Recently, Mogu Street (NYSE: MOGU) released its financial report for the first half of the 2025 fiscal year (March 30 to September 30, 2024). According to the financial report, for the six months ending September 30, 2024, Mogujie's revenue was 61.9 million yuan, a decrease of 25.7% from 833 billion yuan in the same period last year. The decline in performance has attracted attention from all walks of life.
In an interview with China Business News, Shenyang, a senior consultant at the Shopkeeper Think Tank, said, "The core bottleneck of Mogujie is mainly the long-term competition of platform companies in terms of scale and capital. Unlike offline retail, online super platforms are more likely to form a monopoly situation. As a vertical category e-commerce platform, Mogujie finds it difficult to have a scale advantage in the competition with other large e-commerce platforms, thus unable to form a price advantage. Traditional business models can only maintain their scale, and there is an urgent need to innovate business models to seek breakthroughs
Loss
Recently, Mogujie, which has experienced a decline in performance, has been struggling.
The financial report shows that in the six months ending September 30, 2024, the total revenue decreased from 83.3 million yuan in the same period of the 2024 fiscal year to 61.9 million yuan. In addition, the operating loss of Mogujie was 41.4 million yuan, compared to 52.1 million yuan in the same period last year; The company's net loss was 24.1 million yuan, compared to 35.4 million yuan in the same period last year.
Despite a decrease in revenue, Mogujie is narrowing its operating losses by optimizing costs and improving efficiency. As of September 30, 2024, the operating loss of Mogujie Company in the past six months was RMB 41.4 million, a decrease of 21% compared to RMB 52.1 million in the same period of the 2024 fiscal year.
Analyzing the current e-commerce landscape, it is not difficult to find that Mogujie is facing various challenges. On the one hand, with the increasingly mature e-commerce industry and intensified competition, the cost of acquiring new customers has sharply increased, while at the same time, platform revenue growth has stagnated or even declined, directly leading to a serious weakening of profitability.
On the other hand, the rapid evolution of the online retail industry landscape, especially the rise of emerging KOLs (key opinion leaders) and the decline of traditional KOL influence, has made Mogujie inadequate in content ecology construction and user stickiness maintenance, thereby affecting its GMV performance.
Mogujie CEO Fan Yiming also stated that the competition in China's online retail industry is becoming increasingly fierce, accompanied by a further decline in consumer willingness to consume. And the response of all mainstream platforms is to implement "highly competitive" product pricing. In addition, Mogujie is also facing challenges in the lifecycle of KOLs.
Faced with the severe situation, Mogujie has chosen to transform into a professional service platform, aiming to provide more comprehensive and efficient services for KOLs and merchants.
Shenyang stated that in recent years, in addition to the traditional platform business continuing to struggle, Mogujie has invested heavily in the AI digital modeling field and developed innovative business models with external platforms, which is an important technological innovation of Mogujie.
According to insiders from Mogujie, there are currently 1 million B2B customers worldwide. At the same time, Mogujie focuses on strategic external platforms and will start to focus on Xiaohongshu, a fashionable traffic gathering place, in 2024. It has been the top service provider of Xiaohongshu for two consecutive months.
The Battle of E-commerce
Today, the integration trend of traditional retail and Internet segment industry is increasingly obvious. Market resources are concentrated to a few giants, while many vertical e-commerce platforms are facing severe challenges such as user loss and traffic acquisition difficulties.
The delisting of Jumei Youpin, the bankruptcy application of Siku, and the sluggish stock price of Yunji are all clear evidence of this trend.
However, there are also well-developed vertical e-commerce platforms. According to the latest report from the Financial Times, Xiaohongshu's Q1 sales exceeded 1 billion US dollars with a net profit of 200 million US dollars, while its revenue for the same period last year was 600 million US dollars with a net profit of 40 million US dollars.
According to Similarweb information, Little Red Books have also become popular outside Chinese Mainland, with most of the traffic coming from Hong Kong, Taiwan, China, the United States and Malaysia.
From the perspective of business model, Xiaohongshu has become an important advertising investment platform for brands in beauty, fashion and other industries, relying on a large number of young female consumer groups, and has formed its own moat. It is difficult for other Internet enterprises to compete with Xiaohongshu in this vertical field.
Shenyang believes that the industry accumulation and core advantages of Mogujie are still focused on fashion and technology. The AI innovation currently being done belongs to technology empowering the fashion industry. The MCN institution of Xiaohongshu belongs to empowering its own fashion beauty and supply chain capabilities to third-party platforms. The Mogujie platform is just a carrier, and the core still needs to seek more diverse development opportunities around fashion technology. Due to its advantageous genes of fashion and technology, we are optimistic about the innovative capabilities of Mogujie combined with its experience in commercial platforms, which will create new opportunities. The combination of AI big models with overseas business opportunities, fashion genes with the building capabilities of Xiaohongshu, and dual wheel drive still have the opportunity to become a global leader in the commercialization of the fashion industry.
Fan Yiming said, "In the second half of 2024, competition in China's online retail industry will continue to intensify. The live streaming e-commerce industry has entered its seventh year and is experiencing a new round of life cycle for KOLs. Major platforms are paying attention to the rise and cultivation of new KOLs, while old KOLs are gradually fading out of the mainstream industry. With the evolution and challenges of the online retail industry landscape, Mogujie has also been affected
Fan Yiming stated that in order to address these challenges, the company is being restructured into a professional service platform. Mogujie now provides more comprehensive services for KOLs, including merchant procurement, product promotion, and live streaming assistance, to further reduce the operating costs of merchants and KOLs. "In addition, we also use our sales expertise and service capabilities accumulated over the years to carry out live broadcast operations for merchants and KOL agency businesses. These live broadcast businesses involve various channels, especially Tiktok, Kwai and Little Red Book. We believe that this part has great potential and will be conducive to the diversification of the company's revenue structure."
We have achieved positive results by optimizing our cost structure and improving operational efficiency. However, despite these efforts, the increased costs and decreased revenue of acquiring new customers have hindered us from achieving our target operational performance. Looking ahead, we will continue to focus on reducing costs and improving efficiency, and continue to seek new revenue growth opportunities. We believe that these measures will contribute to our overall financial resilience and sustainable growth, "said Qi Feng, Finance Director of Mogujie.