Home furnishing giant 3B is on the verge of bankruptcy, while 3C sellers have successfully passed the review one after another!

It is learned that on January 10, affected by factors such as China's economic recovery and foreign capital inflows, the central parity rate of the RMB against the US dollar was 6.7611, breaking through the 6.8 mark, reaching a new high since August 15, 2022. As of 10:40 on January 11, the exchange rate of the US dollar against the RMB reached 6.77 .

In this regard, many cross-border sellers have expressed that the fluctuation of exchange rates has had a certain impact on them, and some sellers have complained: under the tempering of multiple cost increases, they have built a heart of steel and will not be moved by the exchange rate.

In 2022, platform policies are changing rapidly, the container shipping market situation is unpredictable, and exchange rate trends are ups and downs... Cross-border practitioners have personally experienced and witnessed the turning point of the industry's transformation and shock.

Looking at the uneven quarterly performance of industry giants, many sellers can't help but sigh at the severe challenges of transformation in the cross-border e-commerce industry.

It is learned that on January 10, the latest financial report released by the US home furnishing retail giant 3B (Bed Bath & Beyond) showed that in the third quarter ending November 26, the company's sales fell from US$1.88 billion in the same period last year to US$1.26 billion, a 33% drop, and the company is expected to lose US$393 million this quarter .

According to foreign media reports, in August 2022, in order to reverse the decline in business, the new CEO of 3B Home announced that it would close about 150 stores of the same name, lay off 20% of employees, and implement a number of transformation strategies, and obtained $500 million in new financing. But the final result showed that the retail giant's plan to turn losses into profits failed to materialize.

Last week, 3B Home Furnishing said in a regulatory filing that due to the continued deterioration of its financial condition, there are significant doubts about the company's ability to continue operating and the company will consider all strategic options, including restructuring debt, seeking additional cash, selling assets and filing for bankruptcy.

According to people familiar with the matter, the company is in the early stages of planning to file for Chapter 11 bankruptcy protection, which could be completed within a few weeks.

However, as of now, 3B Home has not explicitly announced that it has filed for bankruptcy . Its maternal and infant retail brand BuyBuy Baby is still favored by many investors. Some sources analyzed that 3B Home may sell this asset or raise funds from existing creditors to exit the bankruptcy process.

Overall, the current collapse of the former home furnishing retail giant has caused many related practitioners to sigh.

Since the beginning of this year, the deterioration of the macroeconomic environment has caused the performance of many sales industries to be lower than expected. Judging from the third quarter reports released by many cross-border sellers, the cross-border e-commerce industry has also experienced a significant decline. However, amid the decline of the industry, there are still some sellers who can go against the trend and knock on the door of listing.

It is learned that at the first review meeting of the GEM Listing Committee in 2023 held on January 6, the initial public offering applications of Shenzhen 3C major sellers Ruilian Technology and Green Link Technology successfully passed the review and officially went to the meeting.

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Both of them belong to the 3C consumer electronics category, but their sales strategies are very different from Anker Innovations, the top 3C brand.

Ruilian Technology

Reolink Technology is mainly engaged in the research and development, production and sales of home video surveillance product hardware and software under its own brand "Reolink", with online platforms as its main sales channels, focusing on overseas consumer markets.

▲ The picture comes from Ruilian Technology's prospectus

The production model of this big seller is mainly outsourcing processing , and the investment in independent production equipment and research and development is relatively small. According to the prospectus data, from 2019 to the first half of 2022, Ruilian Technology's operating income reached 525 million yuan, 960 million yuan, 1.367 billion yuan, and 707.8 million yuan respectively. The proportion of R&D expenses to revenue was 7.77%, 3.38%, 3.46%, and 4.16%, respectively, which is far lower than the industry average.

In contrast to its investment in R&D, Ruilian Technology attaches great importance to the marketing and promotion of its own brands . From 2019 to the first half of 2022, Ruilian Technology's sales expenses totaled 695 million yuan, accounting for 19.5% of its total revenue in three years. By the first half of 2022, the proportion of marketing expenses had reached 37.44%.

▲ The picture comes from Ruilian Technology's prospectus

In the prospectus, Ruilian Technology also mentioned that if the company cannot continue to maintain investment in technological innovation and brand promotion in the future to support higher product added value, thereby feeding back technological innovation and brand building, there will be operating risks such as weakened competitive advantages and declining operating performance.

Greenlink Technology

Founded in 2012, UGREEN is a 3C consumer electronics company integrating R&D, design, production and sales. According to the prospectus, from 2019 to 2021, UGREEN's operating income reached 2.045 billion yuan, 2.738 billion yuan, and 3.446 billion yuan, respectively, and the net profit attributable to the parent company's owners was 225 million yuan, 298 million yuan, and 296 million yuan, respectively.

Similar to Ruilian Technology, during the reporting period, UGREEN Technology's promotion expenses were 142 million, 181 million and 208 million yuan respectively . With the increase in product and sales scale, it is also continuously increasing its investment in on-site and off-site promotion channels.

▲ The picture comes from the prospectus of GreenLink Technology

However, it is worth noting that although UGREEN Technology also has the disadvantage of neglecting research and development under a marketing-heavy model, data from the prospectus shows that the proportion of R&D expenses to revenue is increasing year by year.

From 2019 to 2021, the company's R&D investment was 64.8853 million yuan, 95.1270 million yuan, and 156 million yuan, respectively. Of the 1.5 billion yuan that GreenLink plans to raise in this IPO, GreenLink also stated that 550 million yuan will be used for product R&D and industrialization construction projects . The 3C seller seems to be interested in transforming towards a more R&D-focused direction.

▲ The picture comes from the prospectus of GreenLink Technology

As of now, referring to Anker Innovations' R&D investment in the same period, the proportions were 5.92%, 6.07% and 6.19% respectively. Whether it is Ruilian Technology or UGREEN Technology, the R&D efforts of both lag behind Anker Innovations and are lower than the industry average. Therefore, there is still a long way to go on the road of transformation.

In 2022, there will be many cross-border companies embarking on the road of financing and listing, and many cases have shown that listing is not the ultimate shortcut to maintain a company's profit growth, especially for consumer electronics categories with short iteration cycles and strong substitutability. Marketing and brand building are certainly important, but building strong technological barriers is the key to being invincible overseas.

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