Decentralized ecommerce Saas are still babies compared to established centralized ecommerce giants in China, like Tmall and JD. China Youzan, one of the leader in decentralized ecommerce(Shopify of China) projected to hit 100bil RMB in GMV for this year. That amount is equals to the amount of GMV TaoBao makes during Singles Day. Market cap for China Youzan is also tiny compared to JD. 4.2bil USD vs 132bil USD. They are babies but are currently growing very rapidly. China Youzan for example is growing their GMV at a rate of 90% year on year.
The reason for the fixation of decentralized Saas is primarily due to the preference for private traffic in China. Dan Zhang who wrote an article in Adobe Analytics explained it best. You can read the full article here. Basically private traffic means direct brand to customer interaction without the middle man. It reduces the cost of customer acquisition and increases the return on investment for brands. It enables brands to collect first hand data and in turn gain deep real time insights into marketing efficiency.
I call these decentralized Saas, ecommerce version 2. A very fast growing segment of Saas that is trying to disrupt 'traditional' centralized marketplace like Tmall, Amazon, JD etc. Advertising in these 'traditional" centralized marketplace is a waste of money as its very inefficient and only gives the marketplace more exposure, instead of your own brand. The better way to build your brand and analytics is via the private traffic route via a decentralized ecology. More and more brands that want to establish themselves in China is realizing this. Nike, Dyson, etc.
Youzan is aimed at Saas, an e-commerce company for small and medium businesses that has benefited the most from the epidemic. It is a merchant service provider company. Besides a digital payment segment that they have gotten from their RTO listing, they are very much like Shopify but within the Wechat mini program ecology. If a vaccine comes out and the economy returns to normal, demand may slow down.
China Youzan releases 2020 Q3 earnings report on November 9. The first three quarters of 2020. The GMV of Youzan Service Merchants reached 72.3 billion RMB. A year-on-year increase of 90%. The number of new paying merchants is 45328. Year-on-year increase of 22%. Their churn rate is still unsatisfactory compared to Weimob.
In the targeted marketing segment, Weimob provides one-stop marketing solutions combining technologies such as big data, intelligent algorithms, and marketing automation with premium media resources. During economic recovery Weimob's precision advertising business will do well. Its precision advertising segment is growing much faster and is taking over its Saas business in order to stay profitable. They are the first to do precision advertising for Douyin(Bytedance) and from what I have read, Alipay has asked them for their services many times. I feel it is very much like the combination of Trade Desk and Salesforce in the US.
The jury is still out as to whether these decentralized Saas or version 2 of ecommerce as I call it, will succeed and surpass the giant centralized players. The likelihood of them continuing to thrive and grow is high, as Tencent has vested interest in both of them. See how it goes.
Snap shot of my performance as of today: Total profit S$5,456.969(2020)
Great post and thanks for sharing with us.
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