Such As Touching The Stone Across The River, But How Deep Is The Net Red Economy?

The eastern time of April 3rd, listed on Nasdaq, such as Han holdings opening price of 11.5 U.S. dollars / share, fell below the issue price of 12.5 U.S. dollars / share, the intraday share price continued to decline, closing down 37.2%, the market value fell to 649 million U.S. dollars, the listing breaking out, let many investors glance at, sighed with emotion, "the first time saw the break 15% of the new shares", "hit the first day actually fell 30%", "a few years rarely seen"...

In the continuous geological doubt, Beijing time on June 13th, such as Han (NASDAQ:RUHN) released the 2019 quarter of March 31st as of the fourth quarter and annual earnings. In the fourth quarter, the net revenue was 237 million 300 thousand yuan (US $35 million 400 thousand), representing an increase of 20.7% compared with 196 million 500 thousand yuan in the same period last year. A net loss of 28 million 700 thousand yuan (US $4 million 300 thousand) was narrowed by 55.1% compared with a net loss of 63 million 800 thousand yuan in the same period last year.

In the 2019 fiscal year, such as net revenue was 1 billion 100 million yuan (about 169 million 200 thousand US dollars), compared with the 2018 fiscal year's 947 million 600 thousand yuan, an increase of 15.4%. The net loss was 86 million 200 thousand yuan (about 12 million 800 thousand US dollars), while the net loss in the 2018 fiscal year was 90 million yuan.

Revenue grew steadily, and losses began to narrow. For example, the performance of the company should make the market more confident. But in fact, the market value of culvert has dropped to $313 million at the close of June 14th, which is really amazing.

Why can't we get the trust of capital?

In fact, there are some people who are not surprised by the performance of such a market. Even in the expectation of a person, this person is Wang Sicong, a low-key net red king.

After the news came back to China, Wang Sicong, who was quite involved in the "net red economy", couldn't resist Tucao. There were three major problems: first, the loss caused by the high cost of marketing expenses; secondly, because the net red was not replicable; the most important thing was the mode of Han's "no success has been verified, and it has not proved that it can train a new KOL".

Specifically,

1. loss (gross profit 300 million in 2018, but the performance fee is 100 million yuan, the marketing cost is 146 million 200 thousand yuan, the comprehensive management cost is 130 million yuan, plus other business income 710 thousand yuan, resulting in a total operating loss of 72 million 350 thousand yuan. Income is there, but the money is also inexplicable, especially about 150 million of the marketing cost is puzzling, so much marketing costs, then what is the meaning of KOL; if we stop the marketing costs, how will the performance be?

2. no duplicability (signed more than 100 net red, but one Zhang Dayi in the 2017 fiscal year and 2018 fiscal year) and 50.8% and 52.4% respectively. What an unhealthy proportion it is.

3. such as the net red hatching, net red business, net red marketing mode has not been verified successfully, and has not proved that it can cultivate new KOL.

From the 2019 financial year's earnings report, the marketing expenses such as marketing are still growing rapidly, from 146 million 200 thousand yuan in the 2018 fiscal year to 205 million 700 thousand yuan in the 2019 fiscal year. It is still the bulk of total operating expenditure and even to nearly half of the total operating cost.

And Zhang Da Yi's status as "Han Yi Jie" is more unshakable. In fiscal year 2019, Zhang Dayi's income has nearly 60% of total revenue. As of March 31, 2019, the number of net red signed has increased to 128. But when it comes to pulling the company's GMV as a whole, it will still depend on the three heads of Zhang Dayi, worm and Daikin.

In the face of his unusually heavy physique, such as the deep feeling of anxiety, he put forward his own coping strategy: in fiscal year 2019, such as shoulder and waist net red clothing and cosmetics sales from proprietary mode to platform mode. The number of online stores has decreased from 86 in the same period to 56 in the same period, and the number of net red in the self operated mode has decreased to 33 from 33 in the same period of one year.

These measures achieved instant results. Service revenue surged from 35 million 100 thousand yuan in fiscal year 2018 to 150 million yuan in fiscal 2019, which directly led to a double increase in total revenue and gross margin.

However, it can be seen that for the construction and application of the net red ecosystem, the leader of China Red Net is still in the exploratory stage of crossing the river by feeling the stones. Although gross profit has continued to grow and net losses have begun to narrow, the continued expansion of revenue losses has gradually exhausted the confidence and patience of the capital market.

Feng Min, the founder and chairman of the company, had to seek more help from Alibaba, the largest shareholder. "We look forward to further cooperation with our shareholders, Alibaba (Alibaba), especially in the light assets platform business field, as well as in the product marketing field of Taobao live. We are exploring new product categories, upgrading the core competitive edge of the platform, and continuing to improve our network red ladder training plan, hatching more shoulders and head net red, and enhancing the barriers to entry of the Internet business. But will the action of hatching net red be successful? Feng Min is afraid not to guarantee, even if guaranteed, the capital market is also very hard to believe, at least Wang Sicong does not believe.

