Text | Market capitalization list, author | Jia Lele, editor | Jiaxin
E-commerce SaaS is entering the cold winter.
Entering 2022, There are Zan exposed the news of large-scale layoffs. Previously, Youzan experienced the termination of the second listing, and the parent company China Youzan continued to decline for a year, falling by more than 90%.
Coincidentally, the e-commerce SaaS leader Weimob Group has also experienced a roller coaster of market value and is currently at a low ebb.
A year ago, e-commerce SaaS was still a highly sought after outlet, and all kinds of capital poured in, soaring tenfold in more than a year. Currently, they are stumbling on the road to launching a charge against the US e-commerce SaaS giant Shopify.
In just a few years, e-commerce SaaS has experienced great ups and downs, from the outlet that everyone is optimistic about, playing an important role in the inevitable trend of e-commerce decentralization, to being questioned whether the business model can be established.
What bottlenecks did they encounter? Can the mode still run through? Is Shopify still worth benchmarking? This article will answer these questions.
01 How is the air outlet formed?
In 2013, Taobao banned WeChat, and in the 8 years since, the Internet wall has been built high. In an isolated ecology, the traffic handling business began to rise.
When the merchant complained that it was difficult to raise tens of thousands of fans on WeChat, but could not jump from WeChat to Taobao transactions, the founder of Youzan, Bai Crow, knew that business was coming, and he rushed to a friend's house and excitedly chatted from 11 o'clock to 5:30.
In his plan, Pocket Pass (the predecessor of Youzan) must be transformed from a tool that "helps merchants build sales platforms and manage fans on WeChat" to a SaaS service provider that serves merchants.
In 2013, Sun Taoyong of Weimob just graduated from school. At that time, it was the Gold Rush of WeChat's third-party platform, and the combination of technology and marketing was the field that Sun Taoyong was good at, and under the favorable circumstances of the time and place, Sun Taoyong founded Weimob with WeChat as the core carrier.
What they do in e-commerce SaaS can be summarized as helping enterprises build their own store mini programs, providing ready-made management systems for chain stores, marketing promotion, and accurate drainage. The first two are subscription solutions and the latter two are merchant solutions.
In the business system of Weimob, there is also a digital media business, which is essentially a marketing service.
Youzan and Weimob originated from the WeChat ecology, and the development and growth are inseparable from three key factors, including industry trends, which have certain inevitability, and also include the external environment with occasionality.
First, the public domain traffic dividend has peaked, and e-commerce decentralization has become a trend.
In the era of centralized e-commerce, whether it is Taobao or JD.com, traffic is concentrated on the platform, not in the hands of merchants, and merchants cannot convert consumers into loyal customers of their own brands. Centralized e-commerce naturally has the motivation to tilt traffic to large stores, and small and medium-sized shops are in a weak position.
QuestMobile's 2021 China Mobile Internet Spring Report shows that from March 2017 to March 2019, the overall growth rate of China's mobile Internet monthly active users was 10%, while from 2019 to 2021, the overall growth rate fell to 2%.
The imbalance between supply and demand has further triggered the rise in media prices, the cost of customer acquisition is getting higher and higher, the direct docking of merchants and the decentralization of operating fans have become the trend of the times, and the rise of online red live broadcasting has made the demand for private domain traffic realization particularly hot.
At that time, platforms such as Douyin and Kuaishou had not yet built their own e-commerce closed loops, and users of service providers such as Zan needed to assist platform users to open and manage stores.
Second, macroeconomic growth is declining.
Against this backdrop, despite policies on wealth redistribution, many people still have conservative expectations of future incomes, which may reduce consumption.
In this regard, merchants tend to adopt more accurate and refined operation and marketing, that is, money is spent on the blade, compared with the previous high exposure, merchants pay more attention to effect conversion.
E-commerce SaaS products have gained market because they can provide online and offline multi-channel management services for customers, members, inventory, etc., and more accurate marketing services.
Third, the epidemic itself is a black swan, which objectively strengthens the above two logics.
Affected by the epidemic, many offline stores cannot open their doors to welcome customers, especially offline chain stores, and the demand for "digital transformation", "Internet access" and "cloud" has increased sharply.
Many factors have jointly blown e-commerce SaaS into the outlet, and Youzan and Weimob have won the favor of giants including Tencent and successfully listed. At the most beautiful time, Weimob and Youzan both walked out of the market ten times a year.
