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▶ Video account attention cross-border navigation Some people say that cross-border e-commerce is like a big tree full of fruits. In the past, you could pick the fruits by just standing on tiptoe. However, now the low-hanging fruits have been eaten up. To get the fruits on high, you need to develop sophisticated climbing skills and use a unique vision to discover more hidden fruits. China's cross-border e-commerce has gone through more than 20 years, from connecting with the world through the WTO window to taking the trade express to take off at high speed. The pioneers of going overseas, bathed in the dividends, have spread like wildfire in the overseas market. In that era of "picking up money everywhere", countless cross-border big sellers broke out with violent distribution methods. Today, the golden age of wild growth has become a thing of the past. The fruits of cross-border e-commerce are no longer within easy reach, and can only be harvested by climbing up. As the ladder of brands gradually replaces the stepping stone of distribution, many overseas companies that rely on the distribution model are being eliminated by the mainstream of boutiques. Even the big sellers that were once so glorious cannot escape the fate of falling. From a billionaire to a loss of 4 billion, Cross-border Link is back on track after delisting On September 28, Cross-border E-Commerce announced that its application for revoking the delisting risk warning was successfully approved. The stock name was changed from "*ST Cross-border E-Commerce" to "Cross-border E-Commerce", and the daily price fluctuation limit of the stock trading price was changed from "5%" to "10%". ▲ The picture comes from the Cross-border Communication Financial Report At the same time, Cross-border Communication also issued an announcement: its wholly-owned subsidiary Global Easy Shopping has entered the compulsory liquidation procedure. Since Global Easy will no longer be included in the scope of Cross-border Communication's consolidated financial statements from December 2021, the bankruptcy of Global Easy Shopping will not have a negative impact on its subsequent operations. Having successfully removed the delisting risk and gotten rid of the "burden" of Global Easy Shopping, Cross-Border Link, now with a light load, seems to have seen a glimpse of light at the dawn of hope. As the No. 1 cross-border e-commerce company in the past, Cross-border e-commerce had an annual sales of over 10 billion yuan at its peak, and its market value once soared to 35.6 billion yuan. However, despite its glorious appearance, the seeds of thunderstorm had already been quietly planted inside . The huge inventory crisis accumulated by the massive distribution model weighed heavily on this cross-border giant like a collapsed building. Looking back at the history of Cross-border E-commerce, it started from the traditional clothing industry and acquired the then-strong Global E-commerce for 1.032 billion yuan in 2014, thus officially entering the cross-border e-commerce market. The following year after the transformation, Cross-border E-commerce's revenue soared from 842 million yuan to 3.961 billion yuan. Having tasted the sweet fruit for the first time, Cross-border E-commerce opened up the Ren and Du meridians of crazy mergers and acquisitions. In 2016, it acquired Paton, which focused on exporting 3C business, and Youyi E-commerce, which mainly dealt in imported maternal and child products. The explosive growth of cross-border e-commerce has brought about a frenzy of performance bubbles. In 2018, Cross-border e-commerce's revenue was 21.534 billion yuan, a year-on-year increase of 53.62%. However, the precursor of collapse has already appeared. Cross-border e-commerce's net profit was 623 million yuan, a year-on-year decrease of 17.07%, and the inventory balance of 3.945 billion yuan also buried a hidden mine. ▲ The picture comes from the Cross-border Communication Financial Report The bubble burst after only one year of prosperity. In the performance forecast released on February 3, 2020, Cross-border Link expected to lose 1.43 billion to 1.13 billion yuan, and the news caused a stir in the stock market. However, by April 30, dozens of announcements pushed Cross-border Link to the brink overnight: the actual loss doubled to 2.686 billion yuan. The once high-flying Global Easy Shopping has become the culprit. On the one hand, Global Easy Shopping's sales in Europe and the United States have declined sharply, and on the other hand, the sluggish sales of a large number of categories in overseas warehouses have caused Cross-border Link to make an impairment provision of about 2.87 billion yuan. Although Cross-Border Link stated that this large provision was a one-time clearing of historical burdens and preparing for 2020 with a light load, it ultimately failed to usher in an upward performance inflection point as expected. In 2020, Cross-Border Link recorded a huge loss of 3.374 billion in net profit, and its subsidiary Global Easybuy was also caught in a crisis of unsold inventory and overdue payments. After the first domino of losses fell, Cross-border Link's decline became unstoppable. In order to ease the financial difficulties, Cross-border Link had no choice but to sell Paton. But what followed was that Global Easy Shopping finally broke out into bankruptcy crisis after reaching the critical point. One of his capable deputies donated the money to someone else and the other is on the verge of bankruptcy. The once overseas giant Cross-Border Link seems to have fallen to the bottom. The root