Digital marketing and e-commerce company RooLife Group (ASX: RLG) has locked in a strategy to stay connected with its primary Chinese market after posting strong financial results for the six months to 31 December.
The company reported a revenue of $2.32 million for the period, representing a growth of 44% on the previous corresponding period, as well as product sales of $745,000 (300% growth).
It also secured $22 million in contracted wins from new brands in the health and wellbeing and food sectors including New Zealand-based AFT Pharmaceuticals (ASX: AFP), BLIS Technologies and Essano; Nuria Beauty (US); Total Beauty Network, Reid Fruits and Murray River Organics Group (ASX: MRG) (Australia); SLG Brands (United Kingdom); Kadalys (France); and FRUTEEC (South America).
During the period, RooLife completed placements to raise a total of approximately $5.7 million (net of cash costs), giving it approximately $5.1 million in cash as general working capital which will be used to expand the business.
The results demonstrate RooLife’s focus of driving sales in Australia and China to assist clients to sell directly to Chinese consumers online.
Revenue growth
Chief executive officer Bryan Carr forecast continued revenue growth of up to $2.5m for the next three months – almost double that which has been achieved in the reporting period.
“With expanding sales channels, a strong and growing brand portfolio, and increasingly technology-driven efficient operations, [we are] well positioned to continue to deliver growth through the balance of 2021 and into 2022,” he said.
“An increased investment in sales resources nationally and internationally, supported by increased marketing and advertising, is starting to show strong returns and is expected to contribute to further growth in subsequent quarters, including a forecast revenue growth to $2.5 million in the third quarter of this financial year.”
Tmall Global stores
Mr Carr said RooLife would now be planning to rollout a first phase sales channels development for its new brands in China.
Four Tmall Global stores commenced e-commerce product sales during the six months to 31 December and another four are being prepared to launch in the second half of this year.
Tmall is a Chinese-language website for business-to-consumer online retail, operated in China by Alibaba Group.
It is a platform for local and international businesses to sell brand name goods to consumers and has over 500 million monthly active users.
Brand supply mission
RooLife’s mission is to match consumer demand with brand supply, using proprietary technology to identify consumer trends and sources in the Chinese market.
The company curates high-quality, international products for its shopping customers, while brand clients get direct access to customers outside of their home markets through RooLife’s e-commerce marketplace and sales channels.
In 2019, RooLife announced a partnership with Perth Airport which would see the airport’s retail products sold online to Chinese travellers in Australia and China.
In April, the group entered into a marketing agreement with Chinese buy now pay later (BNPL) platform Alipay, whereby RooLife would provide online store and coupon management and marketing services for merchants and retailers, drive engagement online with Chinese consumers, and facilitate payments.
Online shopping market
China’s online shopping market is currently worth $2.2 trillion – around 1.5 times bigger than Australia’s entire gross domestic product.
The market has a forecast compound annual growth rate (CAGR) of 18% and is estimated to be worth $5.2 trillion by 2025.
China’s ecommerce brand service industry (in which RooLife operates) is currently worth $134 billion and has a forecast CAGR of 24% through to 2025, when it is estimated to be worth around $400 billion.
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