In late March, e-commerce SaaS enterprises are successively issuing financial reports for 2021. The financial reports of Weimeng group (02013. HK) and youzan (08083. HK) show that in 2021, Weimeng turned from profit to loss, while youzan’s loss expanded significantly Hangzhou Raycloud Technology Co.Ltd(688365) ( Hangzhou Raycloud Technology Co.Ltd(688365) . SH) has not released the financial report of 2021, but the announcement of 2021 performance express shows that Hangzhou Raycloud Technology Co.Ltd(688365) also turns from profit to loss in 2021.
Among them, youzan not only expanded the loss range in 2021, but also was exposed to layoffs by the media. A Zambian side responded to the reporter of China Business Daily that the proportion of layoffs was more than 20%.
Director of online retail department of ECOSOC e-commerce research center Mo daiqing, a senior analyst, said in an interview: “Due to the repeated impact of the external environment and the epidemic, major Internet companies have laid off workers, and youzan and Weimeng are also undergoing tests. Youzan was once known as the best e-commerce SaaS service provider in China. Now, not only layoffs and continuous losses, but also the share price has fallen to less than 1 / 20 of the peak period. Youzan is still so, which also means that the SaaS service companies that are not platform parties in the whole e-commerce retail industry have entered a ‘cold winter’.”
recklessness behind losses
First, take a look at the annual revenue and profit data released by several major e-commerce SaaS service providers.
The revenue of Weimeng in 2021 was 2.686 billion yuan, a year-on-year increase of 36.41%; The operating loss was 761 million yuan, while the operating profit of the previous year was 9 million yuan; The loss during the year was 861 million yuan, compared with 1.166 billion yuan in the same period of last year; The adjusted net loss was 566 million yuan, and the adjusted net profit of the previous year was 108 million yuan.
Youzan’s revenue in 2021 was 1.57 billion yuan, a year-on-year decrease of 13.77%; The annual loss was 3.293 billion yuan, of which the impairment of goodwill and assets exceeded 2 billion yuan, and the loss of the previous year was 592 million yuan; The adjusted net loss was 904 million yuan, and the adjusted net loss of the previous year was 304 million yuan.
Hangzhou Raycloud Technology Co.Ltd(688365) 2021 Revenue: 546 million yuan, up 7.01% year on year; The net loss was 584686 million yuan, with a net profit of 936837 million yuan in the same period of last year, a year-on-year decrease of 162.41%; The net loss after deduction was 916427 million yuan, compared with 433703 million yuan in the same period of last year, a year-on-year decrease of 311.30%.
It can be seen that the days of several listed e-commerce SaaS enterprises will not be easy in 2021.
While the financial report was issued, youzan founder Bai Ya made a reply to the development of the past two years. He said that it was because the emergence of the epidemic disrupted the pace of development.
For e-commerce SaaS enterprises, white crow believes that maintaining an annual growth rate of 30% is a better development state. At the end of 2019, the growth rate of China’s total retail sales of social consumer goods slowed down, and the increment of China’s Internet users has peaked. These two data indicate that the 20 years of rapid development of China’s Internet will become history, and the future will no longer face the incremental market, but the stock market.
However, the outbreak in 2020 had an impact on many businesses, especially offline retail. However, it also promoted the rapid development of e-commerce SaaS.
Under the epidemic, many traditional offline businesses cannot open their doors to do business. Goods are piled in warehouses and employees are idle at home. Opening online stores and social platforms to recommend goods to consumers has become one of the best ways for businesses to save themselves.
“The epidemic has accelerated the transformation of traditional offline businesses to online businesses, forming a wave of development dividends for e-commerce SaaS enterprises.” Li Chengdong, founder of dolphin club and e-commerce expert, told reporters that this wave of explosive growth has even driven the growth of advertising revenue of e-commerce SaaS enterprises.
How good is the business of e-commerce SaaS enterprises under the epidemic? “In those two months, our sales even changed from ‘actively promoting orders’ to’ passively receiving orders’, and our performance grew very fast,” Bai said
There can be a more intuitive feeling from the annual report data. Youzan’s subscription solution revenue in 2020 was 1.048 billion yuan, a year-on-year increase of 76.6%; Business solution revenue was 758 million yuan, a year-on-year increase of 33.7%. In 2020, the Gmv (total amount of commodity transactions) generated by merchants through the SaaS solution of youzan reached 103.7 billion yuan. By the end of 2020, the number of paying merchants with youzan reached 97000, with a year-on-year increase of 18%, of which nearly 60000 paying merchants were added in 2020.
A small episode is that in early 2020, the wechat alliance database was maliciously deleted by employees, resulting in the transfer of some businesses to other SaaS enterprises such as youzan.
The person in charge of a community group buying enterprise in Shandong told reporters: “the deletion of Weimeng database in 2020 caused great losses to the operation. In order to resume production and operation as soon as possible, it was transferred to youzan at that time.”
However, some businesses choose to accept compensation and stay in Weimeng. “At that time, the problem was solved through negotiation, and they also provided a lot of help, so they chose to stay in Weimeng later.” A micro alliance business in Zhejiang told reporters.
