On March 19, cross-border e-commerce Lanting (LITB. N) announced unaudited financial results for the fourth quarter and full year of 2020. During the performance period, Lanting Achieved Total Revenue of US$398 Million, an increase of 63.4% year-on-year; under the US Generally Accepted Accounting Principles (GAAP), it achieved a net profit of US$13.3 million, a sharp increase of 1161.4% year-on-year. In terms of revenue and profitability, both of them hit their annual highs since their listing in 2013.
In addition, Lanting Jishi expects its net revenue in the first quarter of 2021 to be between $110 million and $125 million, an increase of 114% to 143% from the same period last year, continuing the growth momentum.
In contrast, in the 7 fiscal years since 2013, Lanting Jiji's previous performance has only achieved a turnaround for the first time in 2019, changing the performance trend, and then starting explosive growth in just one year.
In addition to surprises, the above "report card" may contain more tastes of Jedi Strike Back and Nirvana rebirth. When it comes to this subversive battle, there is one person who is bound to be unable to bypass, he is the "key gentleman" of Lanting Jishi - the current CEO He Jian.
01
From the Pride of Heaven to the Rebirth of the Eagle
On December 10, 2018, He Jian officially took over the handover baton from the former CEO of Lanting Jishi, and this access hand was thousands of junks.
If you want to find a word to describe the former Lanting gathering, the four words of "Proud Son of Heaven" are appropriate. Born in 2007, there are four main founders of Lanting Jishi, with excellence, NetEase, blog China and Google backgrounds, respectively, Guo Zhiyi, who served as the CEO of Lanting Jishi for 10 years, was one of the four founders of Google China that year.
Under the outlet of cross-border e-commerce, Lanting, which is positioned as a global online retail company, has grown rapidly, and by 2011, the company's global turnover exceeded 1 billion yuan. In 2013, Lanting Entered the New York Stock Exchange in the United States, becoming the first Chinese stock to successfully IPO in the United States that year. But since then, Lanting Jishi has fallen into a performance dilemma for up to six years, and by October 2018, because the average closing price of the stock price in the past 30 consecutive trading days was less than $1, Lanting Jishi received a delisting warning issued by the New York Stock Exchange, and the proud son of heaven fell to the altar.
At the same time, the internal hidden dangers of the Lanting gathering have also been fermenting. At that time, Lanting gathered momentum to open up the various channels of traditional foreign trade, and planned to build a one-stop consumption path covering all aspects from production, transportation to transnational sales, and deliver cheap products directly to overseas users. The ensuing pre-platform construction and maintenance costs are quite large, which means that once the revenue growth rate of Lanting is not as expected, the overall operation will stagnate. The Lanting rally in 2018 was clearly deeply affected by this, with net revenue of $227.5 million, down 28.9% year-on-year, with a net loss of $24.4 million.
Under the situation, Lanting Jishi launched a strategic acquisition of ezbuy, a leading cross-border e-commerce platform in Southeast Asia, one of the core conditions is that the CEO position of Lanting Jishi is held by He Jian, the founder of ezbuy.
In the end, Lanting Group acquired 100% of Ezbuy's shares for nearly $86 million. As a well-known e-commerce brand in Southeast Asia, ezbuy ranked among the top ten hot search keywords in Google's annual Singapore list for two consecutive years from 2016 to 2017, and occupied the first seat in the cross-border e-commerce industry in the Singapore market at the end of 2016, and completed the C round of financing. With the continuous expansion of the territory, ezbuy's service customers have gradually expanded from Singapore to countries and regions such as Malaysia, Indonesia, Thailand and Pakistan, providing cross-border e-commerce services for nearly 10 million customers, occupying an invincible position in the Singapore and Malaysian e-commerce markets, which are the sons of major Internet giants.
Now, Lanting Jishi and He Jian's hand-in-hand may be a two-way choice, but for He Jian at that time, everything was not easy. In the face of multiple crises, He Jian did not shrink back, chose to do practical things in a low-key manner, and clarified the company's medium- and long-term development goals by clarifying the remaining problems of Lanting in the company's management and business development in the past.