The joy and pain of net red business

As the first share of the network, the mode of "Han" has not been verified. The unreplicable and short-term timeliness of net red makes rational investors unable to have more confidence in them, but the brilliant achievements that have been done before can not be ignored.

In July 2014, Zhang Dayi worked with Feng Min, founder and chairman of the company, to set up Taobao shop "my happy Wardrobe". Different from the traditional Taobao station promotion mode, Zhang Dayi through the continuous exposure on the social platform, will converge popularity into the traffic flow into the shop, and then realize the flow, into the transaction amount.

After six months, Zhang Dayi's ability to carry goods was tested. The store's single day sales were broken ten million. Zhang Da Yi reached a turnover of nearly 20 million yuan in a new live broadcast of two hours in June 2016. In 2017, "double eleven", Zhang Dayi shop sales amounted to 170 million yuan. In 2018, "double eleven", its store sales realized 28 minutes breaking billion. All kinds of brilliant achievements, Zhang Dayi micro-blog fans, "I joy" shop fans both break through tens of millions.

Based on this dazzling achievement, in early 2018, if Han was delisted from the new three boards, Feng Min was determined to go to the US IPO at the end of the year. When he successfully landed on Nasdaq, Zhang Dayi ushered in the high light moment as the first person of net red. Unfortunately, the cloud is easy to break up. If it is listed, it will break down, and the stock price will fall even after two months.

The wind began at the end of Qing Ping, and the omen of great change had already appeared. After the long live broadcast of "double two" in 2018, Zhang Dayi admitted that "a little tired": "the long live broadcast mode will make everyone feel fatigued. I think after 12 years, this mode will change, because the conversion rate of live broadcast is decreasing." At the Tmall gold makeup awards March 4th, Zhang Dayi slipped second in the annual list of beauty makeup creators.

Judging from the composition of fans, micro-blog and Taobao are the main positions of Zhang Dayi. As of June 18th, on micro-blog and Taobao platforms, Zhang Dayi had 11 million 90 thousand fans and 10 million 420 thousand fans, while Zhang Dayi's fans were only 219 thousand, which is a serious problem.

The rising stars such as Xiaohong and jitter are constantly attacking micro-blog and Taobao's traditional domination. These platforms continue to capture the users of traditional giants. Once they have a high degree of concern on the platform, the ability to carry goods is also very bright.

For example, the "lipstick" Li Jiaqi has been up to 25 million 735 thousand today. The legendary experience of micro-blog explosion and the growth of micro-blog WeChat have entered a period of fatigue. All this shows a trend, that is, Zhang Yi Ming is relying on artificial intelligence technology to spread his ambition. Sham Shang is replacing the Amoy, micro business and broadcasting business as new draught.

But whether Zhang Dayi or Li Jiaqi, net red is an individual person after all, and people have too many possibilities and uncertainties. Net red business is booming because of the red net, and it has to be limited to the net red itself.

In the 2017-2019 fiscal year, the revenue of KOL is extremely dependent on 3 top tier companies. No matter how complex the external capital operation is, no matter how hot the concept of the electricity supplier network is, there is no such thing as Zhang Da Yi. This excessive dependence makes it impossible to "defuse" the high risk of KOL loss, and also makes the bargaining power between Han and KOL weak, and the ratio of KOL draws 10%.

These are actually not only the pain points of the culvert, but it will probably be a problem that all the network providers will have to face.

Outlook net red economic future

Net red business is just like the eagles that have just begun to take off and grow hard in the continuous grinding and crisis. But the broad prospect of net red economy has given great significance to the pains of these growth.

In the light of reality, the content creation platform such as jitter and voice, wants to push itself from "interesting" to "useful", and constantly explore the electricity supplier; Taobao and other electricity giants are unwilling to sit back and wait for the live broadcasting function to fight back. In the fierce collision, Zhang Dayi, Li Jiaqi and other net red led the net red economy era, has slowly opened the curtain, showing its brilliant glory scene.

In the net red ecosystem, net red has replaced traditional sales and marketing channels, achieving two-way communication between enterprises and consumers. Based on the deep understanding of the social relationship between net red and its fans, net red can identify potential consumers, stimulate consumers' needs, transform consumers into brand ambassadors, and effectively create brand with their net red.

Therefore, in fact, a business model has been developed to bring online retailing into a new era. Consumers can tell enterprises what to produce and sell through net red, and enable enterprises to predict demand before production.

Compared with traditional sales, which depends on the information gap between producers and consumers, the Internet era, which is increasingly flat and the information gap is getting smaller and smaller, shows us a future oriented sales mode.

So, no matter what the future development will be, it has become a great explorer in practice.