Up till 2024, consumption going overseas is in full swing.

China's cross-border e-commerce industry is undergoing rapid digital transformation, including the use of big data and AI to optimize operations, while also dealing with various challenges such as increased consumer demand for personalized products, supply chain management changes brought about by globalization, market diversification, and legal compliance.

Great companies survive from the severe competitions. Despite the huge market potential, the performance of each company varies significantly, and the key to success is to dig deep and meet the real needs of overseas customers. Zibuyu Group Co., Ltd. (“Zibuyu” or the “Company”, 02420.HK), as one of the largest cross-border e-commerce B2C companies in China, mainly sells apparel and footwear products through third-party e-commerce platforms and self-operated websites. As a leading enterprise in the industry, Zibuyu is leading the new trend of industry development with its innovative business model and forward-looking strategic layout.

Mr. Chen Caixiong, Executive Director and CEO of Zibuyu, joined the Company in March 2023 and has extensive experience in supply chain management and corporate management. In an exclusive interview by Zhitong Finance, he shared the Company's development history and future plans in the cross-border e-commerce industry. He pointed out: "We have worked hard in terms of brand power, product power and organizational power, and are committed to making great achievements in the track of cross-border e-commerce. ”

Navigator's Perspective: Organizational Structure Innovation and Efficiency Upgrade

Organizational strength is the cornerstone of a company's success. The 6S standard implemented by the Company, including the adjustment of organizational structure and personnel structure, process optimization, elite talent strategy, etc., has greatly improved management efficiency and teamwork.

"We started to restructure our organization in November last year, which is a reform of the superstructure," he explained. The adjusted organizational structure is more simplified, the processes are more streamlined, and the talent is more elite, which improve the operational efficiency of the entire organization. It is particularly noteworthy that Zibuyu's core business unit has established three middle platforms, which means that the Company integrates personnel, commodity and financial information to form a unified and efficient operating system.

In addition, the Company focuses on the three core objectives, which are sales, profit and inventory, and ensures that all business activities are centered around these objectives. This focus allows companies to focus their resources more efficiently and with greater precision and efficiency in business execution.

Product Strength: Data-Driven Innovation, Supply Chain Transformation

The construction of product strength is the core of Zibuyu's scientific and technological innovation strategy. Through big data analysis, the Company accurately captures market demand and promotes product innovation and rapid iteration.

Mr. Chen mentioned: "We must first collect the data back, and then process and digest the external needs through digital construction such as the intelligent product selection system. Today, Zibuyu has significantly improved its decision-making ability through digital business analysis and management decision-making system.” Mr. Chen explained: "Our design team is constantly researching the market, combining social media channels, fashion shows and other diversified information to ensure the fashion and market adaptability of product design.”

In terms of product innovation, Zibuyu focuses on mining customer needs from data, and at the same time combines the creativity and market trends of designers to create products that meet market demand. Mr. Chen mentioned: "The intelligent product selection system can analyze the details of each style, screen out the elements that are in line with the fashion trend, and assist designers in the creation of new styles."

In addition, the Company also attaches great importance to product quality and customer feedback, and incorporates customer evaluations and suggestions into the process of product improvement and innovation. Mr. Chen said: "There is a very detailed evaluation data analysis after sales. We will capture all the evaluation feedback on any model and various platforms, and disassemble and analyze it. ”

In the construction of product strength, Zibuyu has also optimized logistics and warehousing management. "There used to be about five or six warehouses in the mainland, but now they have been optimized to two," said Mr. Chen. The Company has improved logistics efficiency and significantly reduced costs by reducing the number of warehouses.

How can we smoothly reduce dependence on domestic warehouses and reduce inventory risks without affecting the response speed of the supply chain? The secret is that Zibuyu is promoting the direct delivery model of suppliers. Mr. Chen explained: "We are promoting direct delivery from the core main suppliers in China. And why is the domestic industry generally slow to push direct hair now? This actually has something to do with the entire supplier plate of the Company's supply chain. "Only through in-depth cooperation with core suppliers can we achieve a rapid changeover from production to delivery, reduce intermediate links, and improve overall efficiency.

In-depth cooperation with core suppliers to achieve drop shipping model of 30-50% suppliers in stable categories (such as sweaters) is relatively difficult in actual operation, and it depends on the construction of an excellent quality control system. Only when quality control is done well, can we rest assured that the supplier's goods can reach consumers directly. Therefore, it is not an exaggeration to say that "a stable quality control system is an important guarantee for the strength of the product". The Company has established a comprehensive quality control system, and adopts the strategy of full inspection, random inspection or exemption of different levels according to different suppliers, product difficulty, category characteristics and human resource factors. Such a system ensures the stability of product quality and also improves the efficiency of the supply chain.

In short, Zibuyu not only pays attention to innovation and market adaptability in the construction of product strength, but also ensures the high quality of products and rapid market response ability by optimizing product structure, supply chain management and quality control process.

Brand Power Upgrade: Focus on the Core Brand and Enter the High-End Market

The construction of brand power is an important part of Zibuyu's strategy. By focusing on brand building and concentrating resources to create popular products, the Company has enhanced the brand's market bargaining power and profitability. Mr. Chen mentioned: "In fact, the ultimate destination of organizational power and product power is to build brand power.” The brand is not only a commitment to consumers, but also a reflection of the Company's external image.

Zibuyu has adopted a focus strategy in brand building, screened and focused on building multiple core brands, and established a brand department for unified planning and management. Mr. Chen said: "We have set up a brand department to sort out all the core brands from brand characteristics to signage logos.”

In the construction of the second growth curve, Mr. Chen emphasized the independent development of high-end brands: "The most important thing in the second growth curve at present is to build high-end brands. "The Company has made efforts to the high-end market through independent stations, which will open up new growth points. This strategy not only broadens the Company's market area, but also enhances the international competitiveness of the brand.

While consolidating the advantages of core channels, Zibuyu has also focused on developing new sales channels such as Temu and Tiktok, and has achieved outstanding phased results.

Summary

At the end of the interview, Mr. Chen said: "We will continue to deepen digital transformation, strengthen supply chain management, and meet the needs of global consumers through continuous product innovation to promote the Company's long-term development."

Through this interview, Zhitong Finance was able to get a glimpse of Zibuyu Technology's innovative practice and strategic layout in the cross-border e-commerce industry, and the Company continues to explore and move forward with an open mind, innovative spirit and firm determination, showing its heroic nature in the global competition. These new initiatives have been significantly reflected in the 2024 interim results.

According to the latest announcement of Zibuyu (2420. HK), in the first half of 2024, the revenue achieved approximately RMB1.462 billion, an increase of approximately 6.3% YoY; the net profit was approximately RMB91.365 million, an increase of 789% YoY; the net cash from operating activities was approximately RMB130 million, representing a YoY increase of 126.95%.