Chinese community group buying player receives $14m

Chang Zheng Group manufactures maternity and childcare products under the Zichu and Newyerbay brands. Most of its sales come through e-commerce channels such as Alibaba Group's Tmall and JD.com. The company launched Chujia Xinxuan last year.

While the bulk of China’s community group buying platforms focus on perishables, Chujia Xinxuan covers maternity and childcare products, cosmetics and home appliances. It has 20,000 communities across 11 cities, claiming five million users and daily sales of more than 100,000 items.

Community heads are typically young full-time mothers who qualify by building a group of more than 100 members on Tencent Holdings' WeChat service. They receive an initial gift package worth RMB498, 10% commission on purchases made through their community, and a RMB200 cash bonus every time they refer a new community head.

Community group buying is an offshoot of social e-commerce that concentrates on small geographical areas, usually residential complexes. The head circulates offers in the community, aggregates demand and places orders. They also coordinate delivery and distribution.

Numerous VC investors are drawn to the space, citing the huge potential of the model in terms of meeting families' daily consumption needs in an efficient way.

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• Topics
• Greater China
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• Early-stage
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• TMT