On April 28th, brand e-commerce service provider Ruoyuchen released its 2023 annual report and performance data for the first quarter of 2024. Last year, the company realized a revenue of 1.366 billion yuan, an increase of 12.25% compared to the same period last year; The net cost attributable to shareholders of the listed company was 54.2905 million yuan, a significant decrease of 60.93% compared to the same period last year.
This company, which initially helped brands operate flagship e-commerce stores, currently has three major businesses: brand governance, self owned brand, and agency management. The agency business still dominates, but its proportion has continued to rise. The double deletion of expenses in the financial report mainly benefits from the first two operations.
Joining the first quarter of 2024, its decline trend was continuous, with a cash flow of 372 million yuan, a year-on-year decrease of 31.68%. The net cost attributable to shareholders of the listed company was 12.8212 million yuan, a year-on-year decrease of 86.40%. Among them, the sales revenue of self owned brands decreased by 50.12% year-on-year, and their proportion in total sales revenue increased to 21.05%; The proportion of brand governance business reached 31.04%.
Ruo Yuchen, established in 2011, spent 9 years redeeming his listing on the Shenzhen Stock Exchange. In recent years, proxy management companies represented by Ruoyuchen, Baozun E-commerce, and Meirenli Makeup are no longer satisfied with their status as “sales enthusiasts”, trying to break free from the strong self-reliance towards Taobao e-commerce in the past. They have successively incubated their own brands and brand governance businesses in order to seek higher autonomy and cost rates.
Especially as e-commerce moves from a period of deletion to a period of stock, conservative shelf e-commerce is facing pressure to slow down the deletion of users and GMV (total business volume of goods), and instead, it is the high-speed growth of communicative e-commerce. The intensification of mutual assistance within the industry undoubtedly deprives brand governance companies of higher demands for refined management.
In order to break free from the danger of a single business model, starting from 2020, Ruoyuchen began to accelerate its infiltration and infiltration into emerging e-commerce platforms, and continuously increased investment, attempting to join the upstream cost chain of the industry.
In terms of brand governance and business, if Yuchen sells the brand’s sales operations and marketing promotion, and controls the pricing rights of sales in mutual aid areas. The cost of this operation comes from the difference in sales expenses, negotiation costs, and various expenses. At present, its brand customers include Procter&Gamble, Bayer, Johnson&Johnson, Sanofi, and others.
In addition to mutual assistance with mature brand merchants, the company also incubates its own brands such as “Huajia” and “Yuejing Anman”, and directly obtains costs through sales and distribution. In 2023, its own brand will maintain double-digit growth in Tmall, Tiktok, Xiaohongshu and other channels, and its proportion in total sales will also increase.
The conservative agency business of the company is also continuing, mainly providing brand positioning, store operation, adjusting marketing, data mining, supply chain governance and other services for the brand owner.
Starting from the category of mother and baby, Ruoyuchen has now ventured into multiple fast-moving consumer goods categories such as general health, beauty and personal care, and food and beverage. According to the financial report, in 2023, the company’s sales proportion on Tmall platforms (Tmall Mall, Tmall Domestic, Tmall Supermarket) reached 50%, which also means that the sales proportion outside of Taobao has approached half.
Specifically, in terms of categories, Ruo Yuchen’s sales of beauty and personal care products account for 40%, accounting for the majority. The sales of household cleaning, maternal and child care, and health products account for 19.42%, 16.2%, and 16.14%, respectively.
Like many Internet companies, faced with intense mutual aid in shopping malls and economic upward trend, Ruoyechen also adopted the pace of cost upgrading and efficiency reduction, and strictly controlled various cost expenditures. The cost of human resources, trafficking, governance, and warehousing and logistics increased year on year last year. At the business level, it also stops counting and slimming down existing brands, leaving the main capital to focus brands.
The above is to urge the company to reduce its gross profit by 34.47% year-on-year, and to increase its overall gross profit margin by nearly 7 percentage points, in order to strengthen its profitability.
Facing the upcoming era of AI e-commerce, if Yuchen also relies on AI skills to open up a series of marketing assistance targets, increase the scale and intensity of using techniques such as ChatGPT or similar ChatGPT, in order to enhance brand marketing talent. In addition, the company hopes to use AI to assist brands and platforms in optimizing supply chain governance, improving inventory turnover and logistics efficiency.