E commerce SaaS is cold? AI may become a lifesaver .

Visual China.

Text |Liu Kuang.

With the vigorous development of the e-commerce industry, e-commerce SaaS, which can provide merchants with various software support and supporting services related to their operations, has also taken advantage of the trend and achieved rapid development. Not only that, e-commerce SaaS has also become the largest vertical SaaS subdivision in China. In the e-commerce SaaS industry, many well-known companies have also been born, among which Youzan and Weimob are the leaders.

Even if the growth rate of Internet traffic slows down, the popularity of e-commerce has not subsided, and there are still many players who continue to make efforts in the e-commerce field. In the context of the increasing penetration rate of e-commerce, the demand for e-commerce SaaS has been continuously released, and many e-commerce SaaS service providers have achieved performance growth. It's just that the good times don't last long, and today's e-commerce SaaS companies are not only no longer in the past, but are facing a lot of pressure, and life is not easy.

First, the market attention of the SaaS industry has weakened, and the number of investment and financing events has decreased. Previously, the SaaS industry has attracted the attention of the capital market, and many SaaS companies have frequently obtained financing, which has promoted their own development. However, the current SaaS industry has undergone earth-shaking changes, and the market's attention to the SaaS industry has continued to decline, and the investment and financing events and amounts have declined to varying degrees. According to IT orange data, from January to July 2023, a total of 50 investment and financing transactions occurred in the SaaS industry, compared with 153 and 120 transactions in the same period in 2021 and 2022; The amount of investment and financing is 435.2 billion yuan, compared to 258 in the same period in 2021200 million yuan, 142 in 20223.7 billion yuan.

Second, it is difficult for e-commerce SaaS to make profits, and many companies are still facing profitability problems. Different from other industries, SaaS companies often need to invest a lot of money in product development, maintenance and improvement, especially for new entrants, and usually need to build their own popularity through a lot of marketing and promotion to attract a larger number of users. However, due to the low willingness to pay and low unit price of domestic small and medium-sized enterprise customers, the commercialization of e-commerce SaaS service providers is not smooth, and losses have become a common situation in the e-commerce SaaS field.

The data shows that from 2020 to 2022, Weimob's net loss attributable to the parent company will be 115.7 billion yuan, 78.3 billion yuan and 18$2.9 billion. From 2018 to 2021, Youzan lost 72.6 billion yuan, 91.6 billion yuan, 54.6 billion yuan, 329.3 billion yuan. Even Youzan and Weimob, which are known as the "two heroes" of the domestic e-commerce SaaS track, are still in a state of loss and are facing a profit test, not to mention other companies.

Third, e-commerce SaaS service providers have seen the loss of paying users. A large part of the reason why e-commerce SaaS service providers are mired in losses is because of the high cost of various expenses, and sales expenses are the largest of them. However, even with the high cost investment, the goal of e-commerce SaaS service providers to gain more customers has not been achieved, but the number of paying merchants has decreased. The data shows that from 2020 to 2022, Weimob's paid merchant churn rates are %. Another set of data shows that from 2020 to 2022, the number of existing paid merchants in Youzan will be 97,158, 88,395 and 83,439 respectively, and the total number will decrease year by year.

Affected by many factors, many e-commerce SaaS service providers are facing varying degrees of growth anxiety, losses, loss of paying users, and fierce competition ......It is even more in front of e-commerce SaaS service providers, and it still needs to be solved. However, in the face of these challenges, e-commerce SaaS service providers, including Youzan and Weimob, did not sit idly by, but actively sought changes to find new growth opportunities.

In recent years, reducing costs and increasing efficiency has almost become a tacit choice for the entire Internet industry, and enterprises in various industries are implementing strategies to reduce costs and increase efficiency, and the e-commerce SaaS industry is no exception. In fact, in recent years, many e-commerce SaaS service providers have experienced a decline in revenue scale and a decrease in gross profit, and their performance has "changed". In this context, Youzan and Weimob have also chosen the strategy of reducing costs and increasing efficiency to curb their losses.