Originating from the WeChat ecology, under the nourishment of WeChat and other giants, Weimob and Youzan have come to the position of the head of e-commerce SaaS, but also because of the parasitic relationship, they have become unable to bear the risk and suffered great ups and downs.
02 Why is it difficult to make a profit?
After reaching the high point, China Youzan and Weimob both began a downward channel, and there was no problem at the technical level with the pullback.
However, the decline process is too much to test investors, first straight to the waist cut away, after the waist chop Weimob still resisted, China has Zan directly broke down. As of February 10, 2022, Weimob's share price was HK$6.64, down about 80% at a high point, and China's praise fell by more than 90%, leaving only HK$0.315.
Of course, the factors of China's praise are more complicated, and the above-mentioned Youzan Technology is a subsidiary of the listed company China Youzan, and there will be a spin-off and listing action in 2021, and the listing process will be terminated at the end of last year.
Behind the decline of the same destination are similar factors. Overall, it is because changes in the environment have made the uncertainty of earnings worse.
First, it has a strong dependence on the platform, and e-commerce SaaS is not "no you can't do it" for the platform.
E-commerce SaaS grows in the ecology of giants, and when the giants grow in the e-commerce business, they will choose to take back their rights, which is an uncontrollable factor for e-commerce SaaS. The most typical example is the influence of Kuaishou on Youzan.
White Crow said in his speech that the original Kuaishou platform brought 40% of its GMV. In the first quarter of 2020, the proportion of GMV brought by Kuaishou dropped to 20%. In November 2021, Kuaishou officially performed a third-party chain breaking operation on Youzan and Magic Chopsticks, and the dividend of Kuaishou Live came to an end.
WeChat and Weimob, Youzan have a relatively stable cooperative relationship, and this dependence has a greater positive effect. When WeChat has further moves in e-commerce, Youzan and Weimob are vulnerable.
In June 2020, the news of the internal test of the WeChat small store came out.
The function of WeChat small store is relatively simple and relatively basic, in order to allow small businesses to achieve no threshold, low-cost store, as for the follow-up marketing, orders, sales, customer management and other links, or need more professional SaaS service providers to complete. Despite this, it triggered a sharp decline in the shares of Weimob and China Youzan.
Second, interconnection has knocked out some of the incremental markets.
In the case of interconnection, the traffic ceiling on the respective platforms has been temporarily opened, and the demand for multi-platform stores has slowed down. For merchants who have already opened stores on multiple platforms, it is more convenient to choose the same set of operating tools.
The functions of Youzan and Weimob as store opening and store management tools have been weakened, and the functions of advertising delivery and precision marketing that are biased towards the effect are more valued and more demanding. This is a more favorable blow than Weimob.
Third, the renewal rate is low.
Youzan Technology's prospectus contained in the period, has never achieved profit, before 2021 in the loss reduction, the first half of 2021 losses expanded, to 299 million yuan, in the previous article "key indicators down, the story of Praise is not easy to tell", the market value list pointed out that There is still a long way to go from profitability.
Weimob's performance fluctuates greatly, with a profit of 311 million yuan in 2019 and a loss of 1.17 billion yuan in 2020, which hovers on the profit and loss line if viewed in terms of operating profit. Like Youzan, in the first half of 2021, the loss is also expanding.
Behind the difficulty of making a profit is that e-commerce SaaS is still in the stage of burning money for growth, and 50% or 60% of the revenue is used to obtain customers. SaaS products have a high upfront investment, and the renewal rate is the key to profitability.
Large customers are prone to generate greater value, but one is easy to obtain platform traffic tilt, and the other is that delivery and service are heavier, and there will be personalized needs. Although the product requirements of small customers are low, the life cycle of small customers is generally not long.
Under multiple factors, e-commerce SaaS has a weak ability to make customers into lasting business.
Coupled with the high prosperity in 2020, the churn rate of Youzan Technology in the first half of 2021 increased by 12 percentage points, and the conversion rate fell by 2 percentage points.
As an e-commerce SaaS, the space for Weimob and Youzan to play is shrinking. These two companies are also looking for their own way out, such as Weimob's advertising business has become a feature, Youzan has adjusted the business unit, and split the front-end business into five major business units: social e-commerce, new retail, beauty industry, education, and All value.
