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Year of writing: 2021
Author: Tony
91 APP: The first SaaS company listed on the OTC in Taiwan
Focus on new retail OMO online and offline integration
During the COVID-19 new crown pneumonia epidemic, our lifestyle has changed. From offline shopping to online, consumers’ online shopping habits are no longer limited to PChome, Yahoo mall, Momo and other large platforms, but more trusted by physical channels. Brand self-operated mall. The instantaneous return of physical channels to zero has also prompted retailers to no longer ignore the online shopping opportunities.
91 APP creation and business model
91 APP was founded by He Yingqi, the godfather of e-commerce, in 2013. He Yingqi once founded two e-commerce Li Chuan Information and Xingqi Technology. The last two e-commerce companies were sold to large international companies at high prices: Li Chuan Information sold to US$9.5 million eBay; Xingqi Technology was acquired by Taiwan's Yahoo e-commerce company for NT$1.8 billion, which clearly shows He Yingqi's understanding of e-commerce and mastery of trends. 91app went public in May 2021, becoming the first SaaS company to go public and adding more online stocks to the Taiwan stock market. Different from the past B2C and C2C e-commerce models, He Yingqi chose B2B this time.
91APP is a rare SaaS (Software as a Service) cloud software service provider in Taiwan. It assists retail brands to operate their own online channels. The main focus is on the OMO (Online-Merge-Offline) integrated online and offline business model, allowing physical retailers to self-help. Having online channels combined with AI data analysis allows retailers to seamlessly expand their channels online and convert online customer groups to physical channels. It not only provides APP setup, but also includes the linking services of gold flow and logistics behind the scenes, as well as the collection and analysis of consumer data, providing self-operated businesses with a one-stop online channel service.
Three software clouds with three big data X e-commerce services
The company focuses on three major cloud planning products, including virtual and real integration cloud, marketing cloud, and business cloud. Commerce Cloud is the foundation of e-commerce, including complete functions of online channels such as web pages and APPs. Marketing cloud and virtual-real integration cloud are additional value-added functions according to the needs of merchants. Marketing Cloud contains complex membership functions. In addition to general membership management, there is also a marketing combination, which can exclude some members or select some members to push discounts and give different discounts to the most suitable objects. The virtual and real integrated cloud can help retailers integrate the data and members of physical channels, provide the best business strategy, and create maximum revenue for the mall.
Compared with most competitors who can only provide simple online shopping functions, 91APP can provide more value-added services, such as a variety of preferential marketing and promotion programs, VIP membership, data consulting services, etc. Most retailers are beginning to shop online In the market, they will face the problem of integration with physical store members and systems: usually the POS system is relatively closed and needs to be replaced on a large scale for online shopping, but 91APP can be completely connected to reduce the cost of operating online channels.
customer
91APP has hundreds of customers, including many large Taiwanese retailers and international brands. For example, Quanlian's PX Go fully integrates physical channels and online channels. In addition to ordering home delivery online, you can also order online and then pick up the goods at physical channels: This feature allows Quanlian in each community to not lose profits due to online channels, but makes online shopping more convenient. Combined with Quanlian's large female members, it creates more accurate and considerable turnover.
Another example is Family Family. Family Family has a Slogan: "Everyone has Family Family". With the launch of Family Family Mobile App, it also captures the pain points of consumers. Because of system problems, the coffee cup can only be picked up at a single store, and the small details of the cup can be easily lost; the family mobile app allows members to send a cup of coffee at a discount and connect to the family’s store POS machine. You can pick up goods across stores, or through the community model, so that members can give each other gifts to create greater benefits. Because 91APP assisted in the establishment of the system, the whole family has been several years faster than the leading supermarket 7-11 in APP and informatization.
In addition to the above two major retailers in Taiwan, there are also Taiwanese online channels for many international brands: Timberland, Dior, The North Face, Levi's, Biotherm, PUMA, Electrolux, Sharp, etc., showing the customization and technical capabilities of 91APP.
market
Before the outbreak, the US market research company eMarketer estimated that global retail sales in 2020 will be 26.07 trillion U.S. dollars, of which e-commerce sales will be about 4.21 trillion U.S. dollars, accounting for 16.1% of total retail sales; under the COVID-19 outbreak, The proportion of e-commerce will increase substantially. In contrast, in Taiwan in the first three quarters of 2020, e-commerce accounted for 8.6% of the overall retail sales. It is obvious that Taiwan’s e-commerce still has a lot of room for growth, and is even expected to grow by multiples.
91APP has hundreds of customers, including many large Taiwanese retailers and international brands. For example, Quanlian's PX Go fully integrates physical channels and online channels. In addition to ordering home delivery online, you can also order online and then pick up the goods at physical channels: This feature allows Quanlian in each community to not lose profits due to online channels, but makes online shopping more convenient. Combined with Quanlian's large female members, it creates more accurate and considerable turnover.
Another example is Family Family. Family Family has a Slogan: "Everyone has Family Family". With the launch of Family Family Mobile App, it also captures the pain points of consumers. Because of system problems, the coffee cup can only be picked up at a single store, and the small details of the cup can be easily lost; the family mobile app allows members to send a cup of coffee at a discount and connect to the family’s store POS machine. You can pick up goods across stores, or through the community model, so that members can give each other gifts to create greater benefits. Because 91APP assisted in the establishment of the system, the whole family has been several years faster than the leading supermarket 7-11 in APP and informatization.
