By LI Biao

Cross-border e-commerce trader Zibuyu filed an IPO application in the Stock Exchange of Hong Kong (HKEX) for the third time in late September. Two previous attempts both expired.

One of China’s largest cross-border e-commerce traders, Zibuyu has been through three financing rounds worth over US$26 million (200 million yuan), which pushed the company’s valuation to US$516 million. Founder and president of the company HUA Bingru and his wife YU Feng hold 55.5 percent of shares through a family trust fund.

According to the prospectus, Zibuyu’s revenue grew from 1.4 billion yuan in 2019 to 2.4 billion yuan last year, with its net profit up from 81.1 million yuan to 200 million yuan. In the first half of this year, Zibuyu’s profit slid 46 percent year on year to 61.3 million yuan.

Zibuyu focuses on fast fashion retail, targeting young female consumers. Unlike its rival Shein with its own website, Zibuyu relies on e-commerce platforms like Amazon and Wish.

In an interview months ago, Hua admitted Zibuyu didn’t do a good job branding itself, “We are essentially a peddler online, selling clothes,” he said.

Zibuyu started out in 2011 on Taobao as a small online shop. It opened its first Amazon store in 2014, and now it has 392 Amazon stores. More than 70 percent of Zibuyu’s revenue last year came from Amazon, and the number in H1 this year reached 94 percent.

Such a deep connection with Amazon brings risks. When Amazon made it easier for customers to cancel orders and apply for refunds, Zibuyu’s profit crashed.

Since the pandemic has hit the logistics industry hard, Zibuyu adopted an aggressive strategy of hoarding goods. The value of its stock in the overseas warehouses grew from 231 million yuan in 2019 to 802 million yuan in H1. But fast fashion styles change so quickly that these stocks could be out-of-date before they can be listed on Amazon.

A report from Boston Consulting Group indicates North America has become the main battlefield for Chinese cross-border traders. Pinduoduo launched Temu last month. IfYooou, a fast fashion site owned by ByteDance also started operation in North America.

The report also pointed out that after the forced close-ups on Amazon last year, many Chinese cross-border traders are keen to build their own websites.