Onion Global Limited, the parent company of Onion Group, a Chinese cross-border e-commerce company, recently submitted a prospectus with the stock code “OG” to the US Securities Regulatory Commission. The underwriters of this IPO are Huatai Securities, Ross Capital, Tiger Securities, etc. It is understood that the company plans to use 50% of the net proceeds from the issuance to develop its own brands and brand partnerships; 20% to expand marketing and distribution channels; 15% to enhance technical capabilities; 15% to working capital and other general corporate purposes, including potential strategic investments and acquisitions.
In addition, the company’s total revenue has increased year by year in the past three years, from 1.805 billion yuan in 2018 to 3.81 billion yuan in 2020, and net profit has also grown steadily, from a net loss of 94.8 million yuan in 2018 to a net profit of 208 million yuan in 2020.
Can stable revenue capacity give Onion Group a smooth outlook?
Three major business sectors all rely on one support
The Tianyancha App shows that the Onion Group has received capital support from Guotai Junan, Xianfeng Cowin, Yilian Capital, SAIF Fund, etc. since its operation in 2015, and the company’s accumulated financing amount has exceeded 500 million yuan in six years.
It is understood that Onion Group’s parent company is Onion Global Limited, which owns nearly 50 subsidiaries at home and abroad, including Guangzhou Onion Fashion Group Co., Ltd., Guangzhou Yueyang Wujie Internet Co., Ltd., and Guangzhou Ocean Unlimited Technology Co., Ltd. The main business includes global brand incubation and cross-border direct sales e-commerce. There are 4,001 brands on the platform, including 86 brand partners that directly cooperate with the company, offering 23 categories of products including beauty, mother and child, food and beverage, fast fashion, and health.
In terms of business, Onion Group has three major modules, namely Onion Omall e-commerce (hereinafter referred to as Onion Omall), Yangtao Cross-border Supply Chain, and Foreign Trade Encyclopedia. Among them, the income generated by Onion Omall is also the main source of revenue for Onion Group. For example, from 2018 to 2020, Onion Group’s GMV was 2.45 billion yuan, 3.84 billion yuan, and 4.43 billion yuan. During the same period, the GMV generated by Onion Omall’s products was 2.07 billion yuan, 3.53 billion yuan, and 4.02 billion yuan, respectively.
According to the data disclosed by the company, the company’s revenue and profits have been increasing year by year. From 2018 to 2020, the group’s revenue was 1.8 billion yuan, 2.85 billion yuan, and 3.81 billion yuan. The net profit increased from a net loss of 94.8 million yuan in 2018 to a net income of 102.8 million yuan in 2019, and a further increase of 102.3 %, reaching a net profit of 208 million yuan in 2020.
However, the growth of these data does not mean that the Onion Group is risk-free.
KOC recommendation model questioned
Onion Omall is an important business segment of the group, and the company positions it as a social e-commerce company in its data. It is understood that social e-commerce uses social interaction, user-generated content and other means to assist in the purchase and sale of goods. Pinduoduo and Xiaohongshu are all representatives of social e-commerce. The common feature of social products is that they all have a friend function, which is convenient for users. Interactive social.
After downloading the Onion Omall App, the reporter found that the “Planting Grass” section of the app’s main interface seems to provide social content, but it has neither the friend function nor the interaction between users.
After clicking in the “Grass Planting” column, the page is divided into “Grass Planting Tasks”, “Research and Selection Guide”, and “BIG ONION”. “Grass-grass task” is mainly a product evaluation shared by users who purchased the product. There are only “go to buy” and “share” buttons, and other users cannot interact with it. The two parts of “Research and Selection Guide” and “BIG ONION”, the former are cosmetic-related consultations shared by users, and the latter is official news related to the Onion Group, and there is no comment interactive function.
So, where is the social function of Onion Omall?
According to the prospectus, “Omall is a pioneering and leading social e-commerce platform. When a new user visits O\’Mall for the first time, KOC (Key Opinion Consumer) will cooperate with the new user to provide personalized and customized shopping suggestions. , To promote and sell our products through its social networks in an engaging and cost-effective way. KOC promotes our products and recommends new KOCs to our platform, and will receive platform rewards.”
