Here comes our first quarter 2023 report, with financial and other highlights of our company during this period.
*AOV = Average Order Value
**Conversion = The percentage of shop visitors who bought something
As reported earlier, sales situation was and remains challenging. We experienced a YoY sales drop of 9%. While this decrease is not ideal, we remain optimistic that we can regain our momentum in the coming quarters. As always, the annual results are by and large determined during fourth quarter and in the double double shopping festivals, 11.11. and 12.12. And we are doing our utmost to ensure our sales portfolio is up to the challenge to monetize them.
It is also worth noting that online businesses globally have suffered in the wake of the post-pandemic change of consumer behavior. As such, we are not alone in facing these challenges.
Our YoY gross margin decreased by 21%. The larger decline in gross profit was due to the increase in our wholesale business, where our profit margins are typically smaller. While this was a contributing factor to our overall gross profit decline, we are taking steps to get more of our own Moomin branded products, which will strengthen our overall margins.
We recognize the importance of tuning our product portfolio to align with changing consumer consumption patterns. As consumers are now going out from their homes and enjoying outdoor activities, especially in China after the hard lockdowns, we are exploring ways to adapt our products to meet these new demands. Our design team is working on developing new products that cater to outdoor enthusiasts, such as camping, hiking, and travel accessories. Additionally, we are evaluating our existing product line to determine which repackaged combination we can offer to increase sales on our traditional product segments.
One of the challenges we faced during this quarter was the difficulty in introducing new products from Moomin licensees to the market. This risk was partly mitigated by successfully launching six of our own Moomin branded products, totally yielding 16 SKUs (stock keeping unit). Additionally, our own product category has been growing steadily, and we are beginning to see the benefits of our investments in this area. With our own products, we have successfully opened new sales channels, which bodes well for our future sales and profits.
In addition to the above highlights, we are actively working to find new service customers to reduce the risk of having one customer. We recognize the importance of diversifying our customer base and revenue streams to ensure long-term sustainability and growth. To this end, we are exploring various options and opportunities in the market and are in the process of evaluating potential partnerships and collaborations. We believe that this will help us mitigate the risks associated with relying too heavily on one customer or business line.
In conclusion, while our first quarter results were not ideal, we remain committed to improving our performance and exploring new opportunities for growth. We will continue to focus on developing and promoting our own product category, exploring new sales channels, optimizing our wholesale business, finding new service customers, and tuning our product portfolio for changing consumer consumption patterns. We recognize that online businesses globally have suffered aforementioned reasons. Nevertheless, we remain confident that we can overcome these challenges and emerge stronger in the long run.
