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China’s LightInTheBox Helps Sell Chinese Products Abroad

Posted on Tuesday, Sep 30th 2014

According to eMarketer, global business-to-consumer (B2C) e-commerce sales are estimated to grow 20% to $1.5 trillion this year. The growth is attributed to increased adoption of online and mobile devices in emerging markets and higher penetration of features such as advancing shipping and payment options, as well as the thrust into international markets by bigger brands. In fact, this is expected to be the first year when the Asia-Pacific market will outgrow the North American market with sales in Asia-Pacific estimated at $525.2 billion versus $482.6 billion in North America. Not surprisingly, China will be the largest market in the region. Here is an interesting infographic from the report showing the high e-Commerce growth anticipated by emerging markets.

LightInTheBox’s Financials
China’s e-commerce news is currently overshadowed by news about Alibaba’s IPO, but there are others as well who are making their mark. LightInTheBox (NYSE: LITB), the Chinese e-commerce company that sells Chinese goods to overseas customers saw second quarter revenues grow 24% over the year to $89.8 million. During the quarter, net loss per ADS increased to $0.11 compared with a breakeven quarter a year ago.

For the quarter, total number of orders improved 52% to more than 2.2 million. Mobile continued to grow with their contribution growing to 28% of the total orders compared with 17% a year ago.

Among other metrics, revenues from repeat customers accounted for 40% of total revenues for the quarter, increasing from 33% a year ago. Revenues from their apparel segment improved 44% to $35.4 million and revenues from electronics and other general merchandise increased 14% to $54.4 million.

By region, revenues from Europe increased 26% to $55.4 million and revenues from North America improved 40% to $20 million. Revenues from rest of the world grew a modest 4% to $14.4 million.

The company improved their revenue outlook for the current quarter from the previous range of $92 million-$94 million to $94 million-$96 million.

LightInTheBox’s Continuing Losses
LightInTheBox has not earned profits since 2008, and they don’t seem to be ready to turn profitable this year either. However, their financials are registering improvements. During the quarter, fulfillment expenses increased from 5.2% of revenues a year ago to 6.1% of revenues driven by increase in order volume. Fulfillment costs per order actually reduced from $2.6 a year ago to $2.5. Similarly, the company saw significant improvement in selling and marketing expenses as a percentage of total net revenues. Sales and marketing expenses reduced sequentially from 31.8% to 27.7% and saw a modest increase over the previous year’s 27.1%. Selling and marketing expenses per order actually reduced from $13.7 last year to $11.4 during the second quarter this year.

Despite the continuing losses, the market is pleased with the positive trend in its metrics and is expected to see the stock improve. The stock is still trading at $6.32 with a market capitalization of $314.02 million after having recovered from a 52-week low of $4.61 in May this year. The stock is still significantly short of the 52-week high of $12.63 it touched in October 2013 and well below its last June list price of $9.50.

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