Affected by unfavorable factors such as the Amazon suspension incident since April 2021, the continuous recurrence of the global epidemic, and the rising logistics costs, China's cross-border e-commerce industry has suffered from performance pains. Courtesy photo: Zheng Yu
Judging from the latest disclosed 2021 annual report and the first quarter of this year, cross-border e-commerce listed companies are generally in dismal operation, and the "sequelae" of Amazon's name still exist. However, after experiencing this incident, domestic cross-border e-commerce companies began to reflect on their respective sales models to seek a breakthrough, some of which achieved remarkable results, the industry began to diverge, and the e-commerce industry is showing four new normals of development.
Amazon's "sequelae" still exist
List of performance of some listed companies in cross-border e-commerce
The cross-border e-commerce business revenue of Xinghui Co., Ltd. (300464) mainly comes from the Amazon platform, and in 2021 and the first quarter of this year, the revenue and net profit of Xinghui Co., Ltd. have shown a double downward trend.
In 2021, the revenue of Xinghui shares fell by 33.74% year-on-year, and the net profit loss was 1.524 billion yuan, of which the revenue of cross-border e-commerce business fell by 46.02% year-on-year, and the company made a goodwill impairment provision and inventory price decline reserve of 680 million yuan and 416 million yuan respectively for its cross-border e-commerce operator, Shenzhen Zebao Innovation Technology Co., Ltd. In the first quarter of this year, the revenue and net profit of Xinghui shares fell by 54.98% and 174.43% respectively year-on-year.
For the decline in performance, Xinghui shares said that in 2021, the new crown epidemic will be normalized, raw materials and cross-border logistics costs will rise rapidly, and the company's cross-border e-commerce business will encounter amazon suspension incidents, and its operation will face major challenges.
According to the disclosure, in June 2021, Zebao Technology, a subsidiary of Xinghui Co., Ltd., suffered an "Amazon suspension" incident, and the performance in the second half of 2021 suffered an impact. In 2021, Zebao Technology has closed a total of 367 sites on the Amazon platform, and by the end of 2021, the balance of frozen funds in more than sites is equivalent to about 32.2301 million yuan, and the company wirelessly has physical stores.
Coincidentally, Tianze Information (300209) also saw a double decline in revenue and net profit in 2021 and the first quarter of this year. In 2021, Tianze Information's revenue fell by 64.91% year-on-year, and its net profit loss was 2.676 billion yuan; in the first quarter of this year, Tianze Information's revenue and net profit fell by 71.13% and 13.96% respectively year-on-year.
Tianze Information said that due to the adverse effects of changes in the policy environment of Amazon's platform and the fierce competition in the European and American markets, the company's cross-border e-commerce operating performance in 2021 has declined sharply, and its operating income has decreased by 66.55% year-on-year; in addition, The company's inventory decline reserve for cross-border e-commerce business is 771 million yuan, and the goodwill impairment provision for the cross-border e-commerce business operator is 724 million yuan, in addition, due to the slow release of frozen funds on the Amazon platform of a tree in Shenzhen, the company has made a provision for bad debts of 104 million yuan for the receivables involved according to the suspected reasons for freezing, the time limit for appeal, and the past unfreezing experience.
The above situation of Xinghui shares and Tianze information is not an isolated case. The reporter found that the current international B2C cross-border e-commerce platform mainly includes Amazon (Amazon), eBay, Wish, Walmart, Newegg, etc., of which Amazon is currently the largest global foreign trade trading platform, which means that as long as there is a cross-border e-commerce company that cooperates with the Amazon platform, last year's performance is difficult to be alone.
*ST Huading (601113) increased its net profit loss in 2021, and the company expects net profit of -520 million yuan to -780 million yuan for the same period in 2020. Tongtuo Technology, a subsidiary, was seriously affected by the Amazon incident, and the company recorded corresponding asset impairment losses on inventory and accounts receivable at the end of the period.
*ST Cross-Border (002640) expects operating income of 7.8 billion yuan to 9.8 billion yuan in 2021, down 42.42% year-on-year to 54.17%, and the net profit turned into a profit, but mainly due to bankruptcy and the recognition of investment income from the sale of assets, and the expected deduction of non-net profit is -1.6 billion yuan to -2.3 billion yuan. Contact Interactive (002280) has also not performed well recently.
Enterprises multi-way to break the situation
Since April 2021, Amazon has set off a wave of platform bans. According to the statistics of the Shenzhen Cross-border E-commerce Association, more than 50,000 Chinese sellers have been blocked or withheld due to violations of the Amazon platform, and it is expected that the losses may be more than 100 billion yuan. In addition to the small and medium-sized sellers of cross-border e-commerce in the traditional sense, there are also head sellers such as Shenzhen's head brand big sellers, such as Patuoxun, Aoji, and Youkeshu.
