In 2021, cross-border e-commerce has experienced its darkest moment.
The impact of the Amazon Black Swan incident and the adverse impact of the global trade environment have caused most cross-border e-commerce companies to experience sharp declines in revenue and profits.
However, by 2022, companies have entered a recovery period. Although they are still unable to return to their peak in the short term, the performance recovery has been clearly shown in the 2022 performance forecasts of various companies.
A senior analyst at the B2B and Cross-border E-commerce Department of the Net Economics E-Commerce Research Center said: “Although 2022 will be affected by various factors such as the general environment, regardless of the cross-border e-commerce transaction volume data released by the country and the performance forecasts issued by various cross-border e-commerce listed companies, it can be seen that China’s cross-border e-commerce companies have achieved steady growth as a whole and are generally developing in a stable and positive direction.”
Compared with the overall dismal performance in 2021, cross-border e-commerce companies will usher in a wave of transformation and adjustment in 2022, and overall achieve relatively stable growth.
Some cross-border e-commerce sellers, represented by Xinghui Shares and Youkeshu, were affected by the wave of Amazon account bans in 2021 and suffered serious performance losses. They are gradually recovering in 2022. Although they have not yet achieved profitability, their losses have narrowed significantly.
The performance forecast of Xinghui Shares shows that during the reporting period, the net profit loss attributable to shareholders of listed companies was 182 million yuan to 236 million yuan. The net profit loss attributable to shareholders of listed companies in the same period last year was approximately 1.524 billion yuan. The loss narrowed 84.51% to 88.06% compared with the same period last year; the impact of non-recurring gains and losses on net profit in 2022 is expected to be approximately 2 million yuan to 3 million yuan.
Affected by Amazon’s ban, many brands of Zebao Technology, a wholly-owned subsidiary of Xinghui Co., Ltd., were banned from selling on the Amazon platform, and related Amazon stores were also blocked. Zebao Technology’s annual loss in 2021 was approximately 809 million yuan.
After a year of adjustments, on December 10 last year, Xinghui Shares stated on the investor interaction platform that the company’s cross-border e-commerce business had passed the trough period when the brand was banned, and its operating conditions were gradually improving.
Youkeshu’s operating income in 2022 will be 710 million yuan to 850 million yuan, a decrease from 1.764 billion yuan in the same period last year.
Youkeshu said in the notice that due to the impact of multiple unfavorable factors and the company’s corresponding reduction in business scale during the reporting period and the continued implementation of a stable operation business strategy, although the company’s cross-border e-commerce main business revenue fell year-on-year this year, its operating losses have been relatively narrowed.
The preview shows that the net profit attributable to shareholders of listed companies in 2022 will be a loss of 220 million yuan to 310 million yuan, compared with a loss of 2.676 billion yuan in the same period last year.
The net profit after excluding non-recurring gains and losses in 2022 is expected to be a loss of 217 million yuan to 307 million yuan, compared with a loss of 2.682 billion yuan in the same period last year.
It is estimated that the impact of non-recurring gains and losses on net profit in 2022 will be approximately 3 million yuan.
In addition, unfavorable factors such as repeated epidemics, high freight rates, and exchange rate fluctuations in the industry in the second half of 2021 will improve in 2022, which is also reflected in the company’s performance forecast.
Taking Huakai Yibai as an example, the company is expected to turn around from January to December 2022, with net profits attributable to shareholders of listed companies ranging from 210 million to 240 million, with net profits increasing by 339.92% to 374.25% year-on-year.
Huakai Yibai said that the performance changes are mainly due to the fact that in 2022, the export cross-border e-commerce industry in which its holding subsidiary Yibai Network is located has bottomed out, freight rates have dropped significantly, the RMB exchange rate has depreciated, inventories have been gradually cleared, and the industry competition pattern has significantly improved.
Yibai Network’s sales will resume growth in the second half of 2022, and the company’s profit margin will increase significantly.
In 2022, cross-border e-commerce companies, which have slowly recovered from external attacks, have gradually realized the importance of risk resistance.
With the changes in platform rules, the traditional distribution model has gradually withdrawn from the stage of history, and high-quality products and branding have become the new transformation direction of cross-border sellers.
“Branding is the only way for many enterprises to develop, and it is also the basis for enterprises to seek more premiums for development.” said an industry insider.
Youkeshu mentioned in its 2020 annual report that the overseas e-commerce market will further concentrate on high-quality e-commerce platforms represented by Amazon. The company decided to follow the development trend of the cross-border e-commerce industry, focus more resources on high-quality e-commerce platforms represented by Amazon, transform into high-quality routes, build a multi-brand matrix as soon as possible, and obtain differentiated competitive advantages in terms of product power and brand power to achieve healthy and sustainable development.
Focusing on brand building, forming a private brand matrix, increasing the brand premium of products, and extending the product life cycle are the only ways for cross-border e-commerce companies to achieve rapid development.
Nowadays, more and more companies are aware of the importance of transformation, and brand development also appears in the annual reports or announcements of various listed companies.
Take Huading Co., Ltd. as an example. Previously, its cross-border e-commerce sector suffered a significant year-on-year decrease in revenue due to the global economic downturn and the ongoing impact of the Amazon Black Swan incident. Brand transformation is a key task of Huading Co., Ltd.
The 2022 semi-annual report shows that the company’s brand strategy work includes strengthening the development of brand business in mature consumer countries, increasing investment in independent brand layout in emerging countries and platforms, optimizing and focusing on the current business model, and improving the company’s refined operating capabilities.
Coincidentally, the pan-category cross-border e-commerce Yibai Network, established in 2011, will also add boutique business and cross-border e-commerce comprehensive service business in 2021. It has initially planned to form a business combination of “pan-category + boutique + cross-border e-commerce service platform”.
Huakai Yibai said that high-quality products refer to products with relatively high unit prices, strong brand attributes and investment in research and development. This part of the business is a new attempt by the company to strengthen the branding operation of cross-border e-commerce. Through consumer market research and brand innovation, creating high-premium own product brands is also an important focus and profit growth point for mid- to long-term development.
Although this part only accounts for 8% of export revenue, in the recent investor relations activity record, Huakai Yibai stated that the boutique business has gone through two years of trial and error and precipitation. In 2022, it optimized the product line and developed a product line that has market demand but insufficient competition, and its performance has achieved rapid growth.
“The boutique business was at a loss in the first three quarters, but it is expected to be profitable in the fourth quarter, and it is expected to achieve more than 50% growth next year.” It can be seen that branded business is a new growth point for Huakai Yibai’s future development.
Some insiders analyzed that “branding” and “refinement” are the key points for enterprises to transform from “cross-border sales” to “global brands”, and they are also a symbol of the cross-border e-commerce industry’s transition from recklessness to maturity.
“The process of branding may require trial and error, and it may take a long time to see results, but it is a necessary step for cross-border e-commerce companies.” The person said, “Companies that enter the game early may be better able to capture consumers’ minds, and this will also be the focus of cross-border e-commerce competition in the next stage.”
