its brand matrix has become increasingly rich, with leading brands, backbone brands and emerging brands constantly exerting their influence in the market, and now has achieved very gratifying sales results.

 

As of the end of June this year, the four leading clothing brands under Savi, Coofandy, Ekouaer, and Avidlove , have accumulated sales of more than 1.5 billion yuan , and the sports and fitness brand Ancheer has also achieved such sales results . In the first half of this year, the revenue of these four brands increased by 35.11% compared with the same period last year, and contributed 54.77% of the total revenue of Savi.

 

Among the other brands being incubated , 19 have achieved cumulative sales of over 100 million yuan , and 70 emerging brands with sales of over 10 million yuan are gradually occupying the market. Among these brands, clothing still accounts for a large proportion .

 

 

In terms of brand influence, as of August 2023, many products from Savi's Coofandy, Ekouaer, Avidlove, ANCHEER and other brands still rank among the top five Amazon Best Sellers in their sub-categories.

 

In addition, Savi revealed in its financial report that Frost & Sullivan data showed that in 2021, sales of its apparel and accessories categories accounted for approximately 1% of Amazon's apparel and footwear category GMV. To achieve such results in the highly competitive Amazon apparel and footwear market is already impressive, and there is still ample room for growth in the future.

 

The apparel market share has gradually increased, and the brand premium ability has also continued to improve. This is the reward that Savi has received for adhering to the brand path. In this process, Savi has also continued to accurately and efficiently deploy new categories and new brands. However, the increasingly rich brand matrix has further confirmed its nature of distribution, which may be harmful rather than beneficial to user stickiness.

 

At the same time, focusing most of its energy on building more brands will leave Savi with no time to build an independent website.

 

The financial report shows that in the first half of this year, Savi's brand independent website only contributed 3.27% of revenue, and the total revenue was only 90.28 million yuan.

 

In fact, the clothing category has a natural advantage of independent stations. Once the brand is successfully built, on the premise of gaining word-of-mouth market, consumers' preference for the brand will continue to deepen. In addition , due to the characteristics of clothing with many SKUs and rich styles , user stickiness is easier to improve than other categories, so the opportunity to establish an independent station has come.

 

But Savi failed to seize this opportunity, and its independent website could not sustain revenue for a long time. Perhaps because of this, it became more and more dependent on Amazon. If its brand leaves Amazon's fertile soil, it may wither due to lack of nutrients.

 

Today, Savi has comprehensively improved its profitability in product development and design , e-commerce operation supply chain , brand incubation and operation , and flexible clothing supply chain by accurately exploring consumer needs to empower product research and development and using big data technology to optimize supply chain operation efficiency.

 

Although Suntech delivered its first high-scoring financial report after its listing, this distribution model and its current deep reliance on Amazon may bring it unbearable risks in the future.

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