For the reasons for the closure, Amazon's official explanation is that some sellers "improperly manipulate reviews, put gift card reviews in products, and use cash on social media to request false reviews."
After this incident, the industry began to reflect on how to prevent and control platform risks, and how to build a safe, stable and credible platform development model, and some enterprises have put it into practice.
Taking Xinghui shares as an example, the company's management said that after the Amazon suspension incident, the company on the one hand set up a special emergency response team to continuously communicate, coordinate and appeal with the Amazon platform, protect the company's rights and interests through reasonable and legal channels, and at the same time conduct self-examination and rectification of internal problems.
On the other hand, Xinghui Co., Ltd. has accelerated the promotion of the "multi-platform, multi-channel" business strategy, expanded the online sales and self-operated website sales of third-party platforms such as Walmart, eBay, Rakuten, Newegg, and increased the promotion of offline channels. In 2021, the operating income through non-Amazon channels such as self-operated platforms (independent stations), Wal-Mart platforms, and offline channels will reach 605 million yuan, an increase of 92.06% over 315 million yuan in 2020; the total revenue of cross-border e-commerce will account for 23.47%, an increase of 16.87% over 2020, further reducing the dependence on Amazon's single platform.
In addition, Xinghui co., Ltd. joined hands with suppliers to create new brand products. Through new brand identities and images, we will continue to empower suppliers to produce high-quality products and sell them on Amazon. At the same time, the original brand products are sold in non-Amazon channels and offline channels. According to the financial report, in 2021, the revenue of Amazon's platform accounted for the revenue of Xinghui shares from 93.4% in 2020 to 76.54%.
Tianze Information has also taken positive countermeasures, the company said that affected by the adverse changes in the policy environment of the Amazon platform, the company's plan to build a brand matrix with the help of the Amazon platform is not as expected, but the company's focus on cross-border exports, strengthen the strategy and determination of the main business of e-commerce remain unchanged, in 2022 the company will further improve the construction of the internal control system, pay more attention to the platform policy and business risk analysis, identification and prevention and control, balance the relationship between operational efficiency and compliance operations. Strive to reduce the adverse impact of changes in the policy environment of mainstream platforms such as Amazon on the company's subsequent operations, and strive to achieve stable operation of cross-border e-commerce business.
At the same time, Tianze Information also plans to increase the number of other non-core business areas such as vehicle networking operations and software services, and strive to achieve a smooth transition in accordance with the established policy objectives.
In 2021, Anker Innovation (300866) will rely on online sales platforms such as Amazon to enter more emerging markets, and on this basis, it has deepened cooperation with well-known e-commerce platforms such as AliExpress and eBay.
The e-commerce industry presents four new trends
The reporter observed that after the Amazon suspension incident, the entire e-commerce industry showed four new trends in development:
First, the differentiation of cross-border e-commerce has intensified, and some enterprises with multi-platform, multi-channel or self-owned platforms have stable performance and are expected to continue to improve;
Second, due to the Amazon suspension incident to bring more variables to the industry, many companies have seen new opportunities, resulting in more new entrants in the industry, and the intensification of industry competition is facing a reshuffle;
Third, some Chinese companies engaged in similar business with Amazon have performed well, and Amazon's suspension has made companies increase their efforts to expand other platforms, thus helping the development of other e-commerce platform enterprises;
Fourth, there have been new changes in domestic e-commerce channels, and the sales of interactive platforms such as Douyin and Kuaishou have grown rapidly.
Anker Innovation is mainly engaged in cross-border e-commerce business in the field of consumer electronics, and its products mainly include charging, intelligent innovation and wireless audio. In 2021, Anker Innovation achieved a total revenue of 12.57 billion yuan, an increase of 34.45% year-on-year, and a net profit of 982 million yuan, an increase of 14.7% year-on-year.
It is understood that Anker Innovation has formed an "online + offline" three-dimensional sales model, in 2021 its offline revenue accounted for 36.38% of the main business revenue, an increase of 4.48% year-on-year, the company said that it continued to implement the channel expansion plan that year, improve the multi-channel, multi-level sales system, to global consumers to sell their own brand consumer electronics products.
Focus Technology (002315) is the beneficiary of Amazon's suspension event, its revenue and net profit in 2021 increased by 27.3% and 41.33% year-on-year, respectively, and its revenue and net profit in the first quarter of this year increased by 5.18% and 108.09% year-on-year, respectively. The growth of Focus Technology's performance is mainly due to its full-link foreign trade service integrated platforms, such as China Manufacturing Network and Kailuo, which are designed to help Chinese enterprises better go to sea. In 2021, The revenue of China's manufacturing network accounted for 74.63% of the company's total revenue.
