Many cross-border e-commerce sellers envy SHEIN's $100 billion valuation and dream of replicating Zibuyu's successful IPO. But does the glamour of being hailed as the "first cross-border footwear and apparel stock" on Hong Kong's exchange mask deeper issues?
Zibuyu, which began as a Taobao women's fashion retailer before pivoting to cross-border e-commerce, has finally achieved its listing on the Hong Kong Stock Exchange after multiple attempts. While its IPO has undoubtedly boosted confidence in China's cross-border e-commerce sector, behind the impressive performance figures lie significant challenges. This article examines Zibuyu's business model, financial health, and competitive landscape to reveal its unspoken difficulties and explore potential paths forward.
I. Zibuyu: The "Top Performer" in Cross-Border E-Commerce
As a pioneer in China's cross-border e-commerce space, Zibuyu specializes in designing and selling apparel, footwear, and related products globally. With sharp market insights and rapid response capabilities, the company has successfully launched nearly 100 hit brands, creating a diversified "brand matrix." Each brand generates annual sales exceeding 100 million yuan, demonstrating strong market competitiveness.
According to Frost & Sullivan, Zibuyu ranked third globally and first in North America in 2021 by GMV among all cross-border B2C apparel and footwear sellers from China. This achievement solidifies Zibuyu's leading position in the cross-border e-commerce sector.
II. SHEIN's Dominance: Benchmark and Pressure
In the cross-border apparel arena, SHEIN remains an undeniable force. Though still private, its global scale and influence dwarf competitors. CB Insights values SHEIN at $100 billion, making it the undisputed unicorn of cross-border e-commerce.
SHEIN's success stems not just from its robust supply chain and low-price strategy, but from its precise understanding of consumer demand and rapid product iteration. Its global expansion and positive customer reception demonstrate remarkable market appeal. While providing a benchmark for Zibuyu, SHEIN also creates intense competitive pressure.
III. Cross-Border E-Commerce: An Industry Riding the Wave
Zibuyu and SHEIN's success reflects China's rapidly growing cross-border trade. Frost & Sullivan reports that China's cross-border export e-commerce market for apparel grew 47% annually over four years. Compared to categories like consumer electronics, apparel offers lower entry barriers, simpler technology requirements, and easier logistics. Moreover, China's mature apparel industry provides cheap procurement costs and healthy profit margins.
By 2021, China's cross-border B2C e-commerce export market reached 2.7384 trillion yuan. Both Zibuyu and SHEIN have ridden this wave, capitalizing on market opportunities to achieve rapid growth.
IV. Business Models: The Make-or-Break Factor
Beyond favorable market conditions, each company's operational approach determines sustainable success. SHEIN and Zibuyu have developed distinct strategies:
- SHEIN: Flexible supply chain, small-batch rapid production, personalized designs, scaled manufacturing, clear brand positioning, ultra-low pricing, strong supply chain, and frequent social media/offline promotions.
- Zibuyu: In-house design, OEM suppliers, proprietary brand portfolio, supply chain optimization, and platform partnerships.
This comparison reveals SHEIN's more comprehensive and mature model. While SHEIN built its independent platform early, creating a self-contained ecosystem, Zibuyu relies heavily on third-party marketplaces.
V. Zibuyu's Unspoken Challenge: Overdependence on Third-Party Platforms
Zibuyu's prospectus shows Amazon sales growing from 31.5% of revenue in 2019 to 90.6% in Q1 2022. This overreliance creates substantial risk—any policy changes or relationship issues with Amazon could severely impact operations.
Meanwhile, Zibuyu's self-operated website remains stagnant, with revenue share declining to just 11% in 2021. This indicates significant work needed in building proprietary brands and independent platforms.
VI. Financial Health: Hidden Concerns Behind the Shine
Despite solid performance, Zibuyu's financial position raises concerns. From 2019-2021, its debt ratios stood at 86.4%, 73.2%, and 63.4%—showing improvement but remaining elevated. The company attributes this largely to slow third-party platform settlements, with trade receivables reaching 181 million yuan by mid-2022.
Additionally, administrative, marketing, and commission expenses continue climbing. In 2021, platform fees alone consumed 31.7% of total expenses. Heavy spending on customer acquisition primarily benefits third-party platforms rather than building Zibuyu's sustainable user base, requiring continuous reinvestment to maintain sales.
These pressures manifest clearly in 2022 H1 results: while revenue grew 16.07% to 1.278 billion yuan, net profit plunged 46.3% to 61.314 million yuan.
VII. The IPO: A Critical Step Toward Solutions
Zibuyu has stated plans to "establish and expand large independent websites while enhancing brand recognition to increase revenue, improve margins, and boost operating cash flow."
Its IPO aims to raise HK$230 million for supply chain upgrades, sales/brand development, proprietary platform expansion, and strategic acquisitions. The independent website initiative features prominently in recent communications, signaling awareness of current limitations and intent to leverage public listing for growth opportunities.
VIII. The Road Ahead: Challenges and Opportunities
While the IPO opens new possibilities, Zibuyu faces multiple challenges in a competitive market:
- Reducing third-party dependence: Requires significant investment in proprietary platforms to build an independent brand ecosystem.
- Enhancing brand recognition: Needs stronger overseas marketing to increase visibility and attract users.
- Optimizing supply chains: Must improve operational efficiency and cost management.
- Strengthening R&D: Requires continuous innovation to meet evolving consumer demands and maintain competitiveness.
IX. Lessons for Cross-Border Sellers
SHEIN and Zibuyu's experiences offer valuable insights:
- Build proprietary brands: Owning brands ensures market control and reduces dependency.
- Develop independent platforms: Self-operated sites create direct customer relationships and reduce third-party risks.
- Optimize supply chains: Robust logistics and production systems form the backbone of successful cross-border operations.
- Prioritize user experience: Quality products and services build trust and loyalty.
- Control payment flows: Maintaining authority over customer payments and fund settlements is crucial for financial health.
Ultimately, cross-border e-commerce presents tremendous opportunities but demands constant innovation and adaptation to thrive in this intensely competitive arena.