PE-backed Chinese health products distributor files for US IPO

The company’s private equity investors include CID Group, which has a 5.2% stake, and SMC Capital and Delta Capital, which hold 4.8% and 2.1%, respectively. According to AVCJ Research's records, CID invested $50 million in Ecmoho in 2015 alongside Rothschild Private Equity.

The company launched in 2011 as an exclusive distributor for overseas brands in the health supplements, maternity and childcare, and personal care spaces. Its first overseas brand partner was Puritan’s Pride, a US-based manufacturer of vitamins, minerals, and herbs. As of June, Ecmoho was an online and offline sales channel for 40 brands covering around 5,000 product lines.

Its primary means of distribution is e-commerce platforms such as Tmall and JD.com, and social e-commerce businesses ranging from Pinduoduo to Yunji. An in-house customer services team handles a daily average of nearly 7,500 pre-sale inquiries in June, of which 39.3% resulted in purchases.

Ecmoho is also expanding into content-driven sales, working with more than 1,100 healthcare experts and key opinion leaders (KOLs). They generated over 2,000 articles promoting Ecmoho partner brands in June. Another emerging business line is health management planning, under the XG Health platform, which was launched in April. Some 30 doctors and nutritionists prepare plans and respond to consumer inquiries.

The company ranked first in China’s non-medical health and wellness integrated solutions industry by revenue in 2018 with a market share of 2.6%, according to Frost & Sullivan.

As of June, the company had 7.2 million paying consumers - up from 6.3 million at the end of 2018 - with a repeat purchase rate of 35%. Revenue, primarily from product sales, rose 112% year-on-year during the first half of the year to $151 million, while net profit rose 64% to $1.8 million. For 2018 in full, revenue increased 103% year-on-year to $199 million while net profit rose 118% to $6.1 million.

However, Ecmoho's number of brand partners fell from 52 to 39 in the first six months of the year, with the number of brands sold dropping from 76 to 62. The company's gross profit margin also dropped 7.8 percentage points year-on-year to 23.7%. This was due to volume discounts offered to e-commerce platforms. Ecmoho noted that operating margins increased because products sold through these platforms involve lower marketing costs.

The size and pricing of the offering have yet to be set, according to a prospectus.

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• Topics
• Greater China
• Consumer
• IPO
• e-commerce
• China
• The CID Group
• SMC Capital China