Accounting for 23.2% of the domestic market share, Jushuitan Group Co., LTD. (referred to as "Jushuitan"), known as the "largest e-commerce SaaS ERP provider in China", submitted its prospectus to the Hong Kong Stock Exchange on March 21, 2024, once again rushing to IPO. In the past year, many SaaS companies such as Duodian, Baiwang Cloud, Hui Accounting, and Qiniuyun have also gathered on the Hong Kong Stock Exchange to compete for listing. Behind them, gathered millet, Tencent, IDG Capital, Sequoia Capital, Goldman Sachs and known as the "father of business super" Wumart Zhang Wenzhong and other capital and industry leaders.

SaaS (Software as a Service) is a model of providing software services over the Internet. SaaS providers provide all the network infrastructure and software and hardware operating platforms required by enterprises, and are responsible for implementing and maintaining a series of services, so that enterprises can use information systems through the Internet without purchasing software and hardware, building computer rooms or recruiting IT personnel. The benefits of SaaS include reducing enterprise costs, improving management efficiency, driving business model innovation, and reducing time to revenue. At present, SaaS is mainly divided into two categories: universal and vertical. General SaaS is applicable to various industries, providing instant messaging, collaborative OA, financial management and other services, accounting for nearly 70% of the market; Vertical SaaS, for specific industry customers, provides more targeted software services, accounting for nearly 30% of the market.

SaaS can provide a variety of business-related software support and supporting services for e-commerce merchants, such as inventory distribution, store management and customer service. With the increasing number of domestic e-commerce platforms, in addition to Taobao, Jingdong, Pin-duo, Tiktok, Kuaishou, small red book, and other platforms have also begun to assume e-commerce functions. E-commerce merchants who want to set up shop on multiple platforms need to log into different systems to manage a large number of SKUs and orders. SaaS synchronizes all stores, orders, products and inventory, and manages operational and financial data for each platform. SaaS is an indispensable tool for merchants active on multiple e-commerce platforms.

For a long time, problems such as large marketing investment, long sales chain, long payback cycle and declining renewal rates have been plaguing Chinese SaaS service providers.● First, marketing investment is huge, high customer cost. The cost of SaaS service providers mainly includes the cost of sales, research and development and technical service expenses, server and hardware costs. Among them, mainstream SaaS companies' sales and marketing costs account for more than 55%. Of this 55 percent sales spend, more than half goes to customer acquisition. The huge cost pressure has severely compressed the profit margin of enterprises.● Second, the transaction chain is long and the transaction efficiency is low. The SaaS sales chain involves multiple links, including user demand confirmation, business opportunity acquisition, customer conversion and customer decision-making, and involves multiple roles such as buyers, users, executives and business owners, resulting in the sales process being separated and the transaction chain being too long. In addition, SaaS service providers have a longer payback cycle. According to incomplete statistics, the payback cycle of most SaaS enterprises is between 30 and 90 days after invoicing, with an average of about 60 days. How to improve the efficiency of enterprise payment is the main concern of SaaS service providers.● Third, the renewal rate declined, and revenue growth was difficult. According to the first new Sound data show that in 2022, the growth of the general SaaS industry slowed down, reflected in lower revenue and renewal rate than expected, and 45% of customers changed service providers. Many Chinese SaaS startups have questionable business models. In the past, many service providers mainly sold software and custom project development, and they still use the traditional enterprise software sales method after the transformation of SaaS. This model deviates from the essence and advantages of SaaS, and although it can be concluded in the short term, it cannot achieve the growth and scale replication of SaaS enterprises. SaaS companies should generate revenue from ongoing customer subscriptions, and their long-term value lies in the data-driven value of time compounding, which is not fully exploited by the current business model.

Zhang Xinyuan, research director of Co-Found think tank, a domestic consulting agency, said, "At present, the SaaS industry is still in the initial stage, and most enterprises have not yet made a profit. But the SaaS industry has good development potential and prospects, and it is expected to incubate more excellent enterprises in the future. SaaS enterprises need to improve their profitability and core competitiveness through continuous innovation and service quality to achieve long-term stable development. At the same time, enterprises need to pay attention to risk management and carefully plan financing plans to ensure healthy development."According to the latest Research Report on the Development of China's SaaS Industry in 2024 released by iiMedia Research, a third-party data mining and analysis institution in the global new economy industry, the market size of China's SaaS industry in 2023 will reach 55.51 billion yuan, and is expected to exceed 150 billion yuan in 2027. According to "Insight Consulting" data, China's e-commerce SaaS market has grown from 7.3 billion yuan in 2020 to 10.1 billion yuan in 2022, and is expected to grow to 29.1 billion yuan in 2027.

