What began as a modest fitness equipment manufacturer selling dumbbell benches has transformed into a company preparing for an IPO, with shareholders enjoying millions in dividends. This isn't a fairy tale but the real story of Jiangsu Kangliyuan Sports Technology Co., Ltd. (hereinafter referred to as "Kangliyuan"), which has carved out a significant market share for small fitness equipment through strategic operations on Amazon and now sets its sights on capital markets.
I. Kangliyuan: The Ascent of an Export-Oriented Fitness Equipment Manufacturer
Kangliyuan exemplifies the success of export-driven enterprises, with over 80% of its revenue coming from overseas markets. The company operates through two primary business models: providing OEM/ODM services for international brands and selling directly to consumers via its proprietary brand JXFitness on Amazon. Notably, the Amazon channel delivers Kangliyuan's highest gross margins, reaching 74.24% in 2021.
While Kangliyuan's scale remains modest, its profitability commands attention. In 2020 and 2021, the company reported revenues of 675 million yuan and 702 million yuan respectively, with net profits attributable to shareholders reaching 93.65 million yuan and 78.52 million yuan. More impressively, in 2020, Kangliyuan distributed 55 million yuan in cash dividends to shareholders.
II. JXFitness: A "Small but Beautiful" Brand on Amazon
JXFitness, Kangliyuan's proprietary brand on Amazon, specializes in compact fitness equipment like dumbbell benches and weightlifting beds. The company is now exploring online sales of larger aerobic equipment such as exercise bikes and treadmills.
According to data from SellerSprite, based on a sample of 100 ASINs, JXFitness products average 2,134 units sold per listing with average sales of $268,300 and an average product rating of 4.4 stars. While JXFitness doesn't dominate in brand concentration metrics, its sales performance places it in the middle-to-lower tier among competitors, holding its own against established brands like Fitbit, Portzon, and NordicTrack.
Despite seemingly average metrics, JXFitness generates substantial Amazon sales. The brand peaked in 2020 with 70.62 million yuan in sales, slightly declining to 63.16 million yuan in 2021. More significantly, JXFitness has amassed a considerable customer base, with 92,519 buyers in 2020 and 88,391 in 2021.
III. The Secret Behind High Margins: Advantages of Direct Online Sales Abroad
Kangliyuan's overseas direct online sales model yields significantly higher gross margins than other channels, particularly when compared to traditional offline distributors abroad. The data reveals a striking contrast: 74.24% gross margin for direct online sales versus just 28.22% for offline distributors. This disparity highlights the substantial profit potential of Amazon's platform.
Several factors contribute to these exceptional margins:
- Eliminating intermediaries: Direct-to-consumer sales bypass distributor markups.
- Brand premium: Proprietary brands command higher price points.
- Data-driven decisions: Analytics enable precise customer targeting and optimized product/marketing strategies.
- Dynamic pricing: Real-time price adjustments maximize profitability based on market conditions.
IV. Potential Risks: Fake Reviews and Customer Concentration
Kangliyuan's growth hasn't been without challenges. One notable concern involves fake review practices.
The company's IPO prospectus reveals that between 2018 and 2020, Kangliyuan engaged in review manipulation totaling 35.69 million yuan (8.14 million in 2018, 20.96 million in 2019, and 6.59 million in 2020). Although the company ceased these practices in June 2020 and implemented compliance measures, the historical activity could damage its reputation.
Another significant risk stems from customer concentration. In 2021, Kangliyuan's top five clients accounted for 57.86% of total revenue, with this dependence increasing over time. The largest single customer, Impex, represented 39.76% of core business revenue. Such concentration creates vulnerability should any major client reduce orders.
V. Anaerobic Equipment: The Revenue Powerhouse
Anaerobic equipment dominates Kangliyuan's product portfolio, contributing 84.75% of total revenue. Within this category, multi-station gyms and free weight training equipment lead sales, generating 260 million yuan and 258 million yuan respectively in 2021, accounting for 37.21% and 36.87% of total sales.
Kangliyuan offers diverse multi-station gym configurations incorporating chest press, butterfly, pectoral fly, and dip stations. This product variety caters to different fitness needs, enhancing market competitiveness.
VI. The U.S. and Europe: Primary Markets for Fitness Equipment
Globally, the U.S. and Europe represent the largest fitness equipment markets, jointly accounting for 76.43% of worldwide consumption. Despite China's massive population, it represents just 4.07% of global fitness equipment spending.
The global fitness equipment market continues expanding, projected to reach $14.8 billion by 2028. As the world's largest consumer market, the U.S. presents a unified and concentrated opportunity worthy of focused development.
VII. Kangliyuan's Success Formula: Seizing Opportunities and Precision Operations
Kangliyuan's achievements reflect strategic opportunity capture and operational excellence:
- E-commerce timing: Capitalizing on digital commerce growth through platforms like Amazon.
- Operational precision: Prioritizing product quality and user experience while leveraging data analytics.
- Channel diversification: Balancing proprietary brand sales with OEM/ODM services.
- Product innovation: Continuously developing new equipment to meet evolving market demands.
VIII. Lessons for Fitness Equipment Sellers
Kangliyuan's trajectory offers valuable insights for industry participants:
- Prioritize e-commerce channels for their growth potential.
- Develop proprietary brands to enhance margins and customer loyalty.
- Implement data-driven operations to optimize products and marketing.
- Monitor market trends to maintain competitive positioning.
- Diversify distribution channels to mitigate concentration risks.
Kangliyuan's journey from manufacturer to IPO candidate demonstrates how traditional industrial enterprises can transform through e-commerce adoption and operational refinement. While challenges like past review practices and customer dependence remain, the company's Amazon success provides a valuable case study for fitness equipment sellers. The industry now watches to see whether Kangliyuan will successfully list and what new developments this might bring to the fitness equipment sector.