TV and online retailer Momo.com Inc (富邦媒體) has set its sights on fast-moving consumer goods in the expectation that non-essential spending would continue to be affected by public-sector employee pension reforms.
The company remains optimistic about business prospects in the second half of the year and expects the Singles’ Day and Double Twelve shopping festivals in November and December respectively to outperform last year’s showings.
In light of the toilet paper stockpiling frenzy earlier this year, the company has launched a promotional campaign with Kimberly-Clark Taiwan to sell 20,000 cartons of the item, Momo.com said.
The company’s logistics department is also prepared to meet the expected delivery rush, which could push daily revenue to more than NT$20 million (US$651,126).
Worries about the diminished spending power of public-sector pensioners dramatically affected sales last month, Momo.com president Lin Chi-feng (林啟峰) said on the sidelines of a news conference on Tuesday.
Still, sales last month rose 18.6 percent annually to NT$3.09 billion, company data showed.
Consumers have become less responsive to discounts, Lin said, adding that the effect would likely carry over to this month.
Momo.com aims to continue expanding its logistics capacity and is near completing a land purchase in Tainan to set up a logistics center for southern Taiwan, which is expected to become operational in 2020, Lin said.
The company reported that its second-quarter net income rose 19.2 percent annually to NT$405 million, with sales gaining 25.2 percent to NT$9.63 billion.
The company attributed its gains to partnerships with well-known brands that expanded its e-commerce and TV shopping catalogues.
In the first half, the company’s business-to-consumer (B2C) portal, its biggest unit, saw sales contribution from lower-margin consumer electronics and home appliances climb from 33.6 percent last year to 37.4 percent at the end of last month.
However, the sales contribution from higher-margin cosmetics and health products over the same period dipped from 18.6 percent to 17.6 percent.
As a result, overall gross margin and operating margin fell by 0.9 and 0.8 percentage points to 10.4 percent and 3.6 percent respectively, company data showed.
While the firm’s efforts to raise its presence in the B2C market would continue to strain its profitability in the near term, its automated warehouses and improved logistics capacity would begin to reap cost savings next year, analysts said.
Momo.com shares fell 1.43 percent to close at NT$207 in Taipei trading yesterday.
They have dropped 4.83 percent so far this year.
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