Deal focus: Jingling seeks to stand out from the crowd

Jingling is a relative late comer to China’s social e-commerce space, but it isn’t short of admirers. Sky9 Capital recently led a $100 million Series C round that included re-ups by existing investors Tencent Holdings, IDG Capital, Qiming Venture Partners, K2VC and Vision Capital. “The differentiating factor is the execution power,” says Sky9 founder Ron Cao, highlighting the capabilities of a Jingling team led by Qiangqiang Wu, who previously spent nine years with Alibaba Group’s flash sales operation.

The company’s first product, launched in December 2017, was a B2B platform focusing on clothing sales. It was followed six months later by Shuaibao – or Shaking Baby – a B2C offering that now accounts for 60% of gross merchandise volume (GMV). Last month, Jingling launched Wantuan Lianmeng, a platform that helps merchants create their own social e-commerce operations.

Wu believes that Wantuan Lianmeng can grow tenfold over the next three years as more brands turn to social e-commerce. But it’s 20% share of GMV won’t turn into a majority share: Shaking Baby remains Jingling’s prime asset. “Only if we develop strong technology and supply chain support for Shaking Baby will we be able to export these capabilities to other merchants,” Wu says.

Shaking Baby has a similar business model to US-listed Yunji, relying on existing members to sell products and to pull in new members. However, concerns over pyramid selling prompted several changes. First, there are no membership fees, which has seen the user base hit 50 million in a year, compared to 10 million for Yunji. There is even a welcome product for new joiners – basically special offers on groceries that cost less than RMB10 per item.  

Second, there is no multi-level hierarchy. Members who attract 10 followers become shop owners, eligible for commissions on sales arising from products to which they have linked. Moreover, incentives are not wholly focused on sales activity. The 16% commission is relatively low – rival platform Wanwan Xinxuan offers 40% – with Shaking Baby looking to make up the difference through bonuses that reward “impact factor.” This is calculated using an algorithm like the one Google uses for page rankings.

Third, Shaking Baby doesn’t have its own app, instead using a mini program within Tencent’s WeChat service. The official WeChat accounts of several other e-commerce start-ups, including Yunji and Weilaijishi, have been terminated following accusations of pyramid selling. However, Helen Wong, a partner at Qiming Venture Partners, argues that Jingling’s reliance on Tencent – as an investor and as a WeChat merchant – is a source of comfort rather than concern. “Jingling will be very close to any new policies that Tencent introduces,” she says.

Ultimately, Wu believes Jingling’s competitive advantage comes through its ability to leverage technology – this links back to the point about execution, and in turn, efficiency and hopefully long-run profitability. Of the company’s approximately 400 employees, 270 work in the IT department. Sky9’s Cao adds that being “data driven” is a key factor for him when making investments. “The CEO needs to be data sensitive; he should remember it and offer insights based on it,” he says.

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• Topics
• Greater China
• Consumer
• Technology
• Expansion
• China
• e-commerce
• Sky9 Capital
• Tencent
• IDG Capital Partners
• K2VC
• Qiming Venture Partners