Is the export of furniture still a profitable venture?
In the dynamic world of e-commerce, two players—Ziel, often referred to as the "online Ikea," and Aukey—are making their mark in the furniture business. This sector has become a significant revenue stream for both companies, with each carving out its niche in the global market.
Ziel, a cross-border e-commerce company, has its sights set on overseas markets, particularly Europe, which accounted for 62% of its revenue in 2023. Meanwhile, Aukey, which has bounced back financially, generated approximately 75.9% of its total revenue from furniture and home furnishings in the same year.
The logistics behind these operations are diverse. Ziel employs a combination of warehouses operated by platforms, third parties, or itself, with overseas warehouses mainly leased. Aukey, on the other hand, has expanded its overseas warehouses, operating 27 warehouses with a total area of over 465,000 square meters. Notably, Loctek, a subsidiary of Aukey, is also involved in the logistics business and has become "landlords" of overseas warehouses.
However, the landscape is not without its challenges. The Red Sea crisis and the drought at the Panama Canal have led to fluctuating sea freight prices, causing delays and concerns for both Ziel and Aukey. In particular, Ziel has experienced delays in shipping cycles to Europe by about 15-21 days.
In an effort to mitigate these issues, Ziel plans to intensify procurement in Southeast Asia in 2024. Aukey, known for its speedy production and delivery processes, can design and put new products into trial production within 40 days and deliver them to consumers within 50 days after trial production.
Despite these challenges, both companies have shown resilience. In 2023, Ziel achieved RMB 6.074 billion (USD 840.6 million) in revenue, marking an 11.34% increase year-on-year. Aukey, meanwhile, saw a significant reduction in logistics costs, with figures dropping from RMB 2.58 billion (USD 357 million) in 2021 to RMB 1.86 billion (USD 257.4 million) in 2023.
Loctek's overseas warehousing business also saw impressive growth, achieving annual revenue of RMB 951 million (USD 131.6 million), a year-on-year increase of 94.03%. This growth is reflected in Ziel's financials, with the net profit attributable to the company's shareholders seeing a 65.08% surge from the previous year, reaching RMB 413 million (USD 57.1 million).
As the competition heats up, it remains to be seen how these companies will navigate the challenges and continue to thrive in the global furniture market.
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