The process of retail digitization has moved from channel construction to in-depth operation of users. The extensive user operation system cannot adapt to the "refinement operation capabilities required for user growth", so individual, group, personalized, and automated operations are required—that is, the right time, the right way, and the right content pushed to the user.
Produced | Industrialist
Halfway through 2023, economic recovery has become the key word in the first half of the year, and the rapid development of the digital economy has become an important driving force for recovery. Industry analysts believe that SaaS, as a special software industry business model in the digital economy, will benefit from the theme of economic recovery this year.
The mid-term financial report data disclosed by Weimob Group, the leading service provider in the domestic digital business SaaS field, on August 15 just confirmed this expectation. The company’s performance in the first half of the year was driven by the growth of corporate digital demand. Revenue reached RMB 1.210 billion, a year-on-year increase of 34.5%; gross profit increased by 36.6% year-on-year to RMB 816 million, and adjusted net loss narrowed sharply by 55.2% to RMB 254 million compared with the same period last year.
The strong recovery of Weimob’s performance is inseparable from the escort of the large-scale and ecological strategies. The mutual penetration and mutual promotion of the two strategies have driven the continuous growth of large-scale revenue mainly based on smart retail. At the same time, in the face of AI technology empowering enterprises to digitally reduce costs and increase efficiency, Weimob Group increased research and development in the first half of this year and released the first application-oriented product Weimob WAI based on AI large models to help enterprises achieve operational efficiency and performance growth , Consolidating the company's leading position in the domestic SaaS industry.
Many institutions believe that benefiting from the market recovery, Weimob Group's future revenue is expected to accelerate growth, and its profitability will further improve in the second half of the year, approaching breakeven.
1. "Do everything possible" to protect big customers
Strong Growth in Smart Retail
The digital economy is undoubtedly the main theme of long-term development in the future. As an innovative business model, SaaS is in line with the landing path of the digital economy—encouraging enterprises to adopt digital solutions to improve efficiency and competitiveness. According to the "2023 China Digital Marketing Product Technology Research Report", the global SaaS industry is in a stage of high prosperity. Compared with the United States, the development of China's SaaS industry is relatively slow, but overall, China's SaaS industry has passed the introduction period and entered a rapid growing period.
The core SaaS business of Weimob Group has maintained resilient growth during the three years of the epidemic, and will usher in a strong recovery after the impact of the epidemic subsides in 2023. As of June 30, 2023, the total revenue of Weimob Group reached RMB 1.21 billion, a year-on-year increase of 34.5%. Among them, the main SaaS business revenue reached 706 million yuan, an increase of 21.4% year-on-year; the number of paying merchants was 100,092, an improvement of 0.5% from the previous month, and the average revenue per user increased by 26% to 7,047 yuan.
At the same time, in the context of macroeconomic recovery, merchant advertising demand rebounded significantly, merchant solution business revenue increased by 58.3% year-on-year to 504 million yuan, the number of paying merchants increased by 51.3% to 40,494, and average revenue per user increased by 4.6% to 12,452 yuan; the gross income of assisting merchants reached 6.988 billion, a sharp increase of 66.1% year-on-year.
The strong growth of SaaS revenue is closely related to the excellent performance of the smart retail business, and behind the continuous growth of the number of smart retail business users and ARPU value is the continuous promotion of the Group's strategy of mass customerization. In the first half of the year, Weimob launched a "do everything possible" plan-strive to achieve 100 million-level income customers and 1,000 million-level income customers by 2027. The essence of this plan is to continuously increase the unit price of large customers, and the core is to increase customers' repurchase rate and additional purchases of products and services.
The big customer strategy is most directly reflected in the accelerated growth of smart retail business. The financial report shows that in the first half of 2023, Weimob’s smart retail revenue will reach 312 million yuan, an organic growth of 45% year-on-year, and the proportion of subscription solution revenue will increase to 44%. The number of smart retail merchants reached 6,428, including 1,223 brand merchants, and the average order revenue per user of brand merchants reached 224,000 yuan, an increase of 23,000 yuan per household from 201,000 yuan in 2022.
Behind the continuous growth of the average order revenue of smart retail brand merchants is that Weimob Group continues to adjust product technology and digital solutions according to customer needs.
Taking Qipai, which ranks among the top ten in the national men's wear industry, as an example, the brand chose to cooperate with Weimeng to carry out digital transformation construction . Help Qipai realize the refined operation and sustainable growth of private domain, and promote the breakthrough of digital retail business from 1 to N.
