Daigou business AuMake said the closure of its physical stores fast-tracked the company’s online development, launching the Broadway Online platform which gained significant momentum during the quarter.
The store closures, part of the government’s restrictions to help stem the spread of the coronavirus, has also given the company time to look into developing payment platforms that would support Chinese buy now pay later services to penetrate a younger Asian customer demographic.
AuMake said since the launching of its Broadway Online platform in February, more than 10,000 unique Asian-based consumers have visited, with over 3,000 unique visitors in the last two weeks of June alone.
The company said the growth of the Broadway Online platform, alongside a renewed focus on the promotion of new higher-margin products through the existing AuMake online platform, delivered an 87 percent and 21 percent increase in gross margin and gross profit respectively over the previous corresponding period.
Broadway Online continues to grow with 6 percent unique visitor growth three weeks into July, the company said.
According to AuMake, to improve its customer experience, its in-store and online payment platforms have been developed to support Chinese owned buy now pay later providers Alipay and Tencent.
Customers can use Alipay’s buy now pay later Huabei feature which allows purchases to be paid using credit facilities, including interest-free or daily incurring interest loans. Huabei has over 190 million users, 93 percent are less than 35 years old.
Tencent is also in the final stages of developing its “Fenfu” credit feature, which will offer similar credit facilities to Huabei, and can be used by its 1.1 billion customer base, AuMake said.
“The buy now pay later option is revolutionizing the way consumers shop globally, including in China, and will be available to AuMake’s in-store customers as well as its growing 40,000 online customer database,” the daigou company said. “BNPL will assist AuMake to penetrate a younger Asian customer demographic, including the Free Independent Travellers segment which is anticipated to grow post-Covid-19.”
For the quarter ending June 30, 2020, AuMake posted a 70 percent drop in total group revenue from the previous corresponding period to $4.0 million due to the impact of Covid-19 on temporary physical store closures and the drop of inbound tourism to Australia.
Total group gross profit was at $0.73 million, down 63 percent from the previous corresponding period, delivering a gross profit margin of 18.3 percent, an increase of 25 percent on the same period last year.
Online sales were up 21 percent on the previous corresponding period to $2.3 million with gross profit of $0.47 million, delivering a gross margin of 20.4 percent, an 87 percent increase from the same period last year.
The company said its cash at the bank was $8.2 million with no debt.
AuMake said its operational cash outflow was $1.3 million for the quarter, including significant investment in online growth and in-store customer experience on re-opening.
“While Covid-19 has undoubtedly impacted the revenue profile of the business during the June quarter, AuMake has minimized this by materially reducing all non-core expenditure,” said AuMake executive chairman Keong Chan. “At the same time, we are increasing our investment in long term growth drivers, enhancing our online offering and in-store customer experience.”
According to AuMake, its strong financial position allows the business to continue to invest in the acceleration of online growth and to modernize in-store customer experience with significant changes to store layout, presentation, and product category expansion.
“The company will continue to focus on operational readiness ahead of the return of Asian students and tourists,” the company said.
AuMake’s physical stores were closed temporarily at the end of March because of government restrictions related to the health crisis.
The store closures resulted in the company reducing its workforce by 70 percent despite the company receiving support through JobKeeper and rent assistance.
AuMake reopened its stores on May 11.