Online vs Offline Commerce

Chinese online retailer targets growth boom in baby products in post one-child policy era

PUBLISHED : Monday, 19 December, 2016, 1:01pm
UPDATED : Monday, 19 December, 2016, 10:32pm

Allen Zhang, founder and chief executive of Beibei.com, China’s largest online shop specialising in mother and baby products, expects businesses to more than double in 2017, buoyed by the company’s expanded supply chain and enriched product offerings.

Hangzhou-based Beibei plans to achieve gross merchandise volume (GMV) sales of 10 billion yuan in 2017, up from this year’s 4 billion yuan after it became profitable in October.

Gross merchandise volume (GMV) is a standard often used by e-commerce companies to measure sales growth. The metric tallies the value of transactions processed on the online platforms, which counts in the orders cancelled by buyers later.

“We’ll see difficulties in taking each step ahead from now on,” Zhang said. “We want to make our supply chain stronger, give customers better experience and fine-tune product offerings to support fast business growth.”

Beibei, established in 2014, is a “unicorn” - unlisted technology firms valued at more than US$1 billion that receives investment from a clutch of renowned venture capital funds including IDG and Capital Today.

Zhang, 30, is among the mainland’s rising business stars. He has a Master’s of Engineering Degree and had a brief work stint with e-commerce juggernaut Alibaba Group between 2009 and 2011, owner of the South China Morning Post.

“After Beibei eked out a profit, I felt entirely relieved since we can do many things at our own will,” said Zhang. “We are in the second half of a game in which we will chase a larger scale of the businesses based on profitable model.”

The mainland’s market for mother and baby products is estimated to hit 2 trillion yuan this year, according to consultancy iResearch.

Online transactions of mother and baby products are valued at about 300 billion yuan.

As Beijing ended the decades-long one-child policy last year to encourage adults to have a second child, the market has been increasingly viewed as attractive.

“Beibei’s ultimate goal is to become a world-class e-tailer driven by the best technologies,” Zhang said. “We will focus on the ‘mum economy’, which is a mammoth market to tap.”

Economists forecast that the second-child policy would lead to an additional 3 million newborn babies in China every year.

Zhang said mainland startups are grappling with a “nuclear winter” this year after venture capitalists refrained from splashing out millions of dollars worth of backing to own a share of those technology firms perceived as future stars.

In mid-2016, Beibei completed the latest round of financing, raising US$100 million from a consortium of investors including New Horizon Capital.

It was among the few “unicorns” that received fresh capital from venture capital funds this year.

Li Zhigang, founder of online media group New Top 100 and a well-known writer about China’s technology sector, said that efficient management of the supply chain held the key to online shopping success.

“The new economy is obviously an enhanced integration of online and offline operations,” he said. “The scale of the supply chain in your hand decides the business volume that you can handle.”

Beibei sells both domestic and imported products.

It has overseas facilities in Hong Kong, Japan and the Netherlands.

The company is categorised as trailing giants such as Alibaba and JD.com.

“Beibei wants to go it alone, and we don’t want to be acquired by any bigger players,” Zhang said.

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