After the cooperation was implemented, Qipai, with the help of Weimeng's products and services, through a series of methods such as synchronous cognition, data monitoring, process standards, process management, incentive policies, and system upgrades, 17 branches nationwide The companies have all gone to the cloud, and Qiwei has developed more than two million members a year; in 2022, the sales of small programs will increase by nearly 6 times compared with 2021.
Based on the flexible expansion of Weimob WOS, the Weimob team integrates the self-developed AI clothing and shopping function of Qipai with the assembly of the mini-program mall, realizing personalized store construction at low cost and high efficiency, and meeting consumers' needs for diversified clothing purchases. Improve consumer purchasing experience.
Like Qipai, many retail brands are interested in Weimob's strong digital capabilities. As of the first half of 2023, among the top 100 fashion retailers in China, Weimob's service customers accounted for 48%, and the top 100 commercial real estate accounted for 43%. Convenience Top 100 accounts for 40%. Weimob Group stated that it is expected to achieve the goal of increasing the proportion of major customers and merchants to nearly 50% of the revenue in 2023, and to nearly 70% in 2025.
2. High-quality growth of customers
"Three tricks" to promote cross-selling
Under the implementation of the big customer strategy, Weimob Group launched the "three axes" to promote the high-quality growth of customers. The first strategy is to form a "linkage effect" between the strategy of mass customerization and the strategy of ecologicalization. All products and services in Weimob Ecology can be customized according to the needs of enterprises. Cross-selling occurs frequently, driving the average annual price of customers Continuously rising, promoting high-quality growth in performance.
The financial report shows that during the reporting period, customers who purchased two or more products and businesses of Weimob Group accounted for 58% of all customers, and the customer renewal rate reached 87%; customers who purchased three products and businesses accounted for 26%, and customers renewed their contracts. The rate reached 84%.
The second is to address the digital demand trend of retail enterprises. Weimob Smart Retail has launched an integrated omni-channel user operation solution that completely covers online and offline, public and private domains, extension and repurchase, and has achieved positive results among retail customers . Response, more than 22% of existing customers and more than 40% of new customers have adopted it.
Taking Taipingbird Group as an example, through cooperation with Weimob, Taipingbird has fully integrated its PEACEBIRD men's clothing, women's clothing, children's clothing, and Leding into Weimob's new business operating system WOS, digitalizing stores, channels, shopping guides, marketing, and users. Digitalization and other aspects are integrated and upgraded to promote the speed and efficiency of PEACEBIRD's digital transformation, release the new momentum of digital growth in physical retail, and achieve sustainable high-quality growth.
The above-mentioned integrated solutions have been recognized by a number of group-based retail companies that have achieved a leading position in the digital field, such as Peacebird Group, Embry Group, and Ruili Sports, and have chosen Weimob as a strategic partner for digital retail.
The third strategy is to practice the industrialization strategy. Weimob Group has continued to create vertical solutions for the four major industries of apparel, building materials, fast-moving consumer goods, and shopping to strengthen its industry influence. During the reporting period, 32 new head customers were added by industry, and group customers increased by 12% year-on-year.
Ling Yun, vice president of Weimob Group, pointed out, “The process of retail digitization has shifted from channel construction to in-depth operation of users. The extensive user operation system cannot adapt to the ‘refinement operation capabilities required for user growth’, so individual, Group, personalization, and automated operations—that is, push the right content to users at the right time, in the right way.”
To achieve these three things, the systems and capabilities required by enterprises include marketing middle platform, content middle platform, precision marketing and automated marketing capabilities. Therefore, Weimeng has upgraded its user operation capabilities on the user system, helping companies to conduct refined operations on massive user assets, and helping more companies to obtain high-quality growth after consumer operations. "
3. AI opens up new growth space
Institutions are optimistic about the breakeven in the second half of the year
In the first half of 2023, AIGC is undoubtedly the hottest track in the capital market. Everbright Overseas released a research report saying that under the wave of AIGC, the To B industry represented by SaaS is expected to usher in new opportunities. It is recommended to pay attention to the progress of AIGC tools launched by e-commerce SaaS companies such as Weimob Group.
The bank believes that the use of e-commerce SaaS tools by small and medium-sized businesses is essentially to improve efficiency, while AI tools are customer-oriented customer service dialogues on the one hand, and graphic and text generation on the other, which can provide better sales for merchants It is recommended that merchants improve their marketing strategies and enhance consumers' shopping experience. After merchants' GMV increases, it will effectively enhance the stickiness of using SaaS products, thereby attracting more merchants to pay.