Subsequently, a series of measures by He Jian proved to be effective by the market. In the third quarter of 2019, Lanting Jishi's net revenue was $59.9 million, an increase of 34.6% year-on-year; gross margin increased to 42.3% from 15.1% in the same period of 2018. By the end of the 2019 fiscal year, Lanting group turned a loss into a profit, with a total revenue of 244 million US dollars, an increase of 7% year-on-year, and a net profit of 1.058 million US dollars, officially ushering in the dawn of development.
02
The two axes of "Mr. Key": efficiency + focus
In the capital market, investment is an eternal topic, and the key to whether a company does well or not often lies in the leader.
In the face of the "reversal" of Lanting's momentum in 2019, some people may still have doubts, but the new high performance in 2020 undoubtedly proves the correctness of He Jian's established growth strategy. So, in these two years, what did "Mr. Key" He Jian do?
Before that, look at the biography of He Jian, who holds a bachelor's degree in electrical engineering from Zhejiang University and a master's degree in electrical engineering from Fudan University, studied under Dr. Liu Jixiang, a returnee from MIT, and has worked in the semiconductor industry for nearly 10 years, including grofond and SMIC, and is a core member of the 0.18 micron, 0.13 micron and 65nm technology and product teams. In the following years in 2011, He Jian led the completion of Ezbuy's Series C financing, making it occupy the top seat in the e-commerce markets of Singapore and Malaysia.
It can be said that many years of practice have allowed He Jian to have both rich experience in business warfare and meticulous business logic thinking, which has also directly contributed to He Jian's appearance on the management stage of Lanting.
Therefore, it is not difficult to see that after He Jian took over, the operation and governance of Lanting Jishi were parallel. The successful experience of creating ezbuy made He Jian firmly believe that "efficiency" is the key to grasping the long chain of one-stop cross-border e-commerce, and he continued to promote the efficiency improvement of Lanting's gathering momentum, and focused on repairing "internal strength" in the basic link of cross-border e-commerce.
The upgrading of the "hard" efficiency of the industrial chain allows Lanting to better analyze users and achieve accurate supply and demand. Whether it involves the supply chain, the movement path of goods and the single point efficiency of traffic delivery, or the efficiency of the system as a whole, only by truly realizing data drive can we improve the matching degree of goods and traffic, make inventory and style prediction more effective, and then promote the efficiency of the entire industry chain and seize more certainty opportunities.
Correspondingly, He Jian shifted his business focus to categories with higher gross profit margins, most of the low gross profit and loss-making commodities that dragged down efficiency were directly cut, using technology to drive platform architecture and algorithm upgrades, introducing products that matched the preferences of platform users, empowering the efficiency of platform cross-selling, improving users' perception of the platform, and reducing transaction costs. In addition, he quickly integrated ezbuy's high-quality suppliers to accelerate the upgrade of the supply chain.
In 2019, Lanting Jishi's annual R&D investment increased by nearly 70% to $17.9 million, accounting for 7.3% of total revenue, much higher than 4.7% in 2018. In 2020, Lanting concentrated R&D expenses of 15.2 million US dollars, and continued to increase research and development efforts.
The improvement of the "soft" efficiency of the industrial chain allows the platform to leave loyal customers while constantly digging out new customers and improving user stickiness. At this level, The Lanting gathering force led by He Jian has made clear adaptive adjustments from executives to ordinary employees. Among the management, Shi Bin, a ten-year veteran of Lanting Jishi, served as CMO with many years of experience in the technology industry, responsible for lanting jishi and ezbuy's global market launch business; Liu Wenyu, one of the founders of ezbuy who is good at southeast Asian market expansion operations, was appointed as the chief growth officer (CGO) of Lanting Jishi; Ye Yuanjun, who has served Alibaba, TBOW and other enterprises, was appointed as the chief financial officer (CFO) of Lanting Jishi. The integration and innovation of the senior management team has quietly revealed the adjustment intention of Lanting to consolidate the global market. Among the basic employees, the concept of putting customers first, meeting user needs, improving user experience, and strengthening user life cycle management is also being fully implemented.
