The Capital Market Increasingly Does Not Believe The "Story" Told By The Whole Luxury E-Commerce

Revenue was 1.306 billion yuan, a year-on-year decrease of 23.7%; net profit was 5.9 million yuan, a year-on-year decrease of 85.3%; net profit under non US GAAP was 7.4 million yuan, a year-on-year decrease of 82.8%.

This is the latest "report card" submitted by the first domestic luxury e-commerce company Siku on September 3. The overall performance of the treasury as of June 30, 2020 is not ideal. It is worth noting that in the current quarter, Siku successfully turned losses into profits and realized a net profit of 5.9 million yuan (about 800 thousand U.S. dollars), which was significantly improved compared with the loss of 42.5 million yuan in the previous quarter. However, this positive situation did not bring confidence to the capital market. Siku's share price fell more than 10% after the financial report was announced, and closed at $2.44 as of September 4.

Behind this slump is that the capital market is increasingly distrustful of the "story" told by the whole luxury e-commerce.

The story of the temple library is becoming more and more difficult to tell

As the first share of domestic luxury e-commerce, Siku's performance plays an important role in understanding the development context of this vertical market segment.

With the continuous upgrading of the domestic consumer market, China has been maintaining a high level of consumption. According to the "fashion and luxury industry: China's market outlook after the epidemic" released by Boston Consulting Group, it is estimated that the global fashion industry will decline by 29% - 37% in 2020 due to the impact of the epidemic. However, the Chinese market is very special. The report predicts that the Chinese market will not only be able to match the losses at the beginning of the year, but also increase by 10% against the trend.

The temple library also had this kind of halo when it landed in the US stock market. However, both Siku, which has been struggling since listing, or the fallen "pioneers" of luxury e-commerce, such as zouxiu.com, shangpin.com and zunxiang.com, are telling the outside world that the combination of luxury goods and e-commerce is not as good as expected.

Looking at the financial reports since the listing of Siku, it is not difficult to find that although the domestic luxury market has great potential in theory, it has always been unable to get rid of the dilemma of growth. According to Siku's financial report, although its total revenue has been rising steadily in the past four quarters, the growth rate of revenue has been declining since the second quarter of 2019. In the second quarter, both the total revenue and the growth rate of revenue have declined.

What's more, at the moment when the traffic is exhausted, the user base and Gmv growth rate, two indicators representing future development, continue to sting the nerves of Siku. In that quarter, the number of active users was only 467700, and the number of monthly active users was less than 500000, which highlighted Siku's positioning of extremely small crowd; at the same time, its Gmv growth rate had been continuously decreased for five consecutive quarters, and the year-on-year growth rate in that quarter was only 12.1%.

These data are still under the influence of the epidemic, many luxury brands have made efforts in online marketing. Of course, there is a certain economic impact, but in the period when the attention of the brand side and users are inclined to the online market, such a sharp decline compared with the same period last year also confirms the difficulty of online luxury goods.

Under these factors, the stock price of Siku was only $2.44 on September 4, with a total market value of $172 million. Compared with its market value of $670 million at the beginning of its listing in 2017, it has shrunk by more than 70%.

Perhaps based on "taking precautions" for its own development prospects, Siku has long started its own diversified measures, including offline stores, community retail, financial business, intelligence and even agriculture related issues in recent years. However, the development of these new tracks all need financial support. In the case of its own capital is not strong, the new business development brings more cost pressure.

In this regard, relevant e-commerce industry analysts to understand notes said: "luxury itself is a vertical market for a special minority. In recent two years, we have expanded the business of household products to cover more customers. Theoretically, this can get more users, but in these low unit price categories, Siku, a niche vertical business platform, has no advantage. At the same time, the addition of these low unit price categories will lead to the loss of the original target customers of luxury goods. "

Small but beautiful vertical e-commerce's survival

Talking about the limited living space of vertical e-commerce, I can't help but think of the "wanlimu" which suddenly appeared in March this year. As a cross-border luxury e-commerce platform under qudian, wanlimu was also powerful and eye-catching when it first appeared. However, after the announcement of cooperation with five stars, including Zhao Wei, Huang Xiaoming, Zheng Kai, Jia Nailiang and Lei Jiayin, the excitement of the platform ceased.

Until the beginning of June, qudian announced that it would subscribe for up to 10204082 new class a common shares at a price of up to 100 million US dollars. After the transaction, qudian will hold 28.9% shares of Siku (the largest shareholder). Judging from the business operation and composition of the two companies, it is more appropriate to describe it as a group for heating.

With the main business financial business constantly frustrated and innovation business repeatedly defeated, qudian launched wanlimu this year. After going online, wanlimu launched the slogan of "ten billion subsidies". To tell you the truth, the moment the slogan was uttered, it faced countless doubts.

