Chinese social e-commerce player raises $20m
Wanwu Xinxuan, a Chinese social e-commerce start-up that specializes in products for infants and children, has raised $20 million in a Series B round of funding led by local consumer sector-focused venture capital firm Fresh Capital.
Redpoint China Ventures also participated, having previously provided Series A funding in October 2018, a few months after the company was founded by executives from Baidu and Alibaba Group’s Taobao platform.
The Wanwu Xinxuan business model is best described as a combination of Xiao Hong Shu and Netease Yanxuan, both of which have received substantial VC funding. The company seeks to differentiate itself from mainstream e-commerce platforms by providing high-quality goods – from Chinese and overseas suppliers – and attracting customers with user-generated content (UGC).
Mothers pay a RMB398 membership fee to join the platform and establish a virtual storefront. This enables them to buy products for their own use at reduced prices and also earn commissions of up to 40% on third-party sales that arise from their social media-based marketing activities. The next stage of development will see mothers sign up as normal customers, with no upfront fees.
When the platform was piloted in August last year, monthly sales reached RMB10 million ($1.4 million). They now stand at more than RMB100 million, according to local media.
UGC has become a popular tool to drive sales and create new best sellers. One of the goals of Wanwu Xinxuan is to establish mothers as key opinion leaders (KOLs) and attract prospective customers to the platform. Around 90% of members were born after 1985 and 40% were born after 1990.
The company has worked with more than 4,000 brands from 19 countries, although there is a focus on emerging Chinese names. It has more than 40,000 stock keeping units (SKUs).
Xiao Xiao, a partner at Fresh Capital, told 36Kr that his firm chose to back Wanwu Xinxuan because it reflects the convergence between e-commerce and social commerce. He added that the company boasts high-quality customer-generated content, strong supply chain capabilities that can cater to fast-growing demand, and a management team with rich internet industry experience.
MM Capital served as an exclusive financial advisor for Wanwu Xinxuan’s Series B round.
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