However, while SaaS is indispensable, it does not mean that a service provider is indispensable. The industry is highly competitive, with the media describing it as a "Red Sea". The competitive landscape of China's e-commerce SaaS industry is becoming increasingly fierce, and the strength of new and old players is competing to jointly promote the development of the industry. From the perspective of participants, the competition among the leading enterprises in China's e-commerce SaaS market is particularly fierce. As the largest e-commerce SaaS ERP provider in China, Jushuitan has captured significant market share and further consolidated its market position through continuous innovation and optimization of products and services. In addition, Jingdong, Tmall, Taobao and other e-commerce giants are also actively layout in the SaaS field, by providing a full range of e-commerce solutions to meet the diversified needs of merchants.

Company introduction

JushuitanJushuitan is a SaaSERP application company for e-commerce sellers, founded on September 26, 2014, headquartered in Shanghai. Based on the Internet SaaS architecture, it is a management platform for e-commerce enterprises, and is committed to realizing efficient collaboration between the sales platform, warehousing logistics, production and supply.On 21 March 2024, Jushuitan Group Co., LTD. (hereinafter referred to as "Jushuitan") submitted a prospectus to the Hong Kong Stock Exchange for listing on the Main Board of the Hong Kong Stock Exchange, with CICC and JP Morgan as its joint sponsors. Jushuitan had previously filed an ipo application with the Stock Exchange of Hong Kong on June 23, 2023.According to the data of Insight Consulting, in the SaaS market of e-commerce operations in China, Jushuitan also ranks first in terms of total SaaS revenue in 2023, with a market share of 7.5%. In terms of 2023 related revenue, Jushuitan is also the third largest e-commerce SaaS provider in China, with a 5.7% market share.However, for the SaaS industry, the difficulty in making profits is a common problem, and Jushuitan, as a leader in the domestic SaaS industry, can not escape the fate of burning money and losing money. In 2021, 2022 and 2023, the revenue of Jushuitan will be about 433 million yuan, 523 million yuan and 697 million yuan respectively, the gross profit will be 219 million yuan, 274 million yuan and 435 million yuan respectively, and the net loss will be 254 million yuan, 507 million yuan and 490 million yuan respectively.Jushuitan is not heavily dependent on any single customer. During the reporting period, the company's top five customers together accounted for 1.8%, 1.2% and 1.2% of its related revenues, respectively. The largest customer accounts for 0.6%, 0.3% and 0.5% of its total revenue, respectively.However, Jushuitan is more dependent on major suppliers. During the reporting period, the company's top five suppliers together accounted for 65.0%, 72.6% and 66.3% of its total purchases, respectively. Among them, the largest supplier accounts for about 35.5%, 39.4% and 36.3% of the company's total procurement, respectively, and there is a strong supplier dependence.

Multipoint DMALLMulti-point is a cloud-based one-stop end-to-end digital retail SaaS platform for the local retail industry, including customers such as Wumart, Metro, Chongqing Department Store, Yinchuan Xinhua and DFIRetail Group.From 2021 to 2023, the operating income of multi-point was 1.045 billion, 1.501 billion and 1.750 billion, respectively, and the net profit was a loss of 1.825 billion, 841 million and 655 million, respectively. The cumulative loss in the past three years reached 3.321 billion. Over a long period of time, from 2019, the cumulative loss in these five years has exceeded 5 billion, although the loss has narrowed in recent years, the loss is still at a high level.In December 2022, the multi-point began to sprint to the Hong Kong Stock Exchange, but two times the table was declared a failure. The problem of connected party transaction is the biggest obstacle to multi-point listing. In May 2023, the CSRC's feedback on multi-point listing mainly proposed the compliance of equity incentive plans and apps and small programs in data collection and information protection, as well as issues such as equity structure and independence.Independence is the most sensitive. It includes the independence of related entities in terms of business, assets, personnel, institutions and finance, as well as the authenticity, fairness and fungibility of related transactions. The majority of DMALL's revenue comes from affiliated entities such as Wumart Group, Metro China entities, Chongqing Department Store (600729.SH) and Xinhua Department Store (600785.SH).According to the prospectus, in the first quarter of 2020, 2021, 2022 and 2023, multi-point DMALL's revenue from the top five customers accounted for 69.8%, 70.2%, 76.6% and 83.1% of the total revenue in the same period, respectively. Through the analysis of the revenue contribution of multi-point DMALL, it can be found that most of them come from Wumart Group. In 2020, 2021 and 2022, Wumart Group contributed 266 million yuan, 473 million yuan and 662 million yuan to multi-point DMALL, respectively, accounting for 54.5%, 45.3% and 44.1% of the total revenue in the same period.In fact, with the increasing dependence on related parties, authenticity, financial and personnel independence, at least in terms of substitutability, there is no sign of reduced dependence on related parties, especially the major shareholder Wumart Group.From the perspective of market development, although the number of multi-point customers reached 677, it is far from forming a scale effect. Several key customers are dependent on mergers and acquisitions, which is also an important reason for regulators to question their business independence.

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