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It is learned that recently, Xinghui Shares, the parent company of the cross-border seller Zebao, issued an "Announcement on the Reply to the Inquiry Letter on the 2021 Annual Report". It disclosed the specific impact of the company on the Amazon account blocking incident in 2021, and answered the 14 important inquiries of the Shenzhen Stock Exchange in detail, covering a comprehensive range and with complete data. ▲ The picture comes from Juchao Information Network In the account blocking wave, Zebao was blocked on 367 Amazon sites, accounting for 72.52%. From the content of the announcement, it can be seen that the impact of this incident on Zebao is very fatal. The losses in the second and third quarters of 2021 alone are close to its net profit for the whole year of 2020. In addition, due to the decline in revenue, a series of problems have also emerged within the company. Negative impact of account suspension According to the announcement of Xinghui Shares, the most profound impact of the Amazon account suspension on Zebao is summarized as follows: 1. Purchase and sales volumes continue to decline It is learned that due to the Amazon account suspension incident, Zebao's four main products are: The purchasing volume, sales volume and inventory volume of power supplies, Bluetooth audio, small household appliances and computer and mobile phone peripherals all showed an overall downward trend . Although Zebao's sales volume rebounded in the fourth quarter of 2021 by clearing inventory at low prices, it immediately fell back to the bottom in the first quarter of this year. ▲ The picture comes from Juchao Information Network Due to the sharp decline in sales, the purchasing volume also decreased significantly. As the sales side promoted sales through discounts and inventory clearance, the company's inventory also decreased significantly. ▲ The picture comes from Juchao Information Network ▲ The picture comes from Juchao Information Network 2. The company's operating income has dropped significantly With costs remaining the same, sales volume has dropped significantly, and the company's revenue will also face disaster. The sales revenue of Zebao Technology's major products has fallen sharply since the third quarter of 2021. The third quarter of 2021 fell 72.32% from the same period last year , and the fourth quarter of 2021 fell 81.81% from the same period last year . ▲ The picture comes from Juchao Information Network The sales of the four categories of products in the above figure accounted for more than 10% of Zebao's e-commerce business revenue in 2021, and a total of 80.67%. It is the core sales pillar of Zebao. If these products can't hide the decline, other products need not say more. In 2021, Zebao's revenue fell by more than 46% year-on-year compared with 2020 . 3. Shareholders’ shares are frozen and the number of employees is reduced After issuing the reply announcement, Xinghui Co., Ltd. announced the next day the "Announcement on the Judicial Freezing of Some Shares of Shareholders Holding More than 5% of the Shares". The announcement showed that Sun Caijin, the founder and second largest shareholder of Zebao Technology, had a total of approximately 15.02 million shares frozen, accounting for 4.25% of the company's total share capital ; shareholder Zhu Jiajia had a total of approximately 1.3 million shares frozen, accounting for 0.37% of the company's total share capital. ▲ The picture comes from Juchao Information Network In addition, in order to cope with business losses, Zebao also inevitably reduced the number of employees. In 2021, the company had an average of 2,064 employees. After the Amazon account suspension incident in June 2021, the number of employees began to decrease in the fourth quarter, and the number of employees decreased to 1,778 at the end of 2021. Despite this, in the first quarter of 2022, the sales revenue of Zebao Technology's main products was 262.4799 million yuan, which was basically the same as 270.3774 million yuan in the fourth quarter of 2021 , and there was no trend of further decline. It can be seen that Zebao has survived the most difficult stage. Measures taken by Zebao and their results Nearly a year has passed since the account blocking incident, and Zebao, which had seen continuous revenue decline, has also stopped its collapse. This is inseparable from the decisive and thorough strategic shift made by the top management . 1. Multi-platform policy to reduce the proportion of Amazon business In the past few years, Zebao Technology's online revenue from Amazon has grown rapidly, and the risk of operating on a single platform has become increasingly high. The account suspension incident has made the company's top management firm in its "multi-platform, multi-channel" development strategy. Currently, Zebao is gradually reducing its dependence on Amazon's single platform by actively developing new platforms such as independent stations, Walmart, eBay, and offline channel layouts. In 2020, sales revenue on the Amazon platform accounted for 93.40% of Zebao Technology's revenue . After adopting a multi-platform development strategy, the proportion of sales revenue on the Amazon platform fell to 56.12% in the first quarter of 2022 , a decrease of 37.28% . ▲ The picture comes from Juchao Information Network 2. Acquire brands and start both online and offline operations In 2021, Xinghui Co., Ltd. completed the acquisition of 65% of the shares of EURO-TECH, a French company. Most of EURO-TECH's business is in Europe, where it has relatively complete supermarket resources and has established a stable cooperative relationship with major supermarkets in France. It has certain brand and channel advantages, which can help Zebo Technology enter the offline market in France and Europe. As of the end of May 2022, the brand business has contributed approximately US$8 million in revenue to Zebo Technology . At the same time, Zebo has also established mature offline sales channels in North America, the Middle East, Japan and the Asia-Pacific region, and has local subsidiaries in the United States, Germany, the United Kingdom and Japan responsible for localized offline sales operations and management. 3. Optimize costs and increase profit margins It is worth noting that in order to follow up the company's overall contraction strategy and solve the problem of excessive costs, Zebao has also made adjustments in supply chain, distribution, warehousing and other issues. It has reduced comprehensive costs by strengthening the development of high-quality supply chains, reaching strategic cooperation with logistics suppliers , and adjusting overseas warehousing configurations. The quotations of Zebao's three main logistics suppliers have all dropped to a certain extent . The supplier's quotation for ocean freight for the United States has dropped from US$20,580 in September 2021 to US$10,500 in May 2022, with an overall decline rate of more than 55% ; the supplier's quotation for the United Kingdom has dropped from US$17,500 at the end of August 2021 to US$10,635 at the end of May 2022, with a delisting rate of 44% ; the logistics supplier's quotation for JD.com's warehouse in Europe has also dropped by 14% in half a year . Overall, many of Zebao’s initiatives have achieved immediate results, but it will probably be difficult to restore the scale of its peak period in the short term and it will take some time.
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