Focus Technology said that in 2021, under the catalysis of the epidemic, the trend of domestic and even global foreign trade online will accelerate. With the new pattern of domestic "double circulation" strategic development, cross-border B2B e-commerce has become a strong growth point of China's foreign trade, and the transformation and upgrading of traditional foreign trade enterprises has become an inevitable trend. In this context, the company actively gives full play to the advantages of Internet technology and platform resources, and helps Chinese manufacturing enterprises expand overseas trade markets through continuous product technology innovation, service model innovation, operation management innovation and marketing model innovation.
Jihong Shares (002803) will not increase revenue in 2021, last year's revenue increased by 17.40% year-on-year, and net profit fell by 59.32% year-on-year, of which cross-border e-commerce business revenue increased by 11% year-on-year, and net profit fell by 53% year-on-year.
The relevant person in charge of the company revealed that the above performance of Jihong shares is mainly due to the long-term continuous impact of the epidemic, the cost of the entire cross-border e-commerce supply chain has increased significantly, while China's cross-border e-commerce enterprises have frequently emerged, industry competition has intensified, disorderly and low-price competition has further raised costs and reduced profits; in addition, the epidemic in some overseas areas is more serious, resulting in a continuous decline in consumer purchasing power.
In addition, from the perspective of the entire e-commerce industry, some e-commerce companies focusing on the domestic market have recently shown new changes in their sales channels. According to Antarctic e-commerce, in 2021, its GMV (total commodity transaction volume) in Alibaba and Vipshop has declined, and the GMV of platforms that emphasize interaction such as Pinduoduo, Douyin, and Kuaishou has grown faster.
Antarctic e-commerce said that the rise of the new platform reflects the consumption reach and penetration is stronger, the sinking market's demand for consumption upgrades, but also reflects the consumer's appeal to product content, the future company will further build a brand matrix, to bring more and better products to more consumers, while further tapping potential incremental channels.
The e-commerce industry continues to improve
Although the industry is facing unfavorable factors such as logistics obstruction, rising costs, and declining consumption power caused by the new crown epidemic, as well as international policy risks such as Amazon's suspension, overall, the entire e-commerce industry will continue to improve in the future.
On April 29, the A-share e-commerce sector broke out collectively, and as of the close, 43 stocks rose by more than 9%, of which 5 stocks such as Xinghui Shares, Aoki Shares, Kaichun Shares, One Net One Chuang, and Worth Buying rose by 20%.
On the news side, the Politburo of the CPC Central Committee held a meeting on April 29 to analyze and study the current economic situation and economic work, and to review the "National Talent Development Plan during the 14th Five-Year Plan" period. The meeting stressed that it is necessary to promote the healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision, and introduce specific measures to support the healthy development of the platform economy.
On the data side, the overall trend of the cross-border e-commerce export industry in 2021 continues to improve. Global online retail sales reached $4.94 trillion in 2021, up 16.2 percent from 2020 and accounting for 19.6 percent of global retail sales, and global online sales are expected to increase to $7.39 trillion by 2025.
In addition, according to the data released by the National Bureau of Statistics, the online retail sales of physical goods in 2021 will be 10.8 trillion yuan, an increase of 12.0% over the previous year in terms of comparable caliber, accounting for 24.5% of the total retail sales of social consumer goods, and the e-commerce channel will still maintain vitality and steady growth.
From the policy point of view, in March 2021, the State Council issued the "14th Five-Year Plan" and 2035 Long-term Goals, proposing to accelerate the development of cross-border e-commerce, encourage the construction of overseas warehouses, and ensure the operation of the foreign trade industry supply chain; in November of the same year, the Ministry of Commerce issued the "14th Five-Year Plan for High-quality Development of Foreign Trade", pointing out that it is necessary to actively expand imports, optimize exports, promote the high-quality development of foreign trade, and support the accelerated development of new trade formats, including promoting the sustained and healthy development of cross-border e-commerce, giving play to the leading role of foreign trade comprehensive service enterprises. Accelerate the development of overseas warehouses, cross-border e-commerce exports are becoming a new driving force for China's "stable foreign trade".
Huachuang Securities Research Report pointed out that from 2021, Amazon's rules will become stricter and stop blocking a large number of Chinese seller accounts, and the proportion of Chinese brands of Amazon's head merchants will fall from 42.3% to 36.9% at the end of 2021 in one year. The sellers of "Panpin + third party" were seriously damaged, while most of the boutique head sellers were not affected in this round of shuffling. The withdrawal of some cross-border sellers represents a decrease in the number of similar competitors who share the industrial dividend, and the released share will accelerate to the boutique leader with more brand recognition.
GF Securities analysts said that in 2021 and the first quarter of this year, consumer demand is sluggish, express delivery performance is blocked, leading trading platforms have shrunk their expenditures to survive the industry winter, and the sales revenue growth of leading e-commerce companies has slowed down or declined, but in recent times, the leading platforms have increased repurchases, highlighting the management's recognition of the company's value and the industry's optimism about the future.
(Editor-in-Charge: Peng Bo)