At present, the business model created by "efficiency" and "focus" has brought significant performance results, and the value of Lanting Has also been revalued by the market.
In terms of capital market, He Jian's management achievements have received positive feedback. On February 17, 2021, the stock price of LANting Jishi (ADS) climbed to $5.69 at one point, with a difference of nearly 10 times from the highest and lowest in 52 weeks; the market value reached more than $600 million, an increase of 13 times from the lowest.
03
The next "brilliant 10 years" is opening
2021 is he Jian's 10th year of founding ezbuy, and it is also his third year at the helm of Lanting Jishi. Whether he can lead the "returned" Lanting gathering momentum out of the brilliant 10 years is a problem that everyone who pays attention to cross-border e-commerce and pays attention to the Lanting gathering momentum is a problem.
At present, China's cross-border e-commerce has initially completed the embryonic period and the outbreak period, and gradually entered a period of steady growth. In the past 10 years, cross-border e-commerce has determined its market position, and the number of comprehensive test areas has increased to 105. After 5 rounds of urban expansion, 3 rounds of category liberalization and tax rate reduction, the cross-border e-commerce system and business system have been gradually improved, providing favorable conditions for the continuous growth of the market.
On the basis of this, the application of information technology has inserted new wings for the take-off of cross-border e-commerce, on the one hand, it assists merchants to create a multi-platform, scenario-based shopping upgrade service physical examination, on the other hand, it reshapes the consumption behavior model, greatly deepens the degree of online consumption, and provides new impetus for the growth of the cross-border e-commerce market.
Preliminary customs statistics show that in 2020, the total value of China's cross-border e-commerce imports and exports will be 1.69 trillion yuan, an increase of 31.1%, of which exports will be 1.12 trillion yuan. According to eMarketer's forecast, the global e-commerce penetration rate will reach 17.5% in 2021, with sales reaching $4.9 trillion, with a compound growth rate of 20.8% from 2018 to 2021.
"There are many big fish in the water" is already a true portrayal of the current cross-border e-commerce. As a self-built station brand of the older generation, Lanting Jishi has the significance of the times and also has its own macro advantages in the industry. In He Jian's words, Lanting Jishi has three definitive paths.
First of all, the development of cross-border e-commerce requires traffic, and the logic behind traffic is the development and innovation of technology. In the 2G era, the search of web page text is developed; the 3G/4G era promotes pictures as a communication carrier; and the 5G era is the era of video navigation. Therefore, the carrier of traffic is mainly presented in the form of text, pictures and videos. And these three carriers have existed for a long time in most countries in the world. This means that the vast majority of countries and markets are not easy to form e-commerce oligarchies, in addition, when the market is large enough, it is not easy to form a monopoly, so in many countries, many categories and e-commerce games will have medium- and long-term opportunities.
Secondly, the demand gap between the vast majority of people in the world for commodity richness combined with cost performance is long-standing, and relying on China's strong supply chain system, Chinese goods can meet the needs of most people in the world. This clear match between demand and supply has become another certainty for Lanting to deepen the B2C online retail export after the deep integration with ezbuy.
The most important thing is that Lanting Jishi will continue to implement the strategy of "efficiency" as king, drive overall efficiency, comprehensively improve user experience, leave loyal customers and continue to tap new customers in the closed loop of B2C trading, promote the healthy and sustainable development of enterprises, and create long-term value for shareholders, employees and suppliers.
The time is not waiting, dare to fight for the day. He Jian's experience of turning the tide of Lanting, as described in countless similar but different Internet entrepreneurship stories, symbolizes the exuberant vitality of the global Internet economy, symbolizes the strong vitality of global entrepreneurs and Internet practitioners, and symbolizes that any honor and disgrace mark that seems to be "the overall situation has been decided" may be subverted at any time.