Week #13: Alibaba Quarterly Profit Sinks by 96% Despite Rise in Sales | SHEIN's Executive Vice Chairman: The Company Has Not Yet Decided Where to Go Public
Latest news and analysis on China’s global e-sellers
Here’s our pick for last week’s news:
Shein Unveils New Semi-Managed Model, Launching Initially in U.S.
Alibaba Quarterly Profit Sinks by 96% Despite Rise in Sales
Temu Shifts Focus to Europe to Reduce U.S. Reliance
Haers Reports 21.31% Increase in 2023 Net Profit to $34.64M
AliExpress Partners with Major Logistics Firms in South Korea to Boost Delivery Services
MINISO Aims for 600 New Overseas Stores in 2024
SHEIN's Executive Vice Chairman: The Company Has Not Yet Decided Where to Go Public
TCL Smart Home Achieves $2.1B Revenue in 2023, with Nearly 70% from Overseas Markets
Snowboard Brand Nobaday Secures Millions in Series A+ Funding
Shein Unveils New Semi-Managed Model, Launching Initially in U.S.
In early May, Shein introduced its semi-managed model, debuting first in the U.S. Distinguishing itself from competitors like Temu, Shein’s strategy offers sellers enhanced flexibility. Sellers can collaborate with Shein on pricing and operations while maintaining control over product selection. This semi-managed service mandates overseas stocking for local fulfillment, targeting top Amazon sellers and DTC brands.
Shein's new model presents an attractive proposition with zero upfront store costs, waiving commissions and deposits. However, entry standards are stringent: only corporate registrations are accepted, excluding individuals; products must weigh over 400 grams, and certain categories such as apparel, wigs, jewelry, and food are excluded.
Under Shein's fully managed model, sellers send goods to Shein's domestic warehouse for streamlined overseas shipping managed by partner logistics firms, with Shein handling the last-mile delivery. In contrast, the new semi-managed model allows sellers to select their own logistics solutions, leveraging their existing logistics capabilities and potentially expanding their product offerings.
Alibaba Quarterly Profit Sinks by 96% Despite Rise in Sales
Alibaba Group reported earnings for the quarter ending March 31. During the quarter, Alibaba recorded a revenue of $30.69 billion USD, up 7% YoY. Group net income, however, was $127 million USD, down by 96% compared to the previous year, primarily attributable to a net loss from the group's investments in publicly-traded companies during the quarter.
Alibaba International Digital Commerce Group (AIDC) marketplaces notched a 20% increase in combined orders for the latest quarter as revenue grew 45% YoY to $3.8 billion USD. During the quarter, Trendyol continued its double-digit order growth and has become one of the most downloaded e-commerce apps in the Gulf region. Lazada continued to focus on improving its operating efficiency. With further increased monetization and optimized operations, Lazada's loss per order narrowed significantly during the quarter.
Synergies between AliExpress and the cross-border logistics operations of Cainiao have further strengthened AliExpress' competitiveness with both the 5-day and 10-day delivery completion rates doubling YoY. For the quarter, revenue from Cainiao grew 30% YoY to $3.4 billion USD, primarily driven by revenue from cross-border fulfillment services supporting AliExpress.
Temu Shifts Focus to Europe to Reduce U.S. Reliance
In a strategic pivot, Temu, owned by Chinese e-commerce giant PDD Holdings, is shifting its focus to Europe as it seeks to reduce its dependence on the U.S. market. According to Sensor Tower, the number of monthly U.S. users of Temu fell to 50 million in the first quarter, a 10% decline from the peak of 55.6 million in the third quarter of last year. Meanwhile, monthly users in the rest of the world surged by 128% during the same period.
Temu had invested billions of dollars in the U.S. market but is now looking to mitigate risk amid rising regulatory challenges faced by TikTok with the U.S. Government. The company is increasingly concentrating on user acquisition in Europe and other regions. Consequently, Temu now anticipates that less than a third of its sales this year will come from the U.S., down from 60% in 2023.
This marks a significant strategy shift for Temu, which quickly became the second-most popular shopping app in the U.S. after Amazon in less than two years, enticing users with affordable products like $5 water dispensers and $3 T-shirts.
Haers Reports 21.31% Increase in 2023 Net Profit to $34.64M
Haers Vacuum Containers, a listed thermos manufacturer, announced a net profit of $34.64 million USD for 2023, reflecting a 21.31% year-over-year increase. This growth was primarily driven by strong performance in overseas markets. The company's revenue for the year reached $330 million USD.
Notably, sales of thermos and water cups on Amazon's U.S. site surged to $209 million USD from January to November 2023, marking a significant 17.5% increase compared to the same period last year. Haers attributes this growth to its proactive expansion into high-potential markets.
Revenue from proprietary clients in the Regional Comprehensive Economic Partnership (RCEP) region soared by over 50%, and the company achieved a breakthrough in acquiring new customers, generating sales exceeding $27.71 million USD from these new accounts.
Haers is a key player in China's water bottle and thermos industry, with a formidable global footprint spanning over 80 countries and regions. With more than two decades of industry expertise, Haers offers a diverse product portfolio that caters to a wide range of consumer preferences and needs.
AliExpress Partners with Major Logistics Firms in South Korea to Boost Delivery Services
Alibaba's AliExpress is strengthening its presence in South Korea by partnering with four major logistics companies, including CJ Logistics and Hanjin, to enhance delivery services across the country for the upcoming year. This strategic collaboration aims to improve logistics efficiency and service quality, addressing the growing demand driven by business expansion.