According to the data, in the first half of 2023, Youzan's sales expenses decreased by about 30% year-on-year, administrative expenses decreased by about 64% year-on-year, and other operating expenses decreased by about 50% year-on-year, with obvious effects of cost reduction and efficiency increase. During the same period, Weimob Group's general and administrative expenses were 3800 million yuan, down 30 percent year-on-year1%；The total R&D expenditure was 34.9 billion yuan, a year-on-year decrease of 320%。With the continuous promotion of the strategy of reducing costs and increasing efficiency, Youzan and Weimob have also achieved a significant narrowing of losses. According to the financial report data, in the first half of 2023, Weimob Group's adjusted net loss was about RMB 25.4 billion yuan, a significant decrease of 55 from the same period last year2%。During the same period, Youzan's operating loss was about 112650,000 yuan, 97 narrower than the same period last year6%。

Previously, due to the impact of the epidemic, consumers' shopping habits gradually migrated online, and the pace of digitalization of enterprises accelerated, and this series of factors have promoted the development of the e-commerce SaaS industry, and e-commerce SaaS service providers have also achieved performance take-off. However, with the opening of external links on major platforms such as ** and WeChat, merchants no longer need the marketing, diversion and other services provided by SaaS platforms such as Youzan and Weimob, and the customer churn rate of Youzan and Weimob has increased.

For Youzan and Weimob, customers are the key to their business development, so retaining old users and acquiring new users has become the key direction of e-commerce SaaS service providers such as Youzan and Weimob. In addition, small and medium-sized customers generally have the characteristics of low willingness to pay, while large customers are not only large-scale, but also have strong payment ability, therefore, large customers have become the focus of Youzan and Weimob, and both sides have begun to promote the strategy of large customers.

For example, Weimob not only launched the "Do everything possible" plan to promote the increase of the unit price of large customers through the linkage of ecological products, but also implemented the strategy of "on-demand prescription" and launched an integrated solution for omni-channel user operation to enterprises. Coincidentally, in the third quarter of 2023, Youzan established a key customer service department to provide resources, strategies, and overall operational solutions for "good customers" with potential and large volumes.

In addition to promoting the strategy of reducing costs and increasing efficiency, optimizing services to alleviate the decline in the number of paying users and gaining more customers, e-commerce SaaS service providers are also looking for new growth opportunities. At the moment when AI technology is exploding, Youzan and Weimob have also set their sights on the AI field and have coincidentally increased their exploration of the AI field.

Specifically, on April 10, 2023, Youzan not only launched the data integration platform Youzan IPAas, but also released the first AI product "Plus Me Intelligence". It is understood that Jiawo Intelligence currently mainly supports two major scenarios: promotion and event planning, and the product can generate promotional tweets, which can clearly understand the purpose of the event and automatically generate marketing activities across products and functions. In May, Weimob officially released the AI application product "WAI" based on large models. It is reported that the AI large model application product "WAI" supports many capabilities such as construction, creation, marketing promotion, and wisdom insight.

What is the hottest thing in the past two years?It must be AI. Since ChatGPT exploded out of the circle, a wave of AI boom has been set off around the world, and major companies have rushed to the AI arena one after another. The wind of AI has also blown into the SaaS field, and many SaaS companies have launched AI products, such as the above-mentioned Youzan's "Add My Intelligence" and Weimob's "WAI". What are the considerations behind the AI efforts of e-commerce SaaS service providers?

First, the combination of AI and SaaS can lower the threshold for merchants to use SaaS products and make SaaS products easier to use. In order to enhance the competitiveness of their own SaaS products, SaaS manufacturers will continue to polish and optimize the products, which also makes the functions of SaaS products more and more perfect, but the function-rich SaaS products are more complex for users to use, and users often need to spend more time to find the corresponding functions. With the blessing of AI, the effect is different. For example, Youzan's AI product "Plus My Intelligence" supports **promotion scenarios, which can automatically generate promotional tweets with better conversion rates and more liked effects according to the identified product information.

Second, e-commerce SaaS service providers can improve the sense of use of SaaS products, optimize customer experience, and increase customers' willingness to pay by launching AI products. The most critical factor for SaaS products to be accepted by customers is to improve efficiency and reduce costs. The combination of SaaS products and AI can further help merchants improve operational efficiency, make SaaS products and services more personalized, provide customers with more accurate services, and meet the diverse needs of different customers, so as to further optimize the customer's experience, enhance their recognition of the product, and ultimately improve the willingness to pay.

As far as the current situation is concerned, more and more SaaS service providers are accelerating the deployment of the AI field, and the continuous exploration and deep cultivation of SaaS service providers in the AI field will also deepen the integration of AI and SaaS products. The application of AI technology is also expected to bring new imagination and growth space for SaaS products and even the entire industry. It is worth mentioning that many SaaS service providers have already seen initial results by betting on new AI technologies. However, it is also worth noting that the application of AI can certainly bring new impetus to SaaS, but the deep integration of AI and SaaS industry is not an overnight achievement, and SaaS service providers have a long way to go.