What makes investors shy away from Amazon's big sales?

Although cross-border e-commerce is a relatively high-profit industry, it should be the darling of the capital market. After all, the strong profit-seeking nature makes capitalists scramble to get involved in this industry.

But the fact is just the opposite. We sellers all know that this year the capital market and the big sellers are all trying to separate.

In the past, there were the 1 billion yuan claims by Jiazhilian and Xunxing (click the link to view the details). Later, Zhongjie Resources wanted to acquire Banggood Technology, but gave up after just one week. What makes investors so wary of big sellers?

Today we will take Banggood and Zhongjie Resources, which have been the most talked about recently, to see where the incompatibility between capital and Amazon's big sales lies.

The main business of Zhongjie Resources is the research and development, production and sales of medium and high-end industrial sewing machinery. As a traditional industry, it has not had an easy time in recent years.

(Data source: NetEase Finance)

Looking at the financial statements of Zhongjie Resources, the net profit has been negative for many years, and even in the years with net profit, the profit is not high. It is natural for them to actively seek transformation and solutions when the main business is weak. However, is Banggood Technology, which they found, a life-saving straw?

Banggood Technology, as a cross-border e-commerce company that has not yet been listed, does not disclose its revenue and financial statements. Although it applied for an IPO on February 12 this year, it has not disclosed its prospectus so far.

Therefore, we have no way of knowing Banggood's real financial report. However, according to rumors, Banggood Technology has long been the leader in Guangzhou's cross-border e-commerce, with revenue of 5 billion in 2016. The traffic of its main business, the independent website, ranks close to the top 500 in the world.

(Data source: Alexa)

Top: Banggood Technology Bottom: LightInTheBox

It even surpassed the well-known Lazada. Bangu, a company of such a large scale, probably agreed to the merger because it wanted to go public through a backdoor listing. However, according to the announcement released by China-Czech Resources, the investor wanted to go through the acquisition process .

Of course, everyone knows that this event has ended in failure, but why did it end so hastily just one week after the acquisition was announced? This is also a question that confuses me. Is it just that the two parties did not reach a consensus on whether to go public through a backdoor listing or an acquisition?

Until Teacher Alice enlightened me

Yes, it is very likely that the large-scale distribution model has caused all the funds to be invested in the goods, and the capital flow is very unhealthy. You can take a look at the little information found by Xiaofenshen.

Although Bangalore chose not to disclose its 2017 financial report, it did revise its 2017 financial report in June this year, and we were able to see the data before and after the revision (data source: Tianyancha, not sure if it is a bug). The net profit before the revision was actually negative, and even after the revision, the net profit is not optimistic.

It is no wonder that the announcement released by China-Czech Resources was about "acquisition". Bangalore's cash flow is not as strong as imagined, and the "5 billion sales" rumored on the Internet is obviously inflated.

Banggood adopts the distribution model, and its main products cover more than 20 categories, totaling more than 100,000 commodities. A large amount of funds are pressed on inventory, and the entire capital chain faces a serious crisis. External funds are needed to maintain the normal operation or expansion of the enterprise.

Zhongjie Resources has also been losing money for many years and wants to transform and seek a way out. It seems that it hastily terminated the acquisition plan for this reason. After all, if a forced acquisition is carried out at this time, it will easily become the last straw that breaks the camel's back. Therefore, terminating the acquisition is a better result for both parties.

The distribution model occupies a large amount of funds, which eventually leads to the cross-border giants having to turn to the capital market for help. This has become the norm now.

It is so difficult for the giants to distribute their products, so you can imagine what the situation would be like for us small and medium-sized sellers.

In the future, it will be more and more difficult to distribute goods, and the boutique route will emerge. This is the general trend of Amazon. Even a ship as big as Zhongjie Resources is seeking transformation. Don't wait until there is no way out before you think of turning back.

Sellers who still have questions about the boutique operation route or want to transform

You can scan the code to consult me~

There is also a large cross-border seller exchange group waiting for you to join

Platforms huddle together for warmth in the cold winter

Live, have a future

Source: Cross-border Business School

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