Selling women's clothing a year earns 2.3 billion yuan a year, and cross-border e-commerce companies go public in Hong Kong without saying a word

The cross-border e-commerce company that has been established for ten years is silent, and still has not given up on wanting to become a listed company.

On the evening of March 7, Zi Bu Yu Group Co., Ltd. (hereinafter referred to as "Zi Bu Yu") once again submitted a prospectus to the Hong Kong Stock Exchange to prepare for listing in Hong Kong. This is the second time in eight months that Zi Wu has delivered the table. Earlier, in 2017, Zi Buyu had launched a listing plan, but since then this plan has been shelved.

In the past few years when Zi Wu is preparing to go public, the cross-border e-commerce industry has continuously influxed new players and has also been withdrawn by peers. This time, the sub-word is handed over again, how has the external environment it faced changed? Relying on third-party platforms, does it need to revolutionize itself from within?

Nearly 80% of revenue depends on clothing

According to the "China Times" reporter, at the end of June 2021, Zi Buyu submitted a prospectus on the Hong Kong Stock Exchange, but at the end of that year, the application expired due to expiration. Zhang Yi, CEO of Ai Media Consulting, told the "China Times" reporter that the current situation is a more suitable time for the listing of zi wu. "A year ago or earlier, the concept of export cross-border e-commerce was not too hot, the capital attention was not high, and the market value it obtained after listing may not be too good." In addition, at that time, export e-commerce mainly relied on Amazon, but today's environment, in addition to Amazon, platforms such as TIKTOK and AliExpress will also have some imagination space. ”

Founded in 2011, Zibuyu, which started in Zhejiang, mainly sells clothing, footwear and other products to overseas markets such as Europe and the United States through third-party e-commerce platforms such as Amazon and Wish.

According to the prospectus, the revenue of 2.3 billion yuan in 2021 increased by 23% year-on-year, but the operating profit of 250 million yuan increased by nearly 80% year-on-year. In the previous year, both of these indicators grew by less than 40%. Earlier in 2019, both indicators were single-digit growth.

The revenue scale of Zi Wu is not large in the entire cross-border e-commerce industry. In 2020, it was established in the same year as it, and an a cross-border e-commerce company specializing in consumer electrical appliances products, Anke Innovation, reached a revenue of 9.3 billion yuan. Public information also shows that SHEIN, which also went overseas to sell women's clothing, has also approached $10 billion in revenue in the same period.

According to the "China Times" reporter, at the beginning of the establishment of Zi Buyu, positioned in the domestic market, when it was mainly purchased from the Hangzhou Four Seasons Green Clothing Market, and then sold through Taobao. This is similar to SHEIN's initial purchase from the Guangzhou Shisanhang Clothing Wholesale Market.

However, in 2014, which is considered to be the first year of cross-border e-commerce, Zi Buyu began to turn its targets overseas, fully transforming its own business into a cross-border e-commerce business, and selling apparel products through third-party platforms. In 2016, it began expanding its category to include footwear products.

It should be mentioned that the two major categories originally sold by Zi Buyu are still its main sources of income. The prospectus shows that in 2021, its apparel revenue will account for nearly 80%; footwear product revenue will account for nearly 20%. Its relatively single product structure is also considered to have certain risks.

Zhang Yi analyzed the "China Times" reporter, "Compared with other categories, apparel products change very quickly, and enterprises may fall behind if they are not careful, so it may be risky in the speed of innovation." What it needs to do in the future is to operate more refinedly and maintain a market-leading level. ”

Inside and out

In addition to betting on apparel and footwear on products, Zi Wu's sales channels also rely heavily on third-party platforms. Unlike SHEIN, which has built its own independent website since its establishment, the sub-language sales channel is still dominated by third-party platforms such as Amazon. In 2021, more than 70% of its revenue will come from Amazon's platform, and 9% of its revenue will come from Wish.

This is considered by industry insiders to be its lack of independence and autonomy. In a research report in October last year, Guotai Junan said that the interruption of the relationship between Zibu Company and the third-party e-commerce platform and the adverse changes in the terms of the arrangement may have a significant adverse impact on its business and operating results. As an example, last year's wave of Amazon's banning has caused many sellers to suffer heavy losses.

Although in order to reduce the risk of third-party platform dependence, Zibu has expanded other e-commerce platforms such as eBay, AliExpress, TikTok, and has been operating its own website since 2018. However, from the perspective of the prospectus, the revenue contribution of these channels is still relatively limited. In 2021, its self-operated website revenue accounted for less than 11%, and it fell by 8 percentage points from the previous year; while other third-party e-commerce platforms other than Amazon and Wish accounted for only 3% of revenue.

Cheng Weixiong, an independent analyst in the footwear industry, analyzed the "China Times" reporter and believed that self-built independent stations and platform sellers have their own advantages and disadvantages. Self-built platforms not only link domestic supply chains, but also link foreign users, which requires very large investment, and there are not many cross-border e-commerce companies like SHEIN. He said that in the early stage of development of cross-border e-commerce companies, they will choose a third-party platform, but if they want to expand their scale in the later stage, self-built platforms are a channel that must be developed.

Zhang Yi told the "China Times" reporter that for Zi Buyu, the road of self-built websites will be very difficult to walk. "Self-operated websites are not difficult, the difficulty is how to obtain traffic, how to ensure the number of categories that support independent stations, and the number of sub-silent products is far from enough to support websites or APPS." In addition, he believes that under the attack of giants, facing fierce competition, Zi Mu is not absolutely competitive.

In addition, the increase in the number of market participants and the intensification of competition have also put it under greater external pressure. Since 2020, the cross-border e-commerce industry has entered a period of growth explosion. According to enterprise investigation data, the number of cross-border e-commerce-related enterprises will increase by 72% in 2021, which is also the highest growth rate in the past 6 years. In addition, there are also the layout of Internet giants such as Ali, JD.com, and Byte, and small and medium-sized players such as Dunhuang.com, Zhiou Technology, and Santai Shares have also submitted prospectuses last year.

According to the Data of Frost & Sullivan cited by Zibu whisper, according to the GMV of clothing and footwear products sold through third-party e-commerce platforms in 2020, Zibuyu ranks third in the industry. However, the development of this market is still extremely fragmented, and in the same period, in this market of 461.1 billion yuan, Zi Buyu only occupied 0.4% of the share.

Zhang Yi said that in the highly competitive cross-border e-commerce industry, the decisive factor is the company's supply chain capabilities. "For cross-border e-commerce, the integration ability of the entire supply chain will play a very important role in the future export of cross-border e-commerce."

On March 10, a reporter from the China Times contacted Zi by phone and email about the product structure and industry competition, but as of press time, he had not received a reply.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng