After 12 Years Of Constant Domestic Troubles, How Can We Solve The Problems?

In recent months, the luxury industry has been particularly lively.

For example, the first video of prudy and microberry in China has been launched; for example, the first video of prudy and Imada in China has been accelerated.

On the other hand, luxury e-commerce platforms are constantly moving. On January 30, farfetch, a British luxury e-commerce platform, announced that it had acquired Tencent's US $125 million investment, and its intention to increase the size of China's domestic online market was obvious. In March, qudian's cross-border luxury shopping platform "wanlimu" went online, and launched a luxury price war with the "10 billion subsidy" project.

High cold big brands are becoming more and more "grounded", and new players who see opportunities for online luxury goods enter the market and stir up the pattern, thus adding many variables to the industry.

For Siku, a luxury shopping service platform founded in 2008, it is an opportunity for big brands to go online, but the new competitive environment will bring greater challenges and may aggravate its existing difficulties.

On April 30, Siku group released the fourth quarter and annual performance report of 2019. The core financial indicators of the fourth quarter are as follows:

Gmv was 4.679 billion yuan (without special instructions, the unit was RMB), with a year-on-year increase of 51.9%;

Revenue was 2.04 billion yuan, up 13.8% year on year;

The net profit attributable to common shareholders was 40.99 million yuan, which was 46.47 million yuan in the same period of last year;

The net profit of non GAAP attributable to common shareholders was 40.75 million yuan, compared with 52.91 million yuan in the same period of last year.

In terms of annual performance:

Gmv was 13.785 billion yuan, up 71.3% year on year;

Revenue was 6.869 billion yuan, up 27.5% year on year;

The net profit attributable to common shareholders was 154 million yuan, which was 152 million yuan in 2018;

The net profit attributable to non shareholders in 2018 was RMB 76.6 billion, belonging to ordinary shareholders.

Compared with the e-commerce peers who trade money for scale, Siku has always maintained a profitable State, but its performance in the capital market is not satisfactory. Since its listing on NASDAQ in 2017, Siku's share price has been declining. Now it is floating around $3, which has dropped more than 75% from the issue price of $13.

It is not uncommon in the capital market to continue to make profits, but the share price is low. Compared with profitability, capital wants to grow more.

Although Siku tried to replace the label of "luxury e-commerce" with "boutique lifestyle platform", from the perspective of its financial performance, luxury sales is still its biggest basic plate, and excessive reliance on vertical fields has caused Siku's growth dilemma today.

01 growth frustrated, saving money to ensure profits

In the fourth quarter of 2019, the Gmv of Siku increased by 51.9% year-on-year, but compared with the previous nearly doubled growth, the growth rate in this quarter decreased significantly. From the first quarter of 2019, the Gmv growth rate of Siku shows a continuous downward trend.

The decline of Gmv growth rate corresponds to the growth dilemma of revenue. In the fourth quarter of 2019, the revenue of Siku is 2.04 billion yuan, which is lower than the lower limit of performance guidance range. The revenue growth rate of the temple is 8% lower than that in the whole quarter of 2019, which is lower than that in the fourth quarter of 2019.

The main sources of revenue are commodity sales revenue and platform and other service income. Commodity sales, namely luxury goods sales, account for about 97% of the total revenue of the temple. Although Siku is also developing businesses such as finance, intelligence and community, its income has not been reflected too much.

The main revenue of the temple library is the sale of luxury goods. As an intermediate sales channel, the temple library can only make profits from the price difference. From the perspective of its profit trend, the "middleman" expenses have become more and more difficult to earn.

In the fourth quarter of 2019, the gross profit of Siku was 296 million yuan, a year-on-year decrease of 11.6%; the gross profit rate was 14.5%, which was 18.7% in the same period of last year and 17% in the last quarter, showing a continuous downward trend.

In terms of net profit, Siku's net profit attributable to common shareholders in the fourth quarter was 40.75 million yuan, a year-on-year decrease of 23%; the net profit margin under the non general criteria was 2%, 3% and 3.3% respectively in the same period of last year and the last quarter.

Combined with the background of lower gross profit rate, Siku seems to be consciously controlling the expenses in recent quarters. In terms of operating expenses, the operating expense rate of Siku was 12%, lower than 14.8% in the same period of last year and 12.1% in the previous quarter.

Among the various expenses, the control of marketing expenses by Temple library is particularly obvious. When other rates remained stable, the marketing expense rate of Siku dropped from 9% to 5.2% in this quarter.