cause of the collapse of Cross-border Link is the inventory management flaws caused by the massive distribution model that burns a lot of money. Therefore, after learning from the painful experience, Cross-border Link decided to start transformation and self-help. On the one hand, it optimized the inventory management process, and on the other hand, it gradually turned to a refined operation route around the branding strategy and strengthened the construction of self-operated brands such as ZAFUL and Rosegal. As the saying goes, there must be a rebound after hitting the bottom, and Cross-Border Link's transformation strategy is obviously effective. In 2021, Cross-Border Link's net profit was 674 million, a year-on-year increase of 132.69%, finally getting rid of the dilemma of huge losses. ▲ The picture comes from the Cross-border Communication Financial Report Although it lost two generals who helped it reach the top, from another perspective, Cross-border Link has also gotten rid of the heavy burden that has been entangled for a long time. At the end of 2021, Cross-border Link's inventory was 389 million yuan, a decrease of 16.45% in total assets. In addition, the operating cost was 7.265 billion yuan, a decrease of 32.89% year-on-year. ▲ The picture comes from the Cross-border Communication Financial Report From being the first cross-border stock with great glory to being hit by a huge loss, Cross-Border Link, which has experienced great ups and downs in just a few years, is now lightly equipped and slowly recovering. After losing both his right-hand men and left-hand men, the export business plummeted. Is ZAFUL the last hope? Looking back at 2020, the cross-border export business revenue of Cross-border Communication, mainly Paton and Global Easy Shopping, accounted for 59.21%, and the import business led by Youyi E-commerce accounted for 37.51%. However, as the left and right arms of the cross-border business were cut off one after another, the export e-commerce revenue accounted for only 7.30% in the first half of this year, while the import business revenue reached 3.132 billion yuan, and the proportion soared to 91.72%. After losing the two key figures, Paton and Global Easybuy, the focus of Cross-Border Link's export e-commerce business shifted to its own brands, and now Zaful has become the last light. Founded in 2014, ZAFUL was originally a cross-border fashion clothing brand under Global Easybuy. However, on the eve of Global Easybuy's bankruptcy last year, Cross-border Link officially announced that ZAFUL would be separated from it and operated independently as a free brand. After several ups and downs, Cross-border Communication has transformed into a refined and in-depth route, taking ZAFUL as its strategic core and deeply building its brand operation capabilities. In 2021, ZAFUL ranked 43rd in the "BrandZ™ Top 50 Chinese Global Brands 2021" list, ranking second in the online fast fashion field, second only to SHEIN. Backed by the solid supply chain foundation of its parent company, ZAFUL has built its own fast fashion fortress wherever SHEIN reaches. Excellent product strategies and brand approaches together constitute a solid underlying foundation. ZAFUL targets the young women's market in Europe, America and Australia, and enters the market from the swimwear category, which has a fast update cycle but large profit margins. It gradually captures the minds of overseas consumers through the three means of rapid new product launches, high cost-effectiveness and personalized design concepts. Like SHEIN, ZAUFUL pursues a dual-channel brand strategy. Online, it promotes product promotion and brand building through the construction of a social media matrix, KOL marketing strategy, and normalization of the live streaming model . Offline, it harvests potential audiences by conducting a series of university activities and attending fashion shows. Along the way, ZAFUL has been able to survive in the fast-growing and fast-dying fast-fashion market with its intensive branding strategy, and was even once called a rising star comparable to SHEIN. For Cross-border, which has lost its left and right arms and is eager to transform, ZAFUL seems to be the last hope to revive its export business. However, judging from the current development status, ZAFUL, which was highly expected, has shown a downward trend. In the first half of 2022, ZAFUL had 86,900 online SKUs and an average customer unit price of $66.17. Its parent company, Sateng, achieved revenue of 149 million yuan, down 63.77% from the same period last year, and a net loss of 35.89 million yuan. ▲ The picture comes from the Cross-border Communication Financial Report As of June 30, the number of registered users on ZAFUL's self-operated website was 55.3232 million, an increase of only 2.2269 million in one year. In terms of the average number of monthly active users, it dropped sharply from 10.8749 million in the same period last year to 7.7103 million. In fact, since 2018, ZAFUL's average monthly active users have shown a downward trend. In 2019, the average monthly visits also shrank from 166 million to 101 million. Since then, all data have shown a downward trend year by year. This also indirectly confirms that ZAFUL's customer loyalty is constantly weakening, and the falling revenue and loss of profits are the most direct feedback. Although ZAFUL has made a breakthrough in the fast fashion track with its own brand strategy under the shadow of its parent company Cross-border Link, as its backing gradually fades and its own development drawbacks emerge, ZAFUL is now facing a growth dilemma. Whether ZAFUL can find a