From AFR: Note the bolded paragraphs
AuMake’s painful remake as Chinese tourists vanish Feb 15, 2021 – 11.15am
The executive chairman of retailer AuMake says the group aims to shut the last of its brick and mortar stores within 12 months, in a restructure forced on it by the loss of its maincustomer base of Chinese tourists.
Keong Chan said on Monday the group would operate fully as an e-commerce business by next year and that itse-commerce marketplace set up in October last year was starting to make headway. Registered active users had grown to 20,000 and 85 per cent of them had mainland China registration details, in a business reliant on large amounts of social media sharing and video via platforms including TikTok, rather than a product search model.
Four bricks and mortar stores remain in Sydney from an original network of 15 stores in Sydney, Melbourne and Auckland prior to the COVID-19 pandemic, when large volumes of Chinese tourists would flock to the stores to buy vitamins, infant formula, food, wool products and cosmetics. “We’re looking to close those stores in the next 12 months. That’s the way this is all going,” he said.
Mr Chan said the type of products being purchased were still largely the same even after the rapid shift to e-commerce.
Thirteen months ago AuMake had a very different business model, heavily reliant on vast numbers of Chinese tourists coming to Australia. Getty
“ We haven’t seen a lot of change,” he said. It was still the prominent vitamins brands such as Blackmores and Swisse, and infant formula brands including a2 Milk, Bubs and Aptamil that were most popular.
RELATED QUOTES BKL Blackmores $73.200 -0.41%
Gross sales on the e-commerce marketplace rose to $3.5 million, from $1.9 million in a previous trading update on December 23.
AuMake now targeted younger customers and those using skincare and cosmetics brands to help bring in more online traffic, Mr Chan said. It had heavily reduced its reliance on daigou traders, which helped profit margins.
Mr Chan said the company worked closely with online “influencers” in Asia with a large social media following. Large numbers of retailers in Australia have reported logistics delays for goods made in China because of cutbacks in freight services among airlines, and supply chain disruptions. But Mr Chan said shipping goods to China had not experienced the same disruptions.
“At the moment it’s still pretty good with that two-to-three week window,” he said.
The company said on Monday it had $9 million in cash at the bank. It raised capital last month at 6¢ per share with the issue of 116 million new shares, with one of the big investors being Chinese consumer technology venture capitalist Steven Hu, who is based in Shenzhen. AuMake shares traded at 5.2¢ by mid-morning on Monday. The stock traded as high as 79¢ in December 2017, soon after listing on the ASX.
AuMake generated revenue of $60 million in 2019-20 but tumbled to a bottom-line loss of $5.1 million after one-offs stemming from the rapid business restructure, which included cutting 70 per cent of its staff.
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