In addition to the above two major retailers in Taiwan, there are also Taiwanese online channels for many international brands: Timberland, Dior, The North Face, Levi's, Biotherm, PUMA, Electrolux, Sharp, etc., showing the customization and technical capabilities of 91APP.
91APP’s numerous stores are among the minority of Taiwan’s e-commerce companies, and most businesses still choose large e-commerce companies such as PChome and Momo. As of 2019, the total sales of all 91APP stores accounted for approximately 1.57% of the online B2C market share. Therefore, 91APP not only needs to expand more customers, but also needs to assist existing customers to grow, using data consulting, membership marketing, advertising agency operations and other methods to continue to expand the transaction amount, in order to have the opportunity to grow rapidly in market share and revenue.
Towards international
91APP plans to enter the international market in the future. The main regions are Hong Kong, Malaysia and other Asian countries. At present, it has established branches in Hong Kong and Malaysia. In the international market, compared to other online services (ex. social media), e-commerce is usually more difficult to expand international business, because it is more necessary to match local logistics, cash flow services, and customs clearance processes to meet local consumption habits. Operations are more complicated than operating in the local market. 91APP adopts an operating strategy of looking for cooperation with local players, such as exchanging equity with EasyStore Commerce, Malaysia's largest store-opening tool platform company, for local market cooperation.
Source of revenue
91APP's revenue is divided into two parts: recurring revenue and non-recurring revenue. The main recurring income is the GMV (Gross Merchandise Volume) share of the total website turnover: According to the financial report, 91APP draws about 6% of GMV. Whenever consumers spend on apps or websites established by 91APP, 91APP will follow the brand. The supplier collects 6% of the maintenance and operating expenses. Recurring revenue also includes the cost of vendors subscribing to different services. Depending on the service each year, the average cost is about NT$50,000 to 200,000. It includes the most basic APP flagship program, retail enterprise programs suitable for small and medium-sized businesses, and retail exclusives. plan. Other relatively basic recurring income comes from e-commerce agency operations and digital advertising agency operations.
Non-recurring income comes from the one-time cost of system construction and the large-scale project cost for customized services of large retailers, which makes OMO (online and offline integration) smoother and meets the needs of different brands.
It can be seen from the table below that the main revenue comes from retail software cloud revenue. GMV and subscription fees have also become important pillars of the company. However, to increase the gap with competitors, it is necessary to strengthen data x e-commerce. If this product is successfully expanded, it will It can strengthen the competitive advantage and help retailers increase online revenue. It can also promote higher GMV revenue sharing and create a win-win situation.
Shareholder composition
91APP’s pre-listing shareholders included several major venture capitals. The Bencheng Venture Capital Fund, managed by AppWorks’ start-up investment, holds 7.15% of the shares. Other shareholders also include angel investor Cherubic Capital Inc (Cherubic Capital Inc) and Taiwan’s Big Brother. The venture capital invested by Taiwan Daxin Venture Development and Yiding Venture Capital-related enterprise Chengding Venture Capital show that venture capital is happy to see the success of 91APP's new business model.
Revenue amount
91APP's revenue will grow by 30.7% from 2019 to 2020, and EPS will grow by 100%. Revenue growth has not caused a proportional increase in costs and operating expenses. Therefore, EPS growth rate is higher than revenue growth. However, the current P/E is relatively high, at 112 times at the close of 2021/6/11. In addition to the high P/E ratio of Internet stocks (43.8 times at the closing of 2021/6/11, Fubon Media 82.87 times), it can continue to be Only by holding growth momentum can it be favored by shareholders.
Internet stocks usually have the characteristics of high gross profit margin. The main cost of 91APP comes from AWS cloud service fees, and the gross profit margin is also stable at more than 60%; compared with the 10% gross profit margin of the two major e-commerce companies Fubon Media and Nethome Much higher. However, this difference comes from the difference in cash flow: when consumers shop in the two major e-commerce companies, the revenue first enters the e-commerce company, and then the money is distributed to the supplier; 91APP is an online shopping platform established by retailers, and the cash flow is Those who enter the retail industry first, and then use profit sharing to pay the operating expenses to 91APP, so you can see a higher gross profit margin on the financial side, and the relative revenue will not be too high. 91APP also has a good net profit margin, about 23.7% in 2020. This business model creates excellent profits for this company.
risk
I believe that many investors still have doubts about investing in KY (overseas companies listed in Taiwan/ OTC) companies. What's more, this combination is KY+Qinye Zhongxin. This combination has had many financial problems in the past, including Kangyou-KY , Ditao-KY, VHQ-KY, Yingrui-KY, etc., will also allow investors to discount the credibility of these companies’ financial reports; therefore, the government’s financial management committee has also proposed some policies to strengthen the KY corporate governance and supervision mechanism, and investment People need to pay more attention to the financial figures and legal opinions of these companies to reduce investment risks.
Reference: 91 APP OTC Public Instructions