The “capital winter” is only relative. Despite a plunge of investment projects of several investment firms by almost half in 2016 (January to May) compared with the same period in 2015, Beibei.com, a e-commerce site specializing in maternal and baby business, has embraced its “capital summer” in adversity.
While HiChao suffers a big headache from the break of its fund chain, Beibei.com has declared the acquisition of USD100 million in round D. Earlier only 9 months after its outset, Beibei.com declared it had raised USD100 million in round C and had become a black horse that realized the largest funding size in the history of the maternal and baby e-commerce area and achieved the valuation as high as USD1 billion.
Whoever wins mothers will win the world: The mother economy is a huge bonanza
As early as in 2006, Wang Huainan, the former market director of Google Asia-Pacific Region, and Shao Yibo, the former founder of Eachnet China Region, claimed an upcoming arrival of a demographic dividend in the maternal and baby industry when cosponsoring Babytree.com, a maternal and baby community.
As the second largest consumer of pregnant, baby and infant products only after America, China has a total of over 76 million infants aged 0-4, according to statistical data from the National Bureau of Statistics. Over the past decade, China has maintained a newborn number of some 16 million and this figure has kept rising since 2010. Behind the figure of 16 million is a vast market in the pregnant women and infant area. A survey shows that the per capita annual spending of the new-generation maternal and infant groups reaches RMB5,000-RMB18,000. China’s pregnant women and infant industry will be as large as RMB2.2 trillion in 2016 and even further grow to over RMB3 trillion in 2018, forecasted by China Research Center for Children’s Industry.
The maternal and infant industry will set to embrace an opportunity of great prosperity, further benefiting from growing maturity of the industry and implementation of the comprehensive second-child policy this year. At present, about 90 million spouses at the childbearing age meet the conditions and 2.50 million newborns will grow every year in future, forecasts the National Health and Family Planning Commission. If the per capita spending of every infant is RMB12,000 per year, this will create a new market space of over RMB30 billion and a growth potential of some 13% for the maternal and infant industry.
In 2015, the online penetration rate of maternal and infant products in China was only 15.5%, so the e-commerce in this area still embodies an enormous growth potential, compared to the e-commerce ratio of 20% and compared to that of cosmetics, 3C and other products in China. Besides, all investors are now racing to scramble for the big pie, another evidence proving the vast prospect of the maternal and infant e-commerce industry. Data from Talking data show that in 2015, the maternal and infant industry recorded a total of 43 investment and financing projects totaling more than RMB7 billion, including 12 projects relating to maternal and infant e-commerce and involving a combined investment amount above RMB2.3 billion.
2.50 million newborns, vast potential at the trillion trade, policy support and mobile shopping trend - all these factors are the best catalysts propelling rapid development of Beibei.com and other maternal and infant platforms. IN this context, it will be natural that Beibei.com has won the favor from the capital.
The maternal and infant economy is more than milk powder and paper diapers
As a matter of fact, the maternal and infant industry, a market that seems very fascinating, is also a battlefield with heavy casualties. Most of maternal and infant e-commerce sites now lose money to attract users. This is because the core products are milk powder and paper diapers at most of these websites, and these products contribute more than half of their sales revenues. These products are “standard products” (products up to normal specifications) that feature transparent prices, so mothers will only select those sites offering lower prices. During the fiercest price war in 2015, some platforms sold a package of paper diapers with the cost of some RMB150 at only RMB80-90, and some e-commerce sites lost tens of millions of RMB one year only to attract users.
Zhang Lianglun says: “The most essential competitive strength of e-commerce is to retain old users, but the mode of attracting users with loss-making milk powder and paper diapers will not be sustainable at all.” First, “standard products” can’t build a carrier, and given no promotion, the consumer viscosity of these products will be very low; Second, milk powder and paper diapers can only attract mothers of infants aged 0-3, so websites can only retain users for a very short time at a very high cost.
By contrast, Beibei.com has started with infants’ clothes and footwear, and “standard products” don’t constitute a major contributor. Just backed by such mode, Zhang Lianglun forecasts Beibei.com will start making a profit in the fourth quarter of this year.
Two years ago, even his team didn’t understand why Zhang Lianglun decided to enter into the maternal and infant industry, which didn’t seem promising at that time. This is because a curse “the vertical must die” in the e-commerce circle. Taobao.com and JD.com now offer everything, so how many chances will vertical sites have?
However, Zhang Lianglun believes scale is the advantage of Taobao.com and JD.com, but will usually become a problem. “Will a mother really need to select one out of 100,000 children’s clothes brands? Does a brand really need more than 10 and even 100 sellers?” Zhang Lianglun notes that new e-commerce sites like Beibei.com follow different commercial philosophies from traditional e-commerce sites. “The essence of e-commerce is to serve people rather than selling products”, says Zhang Lianglun. “Traditional e-commerce focuses on commodities and only sees traffic and realization of cash flows. However, the thing is now becoming different. New e-commerce will go back to groups and deliver all services that are available to certain group, because users don’t want to install many applications to satisfy different demands. ”
The “mother economy” will create next RMB100-billion-grade entry
JD.com has started rising from 3C products and gradually evolved into an integrated online shopping site from a vertical e-commerce site in the IT product area, because it is highly favored by male users. Compared to other products, the online penetration rate of maternal and infant products is only 6% now, which implies a very vast growth potential in future. Besides, maternal and infant products are a strong demand of mothers, but they are not the only demand. In the opinion of Zhang Lianglun, if male users have brought up JD.com, why will Beibei.com, which is favored by mothers, be impossible to become next JD.com?
Article source: www.soo56.com
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