China’s Club Factory raises $100m Series D

Club Factory has overtaken Snapdeal as the third largest shopping app in India in terms of monthly active users on Android, after Amazon and Flipkart. In the past half-year, its Indian business has reportedly grown tenfold. According to local media, the platform has a nearly 50% return rate, well above the industry average.

“Allowing more players to enter into the ecosystem with lower costs is the key to building a local platform,” Jialun Li, founder of Club Factory, said in a statement.

Club Factory claims two differentiating features. First, it takes no commission fee for local transactions, a strategy that proved effective for Alibaba Group’s Taobao e-commerce platform in China. Second, it promotes a “store-within-platform” concept that allows direct contact between buyers and sellers. Taobao has also had success with this approach, which is said to work well in developing markets where small manufacturers represent most of the market.

“In a large market like India, demand is diversified. Amazon and Flipkart both offer a business model similar to JD.com, a closed ecosystem that offers quality products. However, India also needs another kind of e-commerce, a more open platform which offers more choice to customers. This is the reason that Club Factory can grow so fast,” said Li.

Founded in 2014, Club Factory started as a B2B online platform, providing information such as details of the best-selling items on e-commerce sites Wish and eBay to Chinese clothing manufacturers. The company moved to a B2C model in 2016, connecting Chinese manufacturers with international online buyers.

The mobile app compares prices from multiple manufacturers to present customers with the best deals. Over the past two years, India has become a key market for Club Factory, representing more than half of the company’s overall revenue.

Club Factory raised $100 million in a Series C in 2018 from investors including Bertelsmann, Frees Fund, IDG Capital, Kunlun Fund and ZhenFund. IDG Capital and ZhenFund provided angel funding in 2014. This was followed by a Series A led by Frees Fund in 2016. In January 2017, Club Factory secured a $2 million Series B from undisclosed investors.

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• Topics
• Greater China
• Consumer
• Early-stage
• Technology
• e-commerce
• TMT
• Qiming Venture Partners
• Bertelsmann Asia Investments
• Frees Fund