In May of this year, Weimob Group launched the industry's first AI large-scale model application product "WAI" through self-research and cooperation with third-party LLM models, deeply integrating AI technology capabilities with all SaaS products and digital marketing services under the group , enabling merchants to carry out mall building, graphic creation, marketing promotion, smart insight and other capabilities, deeply covering the entire link business scenarios of merchants, and allowing AI large models to enter "thousands of households".
Hongdou Home joined hands with Weimob WAI, and drank the "first taste soup" in this large-scale model "scene landing" beach rush competition. By applying the AI large model to the whole process of private domain operation, Hongdou Home has achieved a more refined management of user life journey, improved user access efficiency, and reduced user operating costs.
At the same time, by empowering content marketing through WAI, personalized content can be produced efficiently, and private domain users can be reached frequently. The number of effective users of Hongdou Home has reached 16 million, and the resilience of the connection between the brand and consumers is being further strengthened. Taking the guidance scene as an example, the operation staff of Reddou Home has generated nearly 150 marketing copywriting around new product promotion, member registration guidance, community/friend circle marketing activities and other scenarios through AI-generated sharing copywriting, speech skills and other content, and the copywriting is available rate of 70%.
During the "618" promotion this year, Weimob data showed that merchants' usage of Weimob WAI has doubled. Taking the SaaS integration scenario as an example, the content generation of Weimob WAI in a single week increased by 63%, among which the official account tweets increased by 400%, the headlines of planting grass notes increased by 257%, and the carousel pictures increased by 243%.
Yin Shiming, Chief Operating Officer of Weimob Group, said, "AI large models have broad application prospects, but between the 'supply end' of large models and the 'use end' represented by merchants, high-efficiency and high-quality applications are not Zero cost or low threshold. Based on the multiple advantages of WAI, Weimeng hopes to cooperate with the large model to activate "application intelligence" and help every business to enjoy the convenience brought by AI quickly, better and more, and enjoy the benefits brought by technology inclusiveness New productivity, thus opening the era of digital business intelligence."
Up to now, Weimob WAI has been iterated to version 2.0, expanding 6 major application scenarios, covering the functions of 25+ practical application scenarios, deeply penetrating the business scenarios of the whole link of merchants, and has helped Hongdou Home, Metersbonwe, Xtep, etc. Many large retailers have achieved significant cost reduction and efficiency increase in intelligent marketing. According to a research report released by CICC, Weimob WAI is expected to help merchants release new productivity in the era of digital business intelligence, while further opening up the value space of private domain operations for enterprises.
While accelerating the implementation of the "AI+SaaS" strategy, Weimob Group is also continuing to invest in WOS ecological construction, helping more ecological partners to upgrade through the WOS new business operating system. Relying on the digital business infrastructure of WOS, the feasibility and efficiency of research and development of new functions and new products of Weimob Group have been effectively improved. The mutual promotion of ecology and mass customerization strategies has also accelerated Weimob Group's creation of co-creation and sharing. , win-win new digital business ecology, and enhance its ability to serve high-quality customers.
Weimob data shows that WOS helps new product development speed increase by 70%, the number of work orders decreases by 46% compared with Q4 in 2022, the coverage rate of automated testing increases by 30% compared with Q4 in 2022, and the number of monthly open capability calls increases by 28.5% compared with Q4 in 2022 .
Looking forward to business development in the second half of 2023, Weimeng stated that it will continue to invest in research and development, accelerate the iteration of Weimeng WAI and WOS, continuously consolidate its technical strength, and continue to deploy "AI+SaaS" . Promote and create a high-quality digital business new ecology of co-creation, sharing and win-win, and promote the high-quality growth of the group's business.
After the financial report was released, a number of brokerages issued research reports stating that they are optimistic that Weimob Group will break even in the second half of 2023, and it is expected to reach its profit target in 2024. CICC raised the adjusted net profit attributable to the parent company in 2023 and 2024 from -320 million yuan and 19.66 million yuan to -280 million yuan and 27.71 million yuan, respectively.
Comparing CICC's profit forecast for Weimeng in 2023 and Weimeng's operating data in the first half of 2023, Weimeng is expected to approach breakeven in the second half of 2023. JP Morgan Securities also believes that the steady recovery of SaaS business, the strong growth of advertising and the improvement of research and development efficiency make Weimob very hopeful to achieve the goal of breaking even in the second half of 2023. Reflecting higher advertising revenue and GPM (Gross Processing Margin, production gross profit margin), it is believed that the market will recognize Weimeng's ability to execute strategies in the high-end market.