From the official website of Onion Omall, the reporter found that the platform not only sells overseas products, but consumers can also apply to become “store owners” and “service providers.”
According to the phone on the official website, the reporter called Onion Omall, and the staff introduced to the “Securities Daily” reporter that if you apply to become a “shop owner” in the background, you can attract people to buy after sharing the platform products, or the “shop owner” can get 17% for self-use. % Profit. “Service Provider” and “Store Owner” are subordinates. If you want to become a “Store Owner”, you need to contact the “Service Provider” and pay 1,000 yuan. To become a “service provider”, you have to pay a fee of 10,000 yuan.
“Service provider” and “shop owner” are the KOCs introduced in the prospectus. The staff told reporters that the company had held a KOC sales competition before, and all participants in the competition were “shop owners” or “service providers.”
In a question from Zhihu about applying for a refund of the $1,000 joining fee for Onion Omall, an anonymous user replied, “I don’t expect to sell things to make money, but rely on others to be the shop owner and promote the service provider.” “The money is earned by recruiting people. ” In addition, a user named “applestalin” in the comment area introduced that service providers mainly rely on investment income and system income after investment. “Investment is to recruit a shopkeeper for 1,000 yuan, you can recruit 40, more than 40 each pays 600 yuan to the onion, and earn 400 yuan for yourself. Recruiting a service provider is a 4,000 yuan reward. 30% of the sales profit of the shopkeepers goes to the service provider, 70% belongs to the owner.”
At the same time, some users in the comment area questioned that the model is like a pyramid scheme.
The staff denied this, and told reporters, “MLM has many levels, and it has to pay multiple times to brush heads. We only have two levels and only sell products in stores.”
Fan Chen, a senior partner of Jingshi Law Firm, introduced to a reporter from the Securities Daily that there are three characteristics needed to identify MLM: the first entry fee, whether it is necessary to subscribe for goods or pay fees to obtain qualifications for joining or to develop qualifications for others to join, to seek illegal benefits; The second pull head, whether it is necessary to develop others to become their own downline, and to remunerate the development personnel based on the number of directly or indirectly rolling development personnel to obtain illegal benefits; the third method of remuneration, whether to directly or indirectly Development personnel calculate remuneration on the basis of seeking illegal benefits.
“According to these characteristics, this company is not a pyramid scheme. Because the store owner’s commission is ultimately to get money through the goods on the sales platform, there are physical goods. And the pyramid scheme is ‘painting a cake to satisfy your hunger.’” Fan Chen said.
Hundreds of complaints and rated “Caution in Placing Orders”
However, KOC’s recommended sales model still allows companies to hide risks. Onion Group also reminded in the prospectus that there are uncertainties in the interpretation and application of current Chinese laws, regulations and policies related to the current business model. In August 2005, the State Council of China promulgated the “Regulations on Prohibition of Pyramid Sales”, which prohibits individuals and entities in China from engaging in pyramid sales. “If the company’s business model is found to violate applicable laws and regulations, the company’s business, financial status and operating results will be materially and adversely affected.”
The company still has many complaints waiting to be resolved. The reporter found that the Black Cat Complaint Platform has filed 321 complaints against Onion Omall. Among them, on April 1, a consumer complained about Onion Omall, requesting a refund of 10,000 yuan of service provider fees, and said that after joining a service provider, selling goods is not the first, but recruiting people to join is the first. “I was told to send a circle of friends all day long, but the people who bought it did not, it was all me. Not full 299 not free shipping in order to return to the capital vigorously buy caused by the backlog of goods, selling goods back to the capital difficulty factor is great.”
In addition, data from another Chinese complaint platform “Dian Su Bao” shows that the Onion Group has rated it as “not recommended to place orders” or “cautiously place orders” in the quarterly and annual consumption ratings from September 2019 to 2020. ”
Source: Voice of Securities Daily