Thanks to the popularity of the industry, Weimeng also achieved good development in 2020, although its business was affected by SaaS destruction. The digital business income of Weimeng in 2020 was 1.246 billion yuan, a year-on-year increase of 44.0%. Among them, 98000 subscribers subscribed to the solution, with a year-on-year increase of 23.2%; The number of paying users of merchant solutions was 46000, a year-on-year increase of 40.8%.
Hangzhou Raycloud Technology Co.Ltd(688365) 2020’s SaaS product revenue was 358 million yuan, with a year-on-year increase of 11.89%.
In 2020, SaaS industry presents a “thriving” scene. Bai Ya said: “at that time, from the data, the online and digital retail had arrived at a high speed, and there was still huge value increment space for live e-commerce. The management team and I began to be unable to suppress the desire for rapid growth and thought that we must seize the opportunity to quickly become a world-class enterprise service company.” According to the disclosure, when the most time, Zan occupies nearly half of Kwai’s business and transaction volume.
In order to achieve the goal of rapid growth, major e-commerce SaaS enterprises recruit a large number of people.
According to the data disclosed in the financial report, youzan had 2941 employees by the end of 2019, increased to 3603 by the end of 2020, and increased again to 4494 by the end of 2021. Weimeng has 3941 employees by the end of 2019, 5796 by the end of 2020 and 8562 by the end of 2021. By the end of 2019, Hangzhou Raycloud Technology Co.Ltd(688365) had 910 employees, and by the end of 2020, the number of employees of Yunguang technology will increase to 1705.
looking for the second growth curve
The epidemic has brought a wave of dividends to e-commerce SaaS enterprises in 2020, but the continuous epidemic has become the “straw” that overwhelms camels.
Recently, the news of layoffs in Zanda has become rampant. Youzan also admitted that the proportion of layoffs was more than 20%.
White crow said: “because at the beginning of the epidemic, businesses quickly used stores with praise, but also encountered various business difficulties. Some stores had to reduce their scale because of the decline of passenger flow, and some even closed their stores, which affected the renewal rate of businesses.”
Several merchants told reporters that in 2020, because the wechat alliance database event was transferred to youzan, it has now been transferred to other businesses. “At present, the business is depressed. There are few advantages of this mall. Many people have abandoned this model.” The above-mentioned wechat merchants in Zhejiang told reporters, “because after the database deletion event, wechat gave us free use for three years. If we don’t use it after the three-year free period, we can see the development of business at that time.”
In addition, Kwai Chung and tiktok business have built closed-loop ecosystem in the past two years, and built SaaS software on the platform, which has also had a great impact on the SaaS business of independent electric business. Take praise as an example. As of the fourth quarter of 2021, the GMV ratio of praise in Kwai Chung channel has dropped to 2%.
The growth of e-commerce SaaS business slows down, and the increased personnel for business expansion has become a “tiger” eating corporate profits.
White crow admitted: “for the to B industry with a relatively long business chain, the growth of investment can often be very fast, but the decline of investment will be very slow.”
From the perspective of business model, SaaS software needs to invest a lot of research and development personnel and R & D expenses, and a lot of sales personnel and sales expenses need to be invested in the sales and after-sales stage.
In 2021, Weimeng made a total gross profit of 1.517 billion yuan, of which the gross profit margin of digital commerce business was 76.3% and that of digital media business was 2.1%. In 2021, the R & D expenditure was 775 million yuan, compared with 251 million yuan in the same period of last year, an increase of 208.8% year-on-year. The two major expenses of Weimeng in the operation stage are sales and distribution expenses and general and administrative expenses, which are 1.715 billion yuan and 811 million yuan respectively; In the same period last year, the two figures were 919 million yuan and 261 million yuan respectively.
Youzan made a total gross profit of 952 million yuan in 2021, with a gross profit margin of 60.7%. However, the sales expenditure was 959 million yuan, an increase of 22.7% over the previous year; Administrative expenditure was 335 million yuan, a year-on-year increase of 38.9%; In addition, there was another operating expenditure as high as 609 million yuan, a year-on-year increase of 36.9%. Youzan said that the increase in other operating expenses was mainly due to the increased R & D investment in new retail business in 2021 and the centralized launch of four new products.
“The competition in China is too fierce. The development of SaaS enterprises depends on sales, so such enterprises generally account for a large proportion of sales costs and high R & D costs.” Li Chengdong told reporters.
In order to improve profitability, some e-commerce SaaS enterprises choose to embark on the road of cost reduction and efficiency increase. In addition to layoffs, youzan also said that it would improve operating cash flow and operating performance by establishing a more efficient sales system and implementing strict and accurate cost control, and would reasonably arrange sales and R & D investment to improve per capita output.
Mo Zan said that relying on the external platform will lead to its rapid growth, and Mo Zan said that it will not rely on the external platform. For e-commerce SaaS enterprises such as youzan and Weimeng, they need the second curve of business growth and put eggs in more baskets.
Mo daiqing added: the loss of Weimeng lies in the investment in scientific research and employment. In order to promote the rapid development of enterprises in the transformation of the second curve, such large-scale investment is inevitable.
Li Chengdong also believes that China’s traditional e-commerce SaaS market is shrinking, but it can develop to overseas markets. In addition, SaaS services in vertical industries and SaaS tools to improve enterprise efficiency can also be developed.
