Ruhan needs to tell a new story that is touching enough
Editor’s note: This article comes from the WeChat public account“zinc scale” (ID :znkedu).
Author/Xu Wei
Editor/Li Qinlin
On June 3, Ruhan Han, the first e-commerce e-commerce company, released its performance report for the fourth quarter and full year of fiscal 2020 (the quarter and year ended March 31, 2020).
Among them, data such as “GMV exceeded 4 billion in fiscal year 2020” and “service revenue surged by 101%” have made many promising voices in the market.
But even so, it failed to change Ruhan’s current loss situation. Under seemingly good development momentum, risks are also surging in the dark tide. Zhang Dayi, a web celebrity who relies heavily on “one person to prop up a listed company”, while Ruhan is still “old trouble”, has not been able to keep up with the new trend of live streaming.
The head player who shined in the era of online celebrity e-commerce gradually fell behind in the new outlet of live e-commerce. The business is in trouble, and the stock price continues to slump. Ruhan needs to tell a new story that is touching enough.
Cannot strip Zhang Dayi’s influence
“Despite the impact of the new Coronary Pneumonia (Covid-19) epidemic on the fourth quarter, which was already an off-season in our industry, we have still completed strong operating and financial results overall.” For the full fiscal year 2020, Ruhan’s Sun Lei, the founder, director and chief executive officer, concluded.
However, Ruhan’s situation is not as optimistic as Sun Lei said.
According to the financial report data, Ruhan’s net income in fiscal year 2020 totaled RMB 1.295 billion, an increase of 19% from RMB 1.934 billion last year. However, its net loss to its mother was RMB 92.5 million, an increase of 26% year-on-year.
The increase in revenue is mainly due to the fact that as the two main business products of Ruhan, such as product sales and advertising, marketing and other services, have achieved good results: in 2020, revenue from product sales was 992.6 million yuan. A year-on-year increase of 5%; service business revenue was 303.2 million yuan, a year-on-year increase of 101%.
For product sales business and advertising, marketing and other service businesses, the former is to drive self-operated store products through contracted celebrities to achieve profitable sales growth. The latter uses contracted celebrities as third-party merchants. The way of providing marketing services will increase the sales of merchants and charge service fees.
In other words, both of them are inseparable from Net Red, the basic dish that makes Ruhan rich, and even Ruhan is still intending to strengthen the incubation and operation of Net Red. The financial report shows that the number of Internet celebrities in Ruhan has been reduced from 2122 on March 31, 019 increased to 137 on March 31, 2020, an increase of 12% year-on-year; the number of brands served under the platform business model also increased from 507 last year to 735 in fiscal year 2020.
Of course, this is entirely in line with Ruhan’s statement in the prospectus that the company is committed to cultivating online influencers (KOLs). But in this case, it must not be related to Ruhan’s cost.
According to financial reports, Ruhan’s operating costs in fiscal year 2020 were RMB 806.1 million, an increase of 7% over last year’s RMB 751.4 million. One of the largest expenditures is up to RMB 305.2 million in sales and marketing expenses. Obviously, focusing on incubating online celebrities will inevitably be accompanied by high marketing costs. What’s more regrettable is that the huge cost has failed to bring in more top celebrities like Zhang Dayi, nor can it be used to gain more income to reverse its own unprofitable disadvantage.
Today, the three top online celebrities such as Zhang Dayi, Daikin, and Li Beilin are still the main force of income generation. Not only has the data of GMV of more than 100 million brought in, but their influence is still escalating- —In FY 2020, self-operated stores with headline celebrities, product sales revenue increased by 40% year-on-year. As for the 156 Internet celebrities other than the three head anchors under Ruhan Holdings, GMV achieved a total of 658 million yuan in FY 2020, which is even less than 40% of the company’s overall GMV.
Under this new business model, which is highly dependent on headline celebrities, their every move affects Ruhan’s lifeline. Prior to this, Zhang Dayi was trapped in the whirlpool of negative public opinion, causing Ruhan’s stock price to fall by more than 10%, evaporating 150 million yuan overnight.
For this reason, overseas investors have always maintained reservations about Ruhan, and their listing was broken. Since then, the stock price has always hovered below the issue price.
If it is listed, it will be broken
Under the live broadcast, Ruhan has not yet established a firm foothold
It can be seen that although Ruhan took advantage of Zhang Dayi to take advantage of online celebrity e-commerce, he failed to keep pace with the Internet celebrity economic update iteration.
The turning point occurred on September 18, 2019. On this day, Zhang Dayi posted a Weibo: “Ruhan has been preparing and observing for several months, yes, Zhang Dayi is going to live broadcast. I have kept many brands out of the way, I want to open my new collar