The two companies' approach, either to expand the field or increase the variety of services, is getting farther and farther away from pure e-commerce SaaS. So is the concept of private domain e-commerce true? In the business scope of e-commerce SaaS, do Weimob and Youzan still have opportunities?
03 Is there Shopify in China?
Where it goes public, there is always a story to tell. If you want the story to be more beautiful and more deeply rooted in people's hearts, you must have keywords.
The easiest way is to benchmark an industry predecessor who is higher than itself, such as "the next Tesla", "China's UPS" and "China's Uniqlo". It can not only show its determination to catch up with the advanced, but also easy to spread. This is called tea coffee in the rice circle, also called touching porcelain marketing.
In fact, all e-commerce SaaS will use Shopify as a benchmark.
Shopify's founders positioned the company this way, "Amazon wants to build an empire, and Shopify is trying to arm the rebels." As of February 10, 2022, Shopify had a market capitalization of $116.3 billion.
What Shopify does is provide a platform for small and medium-sized businesses to engage directly with consumers, rather than indirectly through Amazon to get traffic. More and more merchants have begun to build their own online stores, and Shopify's revenue scale has continued to expand, from 2017 to 2020, the revenue growth has exceeded 3 times in three years.
With the increase in popularity and customer stickiness, Shopify no longer needs to spend a lot of effort to promote itself, and the sales expense rate has declined year by year, and now it is below 20%, and it has also achieved profitability.
Can China's e-commerce SaaS be concocted? The answer is hard.
First, consumers have different shopping habits.
Most of Shopify's business is in the United States. Consumers in the United States are accustomed to spending directly on the brand's official website. In China, consumers are more accustomed to shopping on integrated e-commerce, which has certain historical reasons.
On the one hand, the domestic consumption level has been in a catch-up position, coupled with the traditional concept of saving, comprehensive e-commerce can just meet the needs of consumers to shop around; on the other hand, the previous search engine bidding ranking led to the official website may not be in the most conspicuous position, consumers need to judge themselves.
Therefore, in China, the development of private domain e-commerce SaaS needs to reverse consumers' shopping habits.
Second, the progress of e-commerce infrastructure is different.
The so-called e-commerce infrastructure, in simple terms, is that the express delivery can arrive in a few days, whether it can see the logistics information, how many payment methods are supported, and how to protect its rights and interests in disputes with merchants.
Convenient payment and fast logistics are the value-added services that Shopify provides for merchants, and they are also the growth momentum of Shopify. In terms of e-commerce infrastructure, China is much ahead. The three-way logistics is developed enough, online payment is quite mature, the rate is low, and the payment can not bite the meat. The place to learn is to do merchant financial services, but this requires cooperation with financial institutions and also requires a lot of money.
In the implementation process, China's e-commerce SaaS also has no value-added space.
Orange is born in Huaibei, on the other hand. Different national conditions, even if Shopify Buddha-figures come, they may not be able to play China's retail business.
Taking a step back, the development and prosperity of private domain e-commerce requires merchants to build a benign relationship with consumers, and new goods or services can have a fission effect in the process of sales.
A benign relationship requires a connection between goods, emotions or other forms to increase the interaction between merchants and consumers and enhance consumer stickiness. Professionally, it is called forming your own private domain assets.
And when the consumers of each merchant are loyal enough, is it another island that the merchant and the consumer jointly build? Does it increase the risk of merchants cutting leeks? After all, the most typical private domain traffic operation is micro-business and stock courses.
Therefore, the road ahead of private domain e-commerce must also be bumpy.
04 Conclusion
Reviewing Chinese e-commerce SaaS, it has found a unique business model in a special period, and they expect to become excellent enterprises like Shopify.
However, due to the different environment and consumer shopping habits, the success of the other side of the ocean cannot be directly moved.
In China, where the e-commerce infrastructure is more perfect, the giant is still a mountain that e-commerce SaaS cannot bypass.
Against this backdrop that is difficult to change, e-commerce SaaS needs to find more emerging platforms to expand new customers.
For old customers, the enlightenment given by Shopify is to provide value-added services and form a community of interests with merchants, and the localization operation is to provide better services and help merchants improve GMV, thereby increasing the renewal rate, reducing the expense rate, and forming a virtuous circle.
Regardless of the above, China's e-commerce SaaS has not fully achieved it.
Resources:
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