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As the former No. 1 cross-border e-commerce stock, Cross-Border Link’s fate in recent years can be described as ups and downs. I still remember that in 2014, when Cross-border Communication, which was still a "100-yuan pants company", acquired the export company Global Easy Shopping, it seized the dividends of the cross-border e-commerce era. With the help of the industry trend and the radical strategy of violent spending and crazy distribution, Cross-border Communication reached its highlight moment in 2018 - joining the 20 billion revenue club. But behind the brilliance, the seeds of the building's collapse had already been quietly planted. Global Easy Shopping, which relied on the distribution model, soon suffered a backlash from the huge number of SKUs: starting with a huge loss of 2.7 billion in 2019, the profit black hole was torn open and it was out of control.
Cross-border Link, which has been losing money continuously, has of course been looking for a way to save itself. From cutting off its former right and left arms, Paton and Global Easybuy, to lightening its load and betting on the fast fashion clothing brand Zaful. Although Cross-Border Link successfully got rid of the quagmire of losses in 2021, the dawn of profitability did not last long. Today, Cross-Border Link, which has turned from profit to loss, is still facing severe growth challenges. To make matters worse, Zaful, which was highly expected, is trapped in a huge loss dilemma. With Cross-Border Link's export cross-border business plummeting, where will it go in the future? For the former cross-border giant, the 2023 annual report recently released by Cross-Border Link is indeed not a passing answer sheet. During the reporting period, Cross-Border Link achieved revenue of 6.616 billion yuan, a decrease of 8.80% from the same period last year; the net profit attributable to shareholders of the listed company was -9.6882 million yuan, a sharp drop of 153.98% from the same period last year. Looking back at 2019, the previously high-flying Cross-Border Link suddenly fell into the abyss, recording a loss of 2.7 billion for the whole year. In the following year, the profit slump was still not curbed in time, and the loss further expanded to 3.3 billion. Faced with a series of difficulties such as inventory backlogs and tight cash flow, Cross-Border Link embarked on a long road of self-rescue: first it sold Paton to alleviate its financial difficulties, and then it divested itself from the bankrupt Global EasyBuy. During this period, Cross-Border Link learned from its mistakes and accelerated its transformation. On the one hand, it optimized inventory management, and on the other hand, it focused on branding strategies and strengthened the construction of self-operated brands such as ZAFUL. Cross-Border Link’s series of self-rescue measures are actually quite effective - in 2021, it achieved a net profit of 674 million yuan, a year-on-year increase of 132.69%, declaring a turnaround from loss to profit. However, after the rebound from the bottom, new challenges will arise. From an internal perspective, Cross-border Link is burdened with huge debts, and the cash flow crisis has not yet been resolved. Moreover, the root cause of the evil caused by the distribution model cannot be completely eradicated in a short period of time. From an external perspective, as the traffic dividend gradually weakens, coupled with the normalization of overseas consumer demand, the market stock competition is becoming increasingly fierce. As a result, Cross-Border Link, which had finally breathed a sigh of relief, once again fell into the embarrassing situation of turning from profit to loss. Looking at the development model of Cross-border Communication, it has always adhered to the strategy of parallel import and export business. At its peak, the export e-commerce business of Global Easy Shopping accounted for the majority of sales in the overall revenue structure. However, with the divestiture of Paton and Global Easy Shopping, Cross-border Communication's export business now only accounts for the tip of the iceberg in the overall performance. According to the financial report, in 2023, the cross-border e-commerce import business of Cross-border Communication achieved a revenue of 6.10 billion yuan, accounting for 92.20% of Cross-border Communication's operating income; the cross-border export business achieved a revenue of 461 million yuan, accounting for 6.97% of Cross-border Communication's operating income. Among them, the revenue of self-operated websites (including mobile terminals) decreased by 40.42% year-on-year, and the revenue of third-party platforms increased by 35.14% year-on-year. In 2019, its cross-border export e-commerce business achieved revenue of 11.417 billion yuan, accounting for 63.87% of total operating income. By comparison, it is not difficult to see that Cross-border has grown from a cross-border export giant to an import e-commerce company. In fact, after losing two capable people, Patonson and Global Easybuy, Cross-border e-commerce business has shifted its focus to its own brands. However, contrary to expectations, Zaful, which shoulders the heavy responsibility, has not achieved high performance, but has been getting worse. At present, in terms of the strategic layout of cross-border exports, Cross-border is implementing the brand-building and creating its own brand products with core competitiveness, thereby increasing market share and user reputation. Behind this is the fast fashion clothing brand Zaful.
In its financial report, Cross-border Communication stated that Zaful has been selected as one of the top 50 Chinese overseas brands for many years in a row and has a loyal consumer base in Europe and the United States. However, judging from its actual development, Zaful has obviously not been satisfactory in recent years. During the reporting period, the export business of Cross-border Link was mainly based on its subsidiary Saf, while Saf's business mainly relied on its own brand Zaful. As of the end of 2023, Zaful achieved operating income of 205 million yuan, and its net profit loss was as high as 87.2602 million yuan. Zaful, which has been on the overseas brand value list many times, was actually once as famous as SHEIN, and both are leading players in the overseas fast fashion market. Founded in 2014, Zaful targets the young women's market in Europe, America and Australia. It starts from the category of swimwear, which has a fast update cycle but large profit margins. Backed by the supply chain foundation of its parent company, it builds a fast fashion fortress in areas that SHEIN has not fully reached. To date, Zaful has accumulated many categories including swimwear, women's wear, men's wear, home furnishings, accessories and other fashion derivative products, and its business covers major economies such as Europe, America, the Middle East, and Southeast Asia. Looking at Zaful's development history, there are many similarities with SHEIN in terms of strategic approach: in terms of sales, it implements the strategy of massive SKU deployment + rapid new product launches , keeps up with trends and responds promptly to the diversified needs of young consumers; in terms of traffic marketing, it seizes the social media dividend and implements the three major policies of building a social media matrix + KOL marketing + live streaming . At its peak, Zaful had over 100 million monthly visits and tens of millions of users. However, this fast fashion brand, once on par with SHEIN, has taken a sharp turn for the worse in just a few years. The financial report shows that during the reporting period, Zaful's self-operated website had 57.4787 million registered users, with an average monthly active user base of only 1.4717 million. According to data from Similarweb, its monthly visits in the past month have only dropped to 680,400. The most important reason for its decline is the bankruptcy of Global Easy Shopping. Zaful was originally under Global Easy Shopping, but on the eve of Global Easy Shopping's bankruptcy, Cross-border E-Commerce officially announced that Zaful would be separated from it and operated independently as its own brand. However, after transferring to another subsidiary, Zaful, it also took on a huge debt burden. According to industry reports last year, Zaful’s Shenzhen office was besieged by dozens of debt collection suppliers. As we all know, independent websites are a money-burning business. From marketing to customer acquisition, user conversion, delivery and fulfillment, after-sales service and other operational links, they all need to rely on a solid financial foundation. As the parent company is facing a cash flow crisis and is burdened with debt, Zaful's marketing investment is obviously constrained, and as a result, traffic has plummeted, and it is difficult to return to its peak. While Cross-Border Link was in the red in 2019 and 2020, Zaful was still able to maintain stable profits. However, after it separated from Global Easybuy and joined Sateng in 2021, Zaful's decline became uncontrollable, and it has recorded losses for three consecutive years so far. It can be seen that as the strategic core of Cross-Border's export business at this stage, Zaful is obviously unable to shoulder the responsibility of helping it make a comeback. As Zaful gradually declines, where will the future overseas expansion of the first cross-border stock, which once dominated the industry with its export business, go?
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