It can be clearly perceived that Siku, whose main business is luxury goods sales, is facing the dilemma of slowing down its revenue and reducing its gross profit rate. Its profit is not obtained through "open source", but is more the result of "reducing expenditure" by reducing expenses.

02 internal worries remain unsolved and foreign troubles increase

In short, from the changes of various financial indicators, the business strategy of the temple library is to save money to ensure profits. Combined with the background that the growth of temples and storehouses is hindered, such a strategy reveals the passivity of management.

It is a safe choice for Siku to seek growth while ensuring profits. But in the context of the ever-changing industrial structure, even if the temple library hopes to seek change in a stable way, I am afraid it will not be so easy.

Due to the impact of the epidemic, the trend of luxury brands embracing online is becoming more and more obvious. Li rixue, founder of Siku, also said in the previous interview that luxury brands will increase investment in selling luxury goods on the Internet, and they will be more willing to cooperate with e-commerce platforms like Siku.

Wrong temple, but online luxury is not the key. Because in front of the opportunity, the temple library ushered in more and more powerful competitors.

According to McKinsey's China luxury report 2019, the size of China's online luxury market in 2023 will be two to three times that of 2018. This growing fertile land has attracted new players from all walks of life, including the giants led by tmall, the technology driven farfetch and the money burning marketing wanlimu.

As a player in the vertical field, the most important problem of Siku is how to face the entrance of comprehensive e-commerce giants to compete for business. The advantage of integrated e-commerce lies in the flow. In the fourth quarter of 2019, the number of active users of Siku is 612500, which is not as large as the giant, and the growth rate is still slowing down.

The target audience of vertical e-commerce belongs to a specific field, and the flow plate is naturally smaller than that of comprehensive e-commerce. When the business develops to a certain extent, the customer acquisition cost of vertical e-commerce will be higher and higher, but the repeat consumption frequency and comprehensive operation cost of commodities will not change significantly. For the temple library, to make the flow plate bigger means to expand the commodity category, but this may damage the long-term high-end user identity, and the layout of "storehouse" is a lesson in the past.

Kudian is a community retail platform under Siku, which attempts to enter the sinking market and lay out social e-commerce. Different from the expensive luxury goods on the Siku platform, the products sold in the store are mainly fresh food, department stores, cosmetics and skin care, with lower customer price and more "grounded".

The intention of Siku as a storehouse is self-evident. It hopes to expand the categories and realize the growth, but it fails to achieve the desired effect. In June last year, kudian was also involved in a wave of layoffs. Some recruits were "dissuaded" at the last moment after being assured that they could be formally employed.

The temple library starts from the "high-end", and if it extends its tentacles to other fields, it may encounter a dilemma that both sides do not please. At present, Siku has chosen to transform from physical e-commerce to a "boutique lifestyle platform" including hotels, travel and other services, so as to gain growth, but the "high-end" label still brings invisible ceiling.

The anxiety of growth is internal worry. On the outside, the number of players in the industry is also threatening the living space of temple library. When each platform is competing for big brands, which channel the brand attaches importance to depends on the degree of resource tilt and profit yield that the platform can give. That is to say, in the new competitive environment, the profit space of temple library may be further compressed.

What is more troublesome is that while Temple library reduces marketing expenses to ensure profits, tmall and wanlimu choose the opposite strategy.

In April this year, tmall launched luxury discount channel luxury SOHO. The entrance of the channel will be pushed to the home page of the potential luxury consumers through tmall big data. Taobao users can also search for "luxury discount" to enter the platform; wanlimu has been marketing continuously since its launch, and tries to leverage the luxury market with "10 billion subsidy" at the same time.

The current situation of Siku is aptly described as internal and external troubles: on the one hand, its growth slows down and its profit margin is difficult to improve; on the other hand, some giants and new players invade their own territory, and their shares are shared, while their discourse power may continue to weaken.

The stock price of Siku is low after listing, which is largely because the capital market is not optimistic about its growth prospects. Li rixue once said many times that Siku is not just a "luxury e-commerce", but a boutique lifestyle platform. It is a Chinese version of "Michelin" + "American Express", because "the former sets the standards for the high-end catering industry, and the latter creates a unique service mode of high-end membership system. Both point out the macro direction of Siku's development."

However, the capital market does not buy this statement. Judging from the financial performance, "luxury e-commerce" is still the biggest label of Siku, but this basic market is being eroded by rivals. There is not much time left for the temple library to break through. Source: capital detective Author: Hong Jian