“The traditional clothing industry has entered a bottleneck period. At present, the prices of both e-commerce and offline stores are relatively ‘loose’, and there is a lot of bargaining space. In the past, many ‘high-ranking’ brands increased their discounts on e-commerce platforms, but it is still difficult to surpass fast fashion brands.” A digital economy researcher who asked not to be named told the Securities Daily.
This gap is also becoming more and more obvious in clothing e-commerce enterprises. There are old fashion e-commerce enterprises facing delisting risk, and emerging fast fashion forces have become the new favorite of capital.
former “first shares”
facing delisting risk
Mushroom street was listed in the United States in December, 2018, and was dubbed “the first share of fashion e-commerce”, with an issue price of $14 /ads. however, in the past four years, there have been many layoffs in mushroom street. From fiscal year 2018 to fiscal year 2021, the operating revenues of mushroom street were RMB 973million, RMB 1074million, RMB 835million and RMB 482million respectively, and the net losses were RMB 558million, RMB 486million, RMB 2224million and RMB 328million respectively.
The company continues to lose money and its share price is ugly. In 2021, mushroom Street received a notice letter from the New York Stock Exchange in November of the same year, saying that its trading price was lower than the compliance standard, requiring the company to raise its share price and average price to more than $1 within 6 months after receiving the notice. If the closing price of the six-month remediation period does not reach US $1 per share by the end of the last trading day, or the average closing price does not reach US $1 within 30 trading days at the end of the last trading day, the NYSE will start the suspension and delisting warning.
In order to avoid delisting, mushroom Street merged shares on March 28, 2022, with one share for every 12 shares. As a result, the company’s share price returned to above $1.
The temple library, known as the “first share of luxury e-commerce”, also has the risk of delisting. Last year, because the share price was lower than US $1 for a long time, Siku received a written notice from the listing qualification Department of Nasdaq stock market in December 2021. Temple library said that from now until June 15, 2022, it will monitor the closing price of its ads and consider it, including adjusting the ratio of ads to class a common shares to re meet the NASDAQ minimum bid requirements.
In recent years, the temple library has also been in constant turmoil, “bankruptcy”, “salary arrears” and other news are rampant, and the performance is difficult to reassure investors. In November 2021, the 2020 financial report, which was half a year later than the specified time, was finally released, and the company turned from profit to loss. Up to now, the company’s share price is still below $1. With the deadline approaching on June 15, there is not much time left for the temple library. In this regard, the relevant person in charge of the temple library told the reporter of the Securities Daily: “affected by relevant policies in the past two years, there are more companies whose shares have fallen by $1. We are also actively trying to seek improvement, but it is not convenient to disclose the specific measures that the company will adopt for the time being.”
It is worth mentioning that the poor performance of listed clothing e-commerce such as mushroom street and temple library is not an example. In recent years, more clothing e-commerce have disappeared even before the day of listing.
For example, luxury e-commerce shangpin.com and zoxiu.com have all suspended business in recent years. The once popular “shared Wardrobe” represents that enterprises also withdraw from the market. In 2021, yiersan said in the notice on the home page of its app that yiersan would close the service on August 15 due to business adjustment. Previously, yiersan obtained six rounds of financing, with a total amount of more than US $80 million.
Referring to the current situation of the “downturn” of these clothing e-commerce, a securities analyst who asked not to be named told the Securities Daily that the clothing industry is an area with low growth for a long time. Although it will not become worse, it will not become better on the existing basis. “The clothing industry has many categories. It is a big market in itself. In the early stage, the threshold for vertical e-commerce is very low and it is easy to enter the market. However, in the later stage of development, what is important is content building and platform construction. Verticality is not so important. Chinese consumers do not have the habit of looking for vertical e-commerce first when buying a product. In this case, the advantages of comprehensive e-commerce are obvious.”
“Many Kwai tiktok are doing live broadcast now, but because of the change of channels, it is difficult to make a transition. They are doing clothing and carrying goods like channel, fast hand and so on. Sales data of clothing category can even be placed in the very front position of the platform. But that’s all. The platform will not separate the garments individually because of the good data of this category.” The analyst said.
fast fashion e-commerce
become the new favorite of capital
The industry seems to be in decline, but there are brave people taking the lead.
Recently, several media reported that the fast fashion cross-border e-commerce SHEEN (Xiyin) is carrying out the latest round of financing, with the participation of well-known investment institutions such as Sequoia China, tiger Global Fund and pan The Pacific Securities Co.Ltd(601099) capital, with a financing amount of at least US $1 billion. Insiders said that after this round of financing, Sheen’s valuation may be as high as $100 billion.
According to this calculation, its valuation exceeds the sum of fast fashion clothing giants H & M and Zara. In terms of the market value of Chinese Internet companies in 2021, Tencent, Alibaba, meituan and jd.com are ahead of sheen, which has become the third largest start-up enterprise in the world, second only to byte beat and SpaceX In February this year, it was reported on the Internet that sheen restarted the U.S. IPO plan, but in April, the company responded to the media that “there is no IPO plan for the time being.”
In this regard, Jiang Han, a senior researcher of Pangu think tank, told the reporter of Securities Daily that the main way of playing sheen is “fast”. Zara used to conquer the market through fast fashion. It takes 14 days to copy trendy clothes from fashion week and then make them into finished products, while sheen is faster, as long as 7 days. “The key to the unimpeded access of made in China in the world over the years is its low price and high quality. Sheen produces new products quickly and cheaply. It has built itself into a ‘pinduoduo + taote + famous and creative products’ in the fashion industry.”
The above analysts believe that although sheen is relatively successful at present, it has no reference significance for other clothing e-commerce in China. “Sheen’s success is precisely because it does not do the Chinese market. Its logistics in the United States is faster and cheaper than other competitors, which is very prominent overseas. However, it will not work in China. China’s e-commerce logistics is fast, and there will be e-commerce with cheaper prices. If sheen does the Chinese market from the beginning, it will not grow because China’s e-commerce market is very mature.”
You Wuyang, President of Hangzhou Xijiang New Retail Research Institute, told the reporter of Securities Daily that there may be moisture in Sheen’s valuation, because many data of the company have not been disclosed yet, which is suspected of exaggeration.
For the future development direction of clothing e-commerce, you Wuyang put forward some suggestions: “on the one hand, the phenomenon of consumption polarization gives many growth opportunities to the high-quality and high-end market; secondly, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) will eventually move towards integration. Content and social networking are also the most potential models, and these enterprises need to grasp them.”