This is not surprising. After all, the book capital of qudian and even the market value of the company are less than 10 billion yuan. Where is the "strength" of qudian calling for a subsidy of 10 billion yuan? As you can see, as of September 5, the total market value of the store was only 393 million US dollars (about 2.68 billion yuan).

In more than five months since it was launched in March, the volume of Wanli destination is no longer as hot as it was when the stars of all walks of life brought goods. With the passage of time, there are more and more questions about its commodity quality and platform services. Up to now, there are 440 complaints about Wanli goal on black cat complaints, most of which involve platform service and commodity quality.

In addition, in the past five months, we do not know how much of the 10 billion subsidies have been spilled out? How many users have enjoyed the bonus of 10 billion subsidies? It's $55 from the end of May.

It can be seen that no matter whether it is Wanli online or the acquisition of Siku shares, luxury e-commerce companies are still unable to give sufficient confidence to the capital market even though they are engaging in group heating, patching and even propagandizing.

Looking at today's e-commerce market, we can find an interesting phenomenon: the net loss of each quarter is several billion or even up to 10 billion, and the stock price is rising all the way; however, those small e-commerce enterprises that can maintain profits can not keep their share prices.

In addition to the temple library this time, vipshop's latest financial report was released not long ago. In spite of the brilliant achievements - 1.5 billion yuan of net profit and 33 consecutive quarters of profits, vipshop's share price still fell by nearly 20%, and its market value evaporated by more than 20 billion yuan overnight.

Although there are various special reasons behind the stock price changes of each company, it is not difficult to find that the capital market seems no longer willing to trust those small and beautiful vertical e-commerce platforms.

The logic of more losses, higher stock prices

Although pinduoduo is constantly losing money, and even the problem of commodity quality is still difficult to change, it has been favored by the capital market. Perhaps, the main reason is that its revenue and the number of users have maintained an ultra-high growth rate at the same time of expanding losses.

Even though there are many voices in the outside world that it may be difficult to achieve a business closed-loop after the suspension of pinduoduo's 10 billion subsidy, the capital market attaches great importance to the fact that it can ensure the sustained and rapid growth of users every quarter, which may mean that the platform will have a bright future.

However, no matter vipshop or Siku, the growth rate of Gmv of these vertical e-commerce platforms is also declining, which is the most fatal.

In this regard, the relevant e-commerce industry analysts to understand notes said: "there is no obvious boundary in the e-commerce market. Others can do what you do, whether it is vipshop's special sale or Siku's luxury goods. Especially for the head e-commerce platforms such as Ali, Jingdong or pinduoduo, they have a large number of users and sufficient funds to enter the field of these vertical e-commerce platforms at any time. “

In essence, the so-called 10 billion subsidy is logically connected with vipshop's special sales. In the field of luxury goods, Ali and Jingdong started their layout early. On the contrary, there is not enough space for these e-commerce platforms to expand their businesses. So once the number of users (activity) decline, it will seriously hit the confidence of investors. " The person stressed.

In addition, there is a more vertical mode of selling luxury goods, such as cosmetics and special photo stores.

Where is the moat in this field?

"Luxury e-commerce is an area that needs a lot of capital investment. If an e-commerce platform like Siku wants to grow bigger, it needs constant investment. Although Siku can make a little profit now, if it wants to break through the current size limit, it must invest heavily. If it does, losses will become a common occurrence." The above-mentioned analysts said that even with heavy investment, it may not be possible to successfully break through the encirclement, because the competitors faced by Siku are too strong. "Imagine, in the future, the brand will give priority to cooperation with such head platforms as tmall and Jingdong, or choose Siku?"

Indeed, one of the most typical examples in the industry recently is that not long ago, Ali's latest 88vip membership rights have added preferential rights and interests of Prada, Versace and other luxury brands. These usually cold luxury brands choose to join the big membership system because they are interested in the huge high-quality user groups carried by the 88vip system. In contrast, Siku, wanlimu and other small vertical platforms are difficult to provide such a high-quality user group to support the brand.

Perhaps, the state of temple library and wanlimu will not last forever. The small beauty in the cracks will either die out or be acquired. Because with the continuous development of the head platform, it is constantly eroding their living space. If you want to survive and develop, you have to speed up running, but how fast do they run compared to those head platforms?

The Matthew effect of countless industries shows that the e-commerce industry is also experiencing this process. Although a pinduoduo has been successfully created in the industry in the past two years, Huang Zheng did not want to become a niche vertical e-commerce platform from the beginning. Relying on the support of capital, pinduoduo crazily spilled money and sank, gaining growth in a larger user space.

In contrast, Siku and wanlimu adhere to the "small and beautiful" of luxury e-commerce. Now, they can not replicate the success of pinduoduo. It's like a marathon race. With the progress of the race, they will be eliminated sooner or later. Perhaps the reason why Xiaohong gave up self-employed business was also important.