With a market value of 3.8 billion, the successful listing was pushed into the spotlight, and the scenery was unlimited for a while.
On the day of the Double 11 Shopping Festival in 2022, Zi Wuyu, one of the largest cross-border e-commerce sellers in China, successfully listed on the Hong Kong Stock Exchange. The success of the IPO also made the 34-year-old founder Hua Bingru worth up to 1.5 billion.
The bright financial results also make people sigh at the broad prospects of cross-border e-commerce.
In the past year, Zibuyu has an average monthly GMV of 270 million yuan (average data from July 2021 to June 2022), ranking first in GMV among Chinese sellers in the footwear and apparel category exported to North America and third in GMV among third-party platform sellers.
What makes Zi Wuyu's success?
Zi Muyu, who started from Taobao, stepped on almost every emerging platform dividend period opportunity, from the earliest Taobao Tmall to AliExpress, eBay, Wish, and then to Amazon, entering the game when the platform was rising, and when the platform bonus period was not there, it entered the decline stage, and quickly withdrew to a new battlefield.
The deeper reason for the rise of Zibuyu is the cognitive dividend, and the cognition and Know How accumulated over the years of platform e-commerce experience allow it to have unique sensitivity and insight into platform trend changes, and can explore effective platform e-commerce operation strategies to migrate and copy on different platforms.
On the other hand, backed by the Zhejiang home textile garment industry belt, relying on the advantages of the domestic supply chain, it is also a natural advantage for Zi Wuyu to kill all sides in the women's clothing category.
The success of Zi Wuyu occupies the right time, place, people and convenience.
From the sales index alone, Zi Wuyu's performance is very eye-catching. However, the high dependence on the Amazon platform and the US market is an indisputable fact.
In order to avoid the operational risks of relying on a single platform, Zibuyu adopts the two-legged strategy of "third-party e-commerce platform + self-operated website (independent website)" combined transportation, which is also the direction explored by most Chinese cross-border e-commerce sellers.
The prospect and future of Zi Wuyu is not only a concern for investors, but also attracts the attention of many Chinese cross-border e-commerce sellers.
Amazon, the basic plate of the solid sub-silent
Interestingly, Amazon sellers and independent sellers who are besieged each other covet each other's territory. After their basic market is stable, many sellers intend to explore new business increments in the new battlefield.
There is no shortage of challengers in the core hinterland.
A few months ago, Chinese seller benchmark, independent station brother SHEIN also appeared on the Amazon stage.
However, if you look closely, the prices of SHEIN's products in the brand's store on Amazon are mostly much higher than the prices on its independent website.
Amazon, which was once extremely strong and forced sellers to guarantee the "lowest price on the whole network" on the platform, also seems to bow its head to compromise in front of SHEIN.
At present, most of SHEIN's products in the brand store on Amazon are much higher than the average price on its independent website. Even if it is the same product, the price difference between Amazon and its independent website is huge.
Take this pullover, for example, which sells for $30.99 on Amazon.
But on its independent site, the product costs only $13, more than double the price difference.
I used jumpers as keywords to search for this product category, and I could see completely different price ranges on independent sites and on Amazon.
Amazon prices range between $20 and $35
Stand-alone prices range between $10 and $25
Perhaps, for SHEIN, entering Amazon is just trying new sales channels, after all, there are still some customers who are accustomed to searching and buying on Amazon, and old customers who have purchased SHEIN products will bring a certain amount of free brand word traffic to the SHEIN Amazon store, and it is a pity that this part of the crowd traffic is not undertaken by the platform store.
Even if SHEIN is priced higher on Amazon than the price range of SHEIN independent sites, you can see from the number of reviews that there is a certain sales scale.
However, independent fast fashion sellers such as SHEIN do not want to, nor can they shake the base of silence.
JUDGING FROM THE PRICE STRATEGY, SHEIN DOES NOT INTEND TO REFINE THE MAZON. After all, FBA's heavy inventory model is incompatible with the rapid response embedded in its genes.
And Zi Buyu is also quite confident in the moat barrier he built on the platform. Even if it is an independent site to sell, it is difficult to pry into the Amazon platform.
For Zi Mu Yu, long-term deep cultivation of the Amazon has formed a self-reinforcing circuit. Long-term sales data precipitation means that the stability of the ranking pit and the difficulty of the challenge are high.
"The same clothes, one with 100 reviews and one with 2,000 reviews, Amazon users will not choose the former because it is $5 cheaper, which means that it is difficult for brands that occupy pits below the head to climb up." An investor who has been following cross-border e-commerce for a long time commented.
The rules of the platform determined that Zi Wuyu chose a completely different business model from SHEIN.