turnaround and restore the glory of its cross-border overseas business is still full of unknowns. Born from distribution, failed by distribution: the shackles of distribution have locked the throats of those who go out to sea The transformation of Cross-border Link from a bottleneck-ridden Baiyuan Pants Industry to a multi-billion cross-border giant was inseparable from the merger agreement signed with Global Easybuy in 2014. However, its sudden fall after its unbridled glory was also closely linked to this merger. Cross-border e-commerce company K-Tong, which sensed the benefits of cross-border e-commerce, and Global Easy Shopping, which was eager to go public through backdoor listing, hit it off and formed a strong alliance. However, behind this beautiful event, Global Easy Shopping paid a considerable dowry: a gambling agreement was signed, with the net profit from 2014 to 2017 not less than 65 million yuan, 91 million yuan, 126 million yuan and 170 million yuan respectively. Although the pressure of the bet was as heavy as a mountain, Global Easy Shopping finally achieved its goal and achieved its goal. In 2017, its revenue exceeded 10 billion yuan for the first time, accounting for 81% of the total revenue of Cross-border Link, which brought Cross-border Link to the top of the industry. However, under the bright shell, the seeds of decay had already been sown. In order to win the bet, Global Easy Shopping resolutely embarked on a road of crazy spending and rampant distribution of goods. Through the strategy of stacking a large number of SKUs and casting a wide net, Global Easy Shopping expanded rapidly with the momentum of a prairie fire, and its revenue increased by leaps and bounds in a short period of time. However, the overly aggressive distribution model lacked refined operational means to protect it. Out- of-control inventory management, a large amount of unsalable inventory, and a price war that sacrificed capital for profit, these contradictions and hidden dangers accumulated over the years suddenly broke out. In the end, Global Easy Shopping completed the bet, but paid the price of having its capital chain cut off and suffering huge losses. In an era when cross-border e-commerce is booming and the market is still in a stage of wild growth, the distribution model has spawned countless overseas sales. For early pioneers, the "sea of goods strategy" of laying out account matrices on third-party platforms such as Amazon and eBay and investing a large number of SKUs can not only save costs but also quickly increase sales, which is undoubtedly the most efficient way to play. This model has brought big sellers such as Global Easybuy and Youkeshu to the forefront of the industry, but it has also put them in a difficult position to shake off. Youkeshu, which was acquired by Tianze Information, also carried the heavy burden of the gambling agreement. After the account was banned and the transformation to high-quality products was frustrated, its performance has been sluggish; while Jiazhilian, which was acquired by Xunxing Co., Ltd., failed to complete the gambling agreement and was hit by a huge debt. From the early days of massive distribution of goods leading to a short-term surge in revenue, to the ambitious backdoor listing with the burden of a bet agreement, to the outbreak of the inventory crisis that opened up the hole of losses, the fate trajectories of the big sellers of goods have more or less overlapped. Whether it is the shock of the account suspension wave or the tragedy of the fall of the big seller, it seems to indicate that the model of distributing goods in pursuit of short-term effects has also reached its end. At the moment when the industry is entering the deep water, it is necessary to be cautious and slow down the pace, and transform into a branding route that takes long-term cultivation and patient precipitation, which has become a new trend. Under this mainstream trend, fast fashion brand giant SHEIN has become the target of pursuit and imitation for many overseas companies. However, in fact, there was once an opportunity for Global Easy Shopping to catch up with SHEIN, but unfortunately it failed to seize it. After Global Easy Shopping went public through the shell company of Cross-border Link, the parent company's strong financial foundation and abundant resource supply were undoubtedly its solid backing for development. However, Global Easy Shopping failed to seize the opportunity to deepen the moat of the supply chain and build core competitive barriers, but was confined to the tunnel vision of competing for short-term interests and making quick money. Compared with Global Easy Shopping that missed the opportunity, SHEIN patiently laid out its supply chain front and spent nearly ten years building a strong and flexible supply chain in the Pearl River Delta to protect its brand's overseas expansion. Success or failure depends on distribution. At a time when the boutique model has become the mainstream, how to start the battle of transformation is a difficult and urgent problem for every overseas company. Cross-Border Link has gone through a long journey, from a billion-dollar giant with unlimited glory to a desperate situation with billions of losses, and now to a light-hearted journey with no burdens. Its ups and downs on the road to going overseas are truly regrettable. Born from distribution, failed by distribution. Cross-border is trying to get rid of the heavy shackles of the distribution model. Where its transformation will eventually lead is still uncertain, but everything is possible.
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