While many cross-border e-commerce sellers appear thriving on the surface, significant challenges often lurk beneath. Zhejiang-based footwear and apparel giant Zibuyu, preparing for its Hong Kong IPO, presents a case study of rapid growth shadowed by a persistent problem—excessive product returns. Despite ranking first in North American footwear and apparel GMV, the company faced return values reaching 140 million yuan in 2021. Is this merely growing pains or a looming crisis?
The Rise of Zibuyu: A Cross-Border E-Commerce Powerhouse
Founded by 1987-born entrepreneur Hua Bingru, who began experimenting with e-commerce during college, Zibuyu officially launched its cross-border journey in 2011 when Hua and his partner Wang Shijian moved from Anhui to Hangzhou. Leveraging Hangzhou's strengths in apparel and footwear, the company quickly built an extensive "e-commerce kingdom."
Data reveals Zibuyu's impressive market position: ranking third among all Chinese cross-border B2C apparel and footwear sellers by 2021 GMV. More remarkably, it claims the top spot specifically in North America. With 2.204 billion yuan in North American GMV that year, Zibuyu slightly outpaced its closest competitor (believed to be Shenzhen-based Saiwei Era at 2.1 billion yuan) and surpassed other rivals like cross-border e-commerce firm ZAFUL.
Apparel and Footwear: The Golden Cross-Border Category
Apparel and footwear represent crucial categories in China's cross-border B2C exports, with a total market value reaching 596.5 billion yuan. While Zibuyu holds modest market shares (0.4% globally, 0.7% in North America), these translate to substantial volumes given the market size.
Apparel dominates Zibuyu's revenue structure, generating 1.834 billion yuan in 2021 and 1.016 billion yuan in the first half of 2022. Footwear contributes about 20% of revenue. The company offers diverse products including women's tops, sweaters, yoga pants, swimwear, and menswear. However, this product range comes with an industry-wide challenge—high return rates.
The Return Rate Dilemma: Growth's Hidden Cost
Zibuyu's return values have climbed steadily with sales growth. In 2021, returned apparel transactions reached 145 million yuan (14.5% of category GMV), escalating to 340 million yuan (24.7%) in H1 2022. This mirrors industry trends—even giants like SHEIN face 30% return rates in key markets like the Middle East, while some competitors experience 40-50% rates.
Multiple factors drive these returns: U.S. inflation making consumers more selective, sizing discrepancies, color variations, and quality concerns. The "try-and-return" culture in Western markets exacerbates the issue, particularly for apparel purchased online.
Best-Selling Strategies: Keys to Success
Despite return challenges, Zibuyu thrives through strategic platform focus and hit products. While initially reliant on Wish, it has shifted emphasis to Amazon, where 2021 revenue reached 1.672 billion yuan, making it Amazon's second-largest footwear/apparel seller.
The company cultivates successful brands like Imily Bela sweaters (361 million yuan GMV from 211,000 units in six months) and Aurgelmir activewear (ranking top-five in Amazon's skiwear category). Other performers include Runcati menswear (410,000 cumulative sales) and Jolimall footwear (2.7 million pairs sold via their independent site). Several brands have earned recognition as Zhejiang's top cross-border export brands.
Balancing Challenges and Opportunities
As essential consumer goods, apparel and footwear offer vast potential but present operational complexities—particularly managing returns amid diverse SKUs and subjective consumer preferences. For Zibuyu, controlling return rates remains critical for sustainable profitability. Its journey exemplifies both the promise and pitfalls of Chinese brands expanding globally, highlighting the need for operational excellence alongside market expansion.