"SHEIN sells fashionable and popular models with a high elimination rate, while the child does not sell fashion and sells basic models." Zhang Sijian, an investor who is silent, pointed out that the two are fundamentally different.
For fast fashion sellers chasing short and changeable fashion trends, the core success factors (KSFs) are the responsiveness of their entire system to trends. Product design and production requires quick response to catch trends without being dragged down by dead stocks.
The main basic model is more like Uniqlo, the product life cycle is longer, and a stable pit ranking can bring more stable sales. Stable sales also bring economies of scale, and have higher bidding power than competitors in the supply chain. The cost advantage brought by this scale effect forms a self-reinforcing loop, and feeds back the cost-effective competitiveness on Amazon.
Better cost performance brings better conversion data and praise rate, and more traffic tilt on the platform.
The flywheel effect is presented!
Once the self-reinforcing circuit is formed, Zi Wuyu can throw off similar competitors on the platform, and the gap will accelerate to widen.
For new entrants, the silent moat means a higher threshold of resource investment and operational skills, enough to deter potential latecomers.
Taking inventory input as an example, this slow fashion model relying on the platform is naturally heavy. The inventory size disclosed in its prospectus in the first half of 2022 has reached 60% of revenue. Zi Buyu is also explained in detail in the prospectus. The long sales and shipping cycles of Amazon FBA models and platforms require sufficient inventory products as a buffer. The platform algorithm also determines the high weight of stable inventory and continuous stocking, and product out-of-stock will greatly affect the subsequent traffic distribution of products, so sufficient stocking is essential. The pandemic has caused supply chain delivery instability, further amplifying stocking demand.
The capital threshold and possible slow-selling risk corresponding to such a business model have virtually dissuaded countless possible new challengers.
The wave of closures has caused concerns about sellers who are highly dependent on the platform, but it is actually just unfounded. E-commerce brands and e-commerce platforms have always been interdependent and interdependent. Most of the gray hat and black hat sellers who were punished were gray hat and black hat sellers who played too much in operation and made the platform zero-tolerance tumultuous, challenged Amazon's bottom line, and destroyed the healthy ecology.
After all, quality sellers are an important part of Amazon's healthy ecosystem.
Zi Muyu's base is very solid. However, third-party platforms have long lost their early dividend potential, and it is not easy to compete with other sellers for limited stock.
Zi Wuyu's layout in the direction of independent stations is not only out of consideration to get rid of the constraints on platforms such as Amazon, but also intends to explore new sources of incremental outbreaks.
Brand independent station, no new growth point?
The company and its brands have also received a lot of praise in China. Since 2016, the company has won the "Best Cross-border E-commerce Marketing Award" issued by the Department of Commerce of Zhejiang Province and Zhejiang Daily for six consecutive years. Its Imily Bell and other brands have been selected as well-known brands of Zhejiang cross-border e-commerce exports.
However, the sales volume on the platform and the recognition of the domestic government do not represent the recognition and love of overseas consumers for the brand.
Investigated several independent websites of Zi Wuyu's brand, and the overall situation is very rough. Let's take a look at the specific performance and professionalism of one of the best-selling brands, Imily Bela.
Imily Bela is positioned in the women's sweater category and is the main brand of Zi Wuyu on Amazon, with more than 378,000 products sold in 2021; In the first half of 2022 alone, Imily Bela sold more than 210,000 units on Amazon, and its GMV exceeded RMB 36 million in half a year.
As the most important brand under Zibuyu, from my personal point of view, the overall localization and branding of Imily Bela independent station is not high. A few small details can show the level of professionalism and limited investment of the team.
For example, the brand story on the website, the English is very stiff and Chinese, lacks a full sense of story, and is more like the product of applying templates. There is also a lack of image retouching to enhance its look.
From this link alone, it can be seen that Zi Wuyu lacks a little ability to tell a story. Let's take a look at the brand story of a niche bracelet brand overseas.
Product pages and category pages, as the most important traffic acceptance landing pages, also have many problems. The image size and style are not uniform, which makes the category page appear chaotic and very much affects the overall brand sense. Many product pictures still retain Chinese logos and expressions, which are obviously borrowed from domestic channels, and it can be seen that the operation model is still simply fast distribution, rapid testing, and does not pay attention to the fine processing of materials such as picture copywriting.
These should be from the source of goods on 1688, that is, the Imily Bela independent station does not rely on the supply chain behind the Amazon business, but the independent station team operates independently using the Imily Bela brand to adopt the mode of spreading goods and explosive products.
The reason behind it is estimated that this model is also familiar to most independent station leaders, and it was a very effective playing method a few years ago. Refined, branded, and localized talents are too scarce, and you can only use the familiar gameplay of the team first.
