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▶ Video account attention cross-border navigation It is learned that the "False Reviews Governance Act" approved by Spain in November last year has officially come into effect recently. The bill aims to eliminate the phenomenon of false reviews, and the maximum sanctions can be increased to 1 million euros or 8 times the value of illegally obtained profits.
This new regulation is conducive to sanctioning companies that conduct large-scale fake orders or use illegal advertisements on social platforms. Over the years, many Internet giants have been frequently exposed for fake orders, and Amazon is the focus of regulatory agencies in various countries because of its huge market size and the prevalence of fake reviews. Although Amazon has been committed to introducing relevant policies since 2016, fake reviews still persist. It was not until last year that Amazon took drastic measures to rectify the situation. A large number of Chinese sellers were banned within a year, including some billion-dollar sellers. Under the siege of regulatory pressure from various countries, Amazon's policy of cracking down on violations has continued to escalate, and recently another big seller was hit by its iron fist of banning his account. Jiazhilian’s account was blocked by Amazon, freezing nearly 8 million yuan! Recently, Xunxing Co., Ltd., the parent company of Shenzhen Dasheye Chain, issued an inquiry announcement regarding the Shenzhen Stock Exchange's annual report inquiry letter. Xunxing Co., Ltd. revealed that in 2021, the company's cross-border e-commerce business had an accounts receivable balance of 16.841 million yuan for which bad debt provisions were made, of which Amazon made bad debt provisions of 2.3693 million yuan, mainly due to the freezing of some accounts. ▲ The picture comes from Xunxing Shares Announcement Due to the adjustment of Amazon platform rules, some store operations on Jiazhilian were suspected of not complying with platform rules, resulting in the temporary closure of some accounts on the platform, with a frozen amount of approximately 7.8975 million yuan. At present, Jiazhilian has entrusted a professional organization to communicate and appeal with the Amazon platform. In view of the progress of the appeal and the costs and expenses incurred during the process, a single provision for bad debts is made at 30% for the accounts receivable with a relatively large amount. In fact, Jiazhilian was also involved in a ban controversy at the beginning of last year. Due to the VAT tax reform on European sites, some of Jiazhilian’s accounts on Amazon Germany were frozen, and related accounts were banned for violating AliExpress operating rules. Looking at the development history of Jiazhilian, it has experienced ups and downs since it was acquired by Xunxing Co., Ltd. in 2017. At the beginning of the acquisition, the two parties signed a bet agreement for a cumulative net profit of 510 million yuan in three years. However, Jiazhilian ultimately failed to fulfill its promise, and the founder was fined 1.01 billion yuan and fled abroad, refusing to execute the agreement. After experiencing a series of shocks, what will be the direction of the price chain now? Is the price chain going against the flow during the peak season? More than 65 million logistics costs are spent in one year! It is understood that Jiazhilian mainly sells its own brands through third-party platforms such as Amazon and Shopify independent stations. Its main product categories cover household living supplies, health and beauty products, 3C electronic products and other fields. From the perspective of Jiazhilian's business model, first of all, it has a supply chain headquarters, and collects massive information through big data for data mining, discovers best-selling products, and uses the principle of small batch and multiple batch purchasing to prepare stocks. In terms of warehousing and logistics, on the one hand, a dedicated department is set up to manage inventory based on digital intelligent means. On the other hand, logistics adopts the transportation model of third-party logistics companies and Amazon FBA logistics. According to the financial report, Xunxing Co., Ltd. achieved revenue of 2.262 billion yuan in 2021, and net profit attributable to shareholders of listed companies was 126 million yuan. Among them, the cross-border e-commerce business revenue was 550 million yuan, a year-on-year increase of 46.48%; the total profit was -9.8891 million yuan, a year-on-year reduction of 74.98%. ▲ The picture comes from Xunxing Shares Announcement However, during the peak season in the fourth quarter of 2021, the price chain, which had achieved a sales breakthrough by taking advantage of the big promotion bonus, suffered a large loss in profits. The main reasons are: (1) Increase in product promotion expenses. In order to improve and stabilize the ranking of product listings and achieve peak season sales targets, Jiazhilian’s advertising and marketing promotion expenses increased by RMB 21.14 million, a year-on-year increase of 352%. (2) Increase in logistics costs. Affected by the epidemic, international freight logistics prices continued to rise, and Jiazhilian's logistics expenses in the fourth quarter increased by RMB 12.7465 million year-on-year. (3) Increase in storage costs. Due to the increase in inventory in the fourth quarter, storage costs increased by RMB2,691,700. It can be seen that inventory pressure, high promotion and logistics costs are the biggest challenges for Jiazhilian to turn losses into profits. More than 30% of the inventory value of Jiazhilian is stored in Amazon FBA warehouses, and another 70% of the inventory value is stored in temporary turnover warehouses. Therefore, the warehousing costs in 2021 totaled 12.4158 million yuan, and the first-leg and second-leg logistics expenses totaled 65.8492 million yuan. The financial report shows that Jiazhilian's inventory increased by 93.9867 million yuan in 2021, mainly due to the increased layout of new stores and new products. From August to October, more inventory was purchased to prepare for the peak season sales in the fourth quarter . However, due to sales falling short of expectations, the end-of-period inventory increased by 96.35% year-on-year. The increase in inventory also caused its inventory turnover rate to drop by 24.14%, to only 1.88 times. ▲ The picture comes from Xunxing Shares Announcement At the same time, due to the launch of a large number of new products by Jiazhilian in 2021 and the sharp increase in Amazon's advertising cost rates, advertising and promotion expenses increased by 46.3868 million yuan. Looking at the first quarter of 2022, Xunxing Co., Ltd. achieved revenue of 474 million yuan, a year- on-year increase of 24.71%, of which the cross-border e-commerce business with Jiazhilian as the main body increased by 23.46% year-on-year; the net profit attributable to shareholders of listed companies was 20.2961 million yuan, an increase of 16.48% over the same period last year. ▲ The picture comes from Xunxing Shares Announcement It can be seen that in the first quarter of this year, the revenue of Price Chain has maintained a steady growth. However, with the start of Prime Day, whether Price Chain can avoid repeating the mistakes of last year's peak season and achieve a profit breakthrough is still full of unknowns. What do you think about this? Feel free to leave a message in the comment area~
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