Over the past year, AliExpress has intensified its global expansion efforts, achieving notable success in the Korean market. The platform has consistently topped the charts for Korean shopping app downloads and emerged as the app with the highest number of new users in 2023. To further bolster its presence, AliExpress has enlisted renowned actress Tang Wei and actor Ma Dong-seok as brand ambassadors for the Korean market.
AliExpress now boasts a user base that surpasses local e-commerce giants like Gmarket and 11st, securing its position as the second-largest e-commerce platform in South Korea. This milestone marks a significant achievement for an overseas platform entering the top three e-commerce players in the Korean market.
MINISO Aims for 600 New Overseas Stores in 2024
MINISO, the lifestyle retailer, reported a net profit of $81.2 million USD for the first quarter of 2024, marking a 24.4% year-over-year increase. The company's revenue for the same period was $515.7 million USD, up 26.0% from the previous year. As of March 31, the total number of MINISO stores worldwide reached 6,630, with 2,596 of these located in overseas markets outside mainland China. Notably, 109 new overseas stores were established in the quarter, a threefold increase compared to the net new store openings in the same period last year.
During the March quarter, revenue from overseas markets surged by 52.6% year-over-year to $169.2 million USD, now constituting 32.8% of MINISO's total revenue, a significant rise from the 27.1% share in the same period in 2023. This growth was primarily driven by a 19.7% expansion in the average store count and robust same-store sales growth of around 21%. Revenue from directly operated overseas markets contributed approximately 58% to the total overseas market revenue for the March quarter.
Ye Guofu, Founder & CEO of MINISO, remarked, "Overseas markets performed even beyond our most optimistic expectations and set a new record for the first quarters. This was largely attributable to a 92% year-over-year increase in revenue from our directly operated markets, which have seen growth of over 80% for four consecutive quarters." Additionally, MINISO CFO Eason Zhang announced the company's ambitious plan to open 600 new overseas stores in 2024.
SHEIN's Executive Vice Chairman: The Company Has Not Yet Decided Where to Go Public
Tang Wei, executive vice chairman of fast fashion giant Shein, said in an interview that the company has not yet decided where to go public. "We want to explore all options and have not made any decisions yet." Earlier, Reuters reported that Shein is stepping up preparations for a London listing after its attempt to float itself in New York faced regulatory hurdles and pushback from US lawmakers.
The China Securities Regulatory Commission earlier this year informed Shein that the regulator would not recommend a US IPO due to the company's supply chain issues. Despite this, the plan for a US IPO is still officially on the table.
Shein was valued at $66B USD in a fundraising last year, making it poised to become one of this year's largest IPOs if successful. Analysts speculate that a move to list in the UK could inject much-needed momentum into the local stock market, which has been sluggish for quite a while.
Notably, several UK firms, grappling with low valuations, have opted for US listings in recent years, with some prominent listed entities even are contemplating relocating their listings from the UK to the US. Analysts have noted the UK's tepid enthusiasm for investing in technology and e-commerce. Coupled with Shein's predominant US market presence and established reputation among US consumers and investors, a UK listing might also pose valuation challenges down the line.
TCL Smart Home Achieves $2.1B Revenue in 2023, with Nearly 70% from Overseas Markets
TCL Smart Home, formerly known as Homa Appliances, reported a total revenue of $2.1 billion USD for 2023, marking a 30.15% increase compared to the previous year. The net profit also saw a significant rise, surging 69.37% to reach $109.05 million USD. A noteworthy portion of this revenue, $1.42 billion USD, came from overseas markets, reflecting a 51.95% year-over-year increase and constituting 67.44% of the company's total revenue.
The company, which specializes in refrigerators, freezers, and washing machines under the Aoma and TCL brands, experienced substantial growth in 2023. Sales of refrigerators and freezers surged by 36%, reaching 14.19 million units, while washing machine sales increased by 19%, totaling 2.56 million units—both outpacing industry averages.
Founded in 2002, Aoma refrigerators have gained global recognition for their top-notch R&D and manufacturing services, catering to over 2,000 partners across 130 countries. Notable clients include Electrolux, Candy, Whirlpool, Fagor, GGV, and KESA.
As of 2023, TCL Smart Home has maintained its position as China's top exporter of refrigerators for 15 consecutive years and as the leading exporter to Europe for 16 consecutive years. Both TCL's refrigerators and washing machines consistently rank among the top five in domestic sales.
Snowboard Brand Nobaday Secures Millions in Series A+ Funding
Nobaday, a snowboard brand designed and produced in China, has recently secured millions of dollars in a strategic Series A+ funding round. This new capital is set to propel the brand's expansion into the broader realm of outdoor sports. Nobaday, established by Auxue Culture in 2014, initially launched as a winter sports gear provider in Seattle, USA.
Auxue Culture, the parent company, develops a range of products for skiing, snowboarding, surfing, and camping. The company has been a sponsor for the Chinese national team at the Beijing 2022 Winter Olympics, supplying professional gear. Additionally, Auxue has signed sponsorship deals with over 1,000 top skiers globally. The exposure from the Olympics has significantly boosted Nobaday's snowboarding business, which has thrived despite the challenges posed by the COVID-19 pandemic.
Nobaday offers a diverse product portfolio with thousands of SKUs, retailing through various online platforms such as its standalone website, Amazon, and eBay. The brand also operates offline stores across China, the US, New Zealand, and Russia. Nobaday boasts an average transaction value exceeding $700 USD and a customer retention rate of 40%.
Currently, Nobaday operates 17 brick-and-mortar outlets globally, with 13 located at key ski resorts and 4 in bustling commercial hubs. The brand’s overarching vision is to become a globally recognized, tech-savvy outdoor brand offering products for all seasons.