Imily Bela's lack of refinement, branding, and localization in operation can also be glimpsed from the website traffic structure.
Let's take a look at Söfft, a local brand with a similar online traffic scale to Imily Bela, owned by Wako Buyu. We can see the gap between Imily Bela and a brand that is truly loved by consumers through the traffic structure.
https://www.sofftshoe.com/
The scale of traffic between the two is large, and the difference is not bad.
Let's compare the traffic structure to see the essential difference between the two.
Even such a small brand with similar traffic scale, in the North American market, which Zi Wuyu relies on the most, is indeed completely different from Imily Bela in terms of search popularity.
The red line is sofft and the blue line is Imily Bela
The higher the index, the more consumers actively search for this brand, the brand is remembered by more consumers, and they actively choose to find brand stores in the purchase scenario.
The user portraits of the two are also very similar in the distribution of age structure. But from the user interest tag, it can be seen that Sofft consumers also pay attention to similar brands with prices in the hundreds of dollars; Imily Bela's user tag shows that it is more loyal customers of the cost-effective Amazon platform. The spending power of the two customer groups is not at the same level.
The price of Drmartens.com website is similar to that of Sofft, and the price range of mid-range brands is completely different from the price range of Chinese brands that focus on cost performance.
In addition to the popularity of brand word search, we can also judge by the proportion of direct traffic and brand word search traffic, how many consumers who already have brand recognition actively search or directly enter the official store through the domain name. These two data indicators can also be used to judge the effectiveness of building the brand mentality.
In terms of direct traffic metrics, Imily Bela is not bad. may be a repeat customer; It may also be that Amazon's settled customers move to the brand store; It may also be customers who did not buy after the early advertising reached and remembered the brand when they needed it.
But we can see the difference between the two from the percentage of brand terms in search traffic.
76% of Sofft's searches are organic traffic, and the top searches are brand-related keywords;
A large proportion of Imily Bela's search traffic is the result of paid advertising, which should be the traffic brought by shopping ads, and it is also a traffic channel that Chinese sellers rely on very much. In the Imily Bela keyword structure, the proportion of brand words is small, which also confirms the performance data of the previous brand popularity indicator.
Even if Zibuyu's brands have won many awards and praise in China, from the actual performance, these brands owned by Zibuyu will never be considered brands that are loved by consumers and have a solid loyal customer base.
And such a brand, which lacks a loyal customer base, is still subject to other traffic channels, even if it gets rid of Amazon's dependence. Once the cost of external traffic rises, or the traffic channel changes (such as the attribution caused by Apple's new privacy policy is no longer accurate), it will have a great impact on the business. The popular website group sellers in the past few years are an example, and the explosive website group sellers who relied on Facebook traffic in the early days after the New Deal are already full of mourning and chicken feathers.
Not only that, but we can also see that the Zibuyu team is very lacking in the upper funnel and omnichannel operation capabilities.
The negligible proportion of display ads (0.27%) and limited social content media traffic (1.83%), coupled with brand content and limited exposure rarely seen on different social media and content platforms, show that Imily Bela is too focused on lower-end traffic with clear shopping intent. This type of ad is more like a low-hanging fruit, with quick feedback and results, but limited in scale, low barriers to entry (no creative and content production capabilities required), and fierce competition.
The upper-end traffic (reach in non-shopping scenarios), whether it is content marketing, display advertising, video advertising, influencer marketing, etc., requires the team to have new skills and cognition, and must master a completely different knowledge system from platform e-commerce operations.
The main business of Zibuyu, the women's clothing category itself determines the high weight of upper-end traffic (non-shopping scenarios). We are all familiar with the marketing routine of planting grass in non-shopping scenes and harvesting shopping scenes, which is very suitable for the complete link of women buying clothing.
Because clothing brands need effective upper-end traffic management to drive trends and awaken demand to shape brand recognition. And this is the ability that the silent team extremely lacks.
Weak independent station business
Zibuyu's prospectus revealed that the company currently has 238 self-operated websites. From 2019 to the first half of 2022, the proportion of revenue contributed by Zibuyu Independent Station was only 7.68%, 19.1%, 11.0%, and 5.9%. From the perspective of the proportion of sales, the layout of Zi Wuyu in independent stations is not yet a climate, and it has not been freed from the shackles of third-party channels.
In the past, relying on the platform dividend, the fast-growing Zi Wuyu gene determined the path dependence. It is not impossible to make a breakthrough in brand building and independent website business in the future. However, it depends on the speed of cognitive upgrade iteration at the top and the entire team.
After all, building a successful overseas brand and platform e-commerce operation are completely different ways of playing.