The revenue scale of Yixian e-commerce, from 3 billion yuan in 2019 before the listing, increased to 5.8 billion yuan in 2020. Net profit, however, went from more than 70 million yuan in the year before listing to a loss of 2.6 billion yuan. Why does this happen?
The first is the high cost of marketing. In my previous article on cost reduction and efficiency improvement of Internet companies, I discussed in detail the cases of companies in different industries. Iqiyi, for example, reduces the number of copyright purchases and reduces the cost, thus increasing the gross profit margin. And while costs have fallen, the company has seen little decline in membership or revenue. So, for iQiyi, it's easy to turn a profit. In terms of business model and finance, Yixian e-commerce is worse than iQiyi:
In 2022, the operating revenue of Yixian E-commerce was 3.7 billion yuan, and the sales and marketing expenses were 2.3 billion yuan, accounting for 62.1%. In 2021, the revenue of Yixian E-commerce is 5.8 billion yuan, and the sales and marketing expenses are 4 billion yuan, accounting for 68.9%.
Iqiyi's cost reduction and efficiency increase feedback to the revenue is maintained or slightly decreased, while Yixian e-commerce is a big drop in revenue, the cost is not too low. Therefore, Yi Xian e-commerce 2022 fourth quarter and the whole year, are losses. Operating profit was a loss of $11 million and a loss of $130 million.
Second, the larger the scale, the lower the input-output ratio. Perfect Diary us, as an emerging beauty brand, is very weak in the ability to lock customers. Take Vipshop as a comparison: Vipshop had 84.8 million active users in 2022, but marketing spending decreased compared to 2021. Perfect diary as a consumer goods brand, generally do not disclose daily live, monthly live users. But there are also problems with the company's data.
At its peak in 2021, Yixian's sales volume was 5.8 billion yuan. If the accumulated sales amount is included, it is close to 20 billion yuan. Perfect Diary has 18.31 million followers on Tmall. Among these fans, the number of people who re-purchase can be said to be small, because the company's income is continuing to decline, so it can only be called accumulative purchase users, and can not be called the active users of perfect diary. Because the more the company develops, the more revenue increases, the higher the cost to maintain. Take the historical data as a comparison: in 2019, Yixian e-commerce revenue of 3 billion yuan, sales expenses only 1.25 billion yuan.
By 2022, sales expenses had nearly doubled to 2.3 billion yuan on 3.8 billion yuan in revenue. The company's sales, however, increased by only 800 million yuan. In business, the input-output ratio of the company is getting lower and lower. And the company is not making money. This requires a complete rethink of the company's business model.
Finally, dividends fade and costs rise. Perfect diary from the birth to the present, called "network red brand" more appropriate. When the company was founded, it planted grass on various social media. At that time, Perfect Diary did grab the "channel dividend", because there were not many big companies and brands in these channels. But today, both Douyin and XiaoHongshu are the "standard" of each company's marketing, and there is no "depression" or "gap".
However, Perfect Diary, an online celebrity brand that relies on "channel dividend", saw its costs rise immediately and its income decline sharply once the dividend was withdrawn.
