Meet the man who wants to upend China’s fashion industry with an app called Mogujie

Shark Chen Qi got the idea to create fashion-centric social commerce firm Mogujie from helping his wife operate an online make-up and skincare community. Last week, the company, which claims to have pioneered the live-streaming e-commerce model, finally went public on Nasdaq with an estimated valuation of about US$1.3 billion.

Now, the hard part is convincing investors that it can eventually turn a profit.

Mogujie, founded in 2011, has attracted heavyweight investors including the likes of Tencent and JD.com and has been labelled as China’s combination of Pinterest and Amazon. It has over 62 million users who share photos of their outfits on the site and browse for clothing on the app, with its live-streaming section racking up over 3,000 hours of live broadcasts daily. But filings to the SEC show that the Hangzhou-based firm is still loss-making, with declining revenues and slowing growth over the last two years.

To co-founder and chief executive Chen, these slowing numbers are temporary as he looks to take Mogujie a step further and transform itself into a fashion label incubator.

It plans to do this with data that it has amassed on Mogujie, allowing the firm to help merchants optimise their supply chain processes by helping to estimate demand and providing insights into consumer preferences. Previously, the company had over 100,000 merchants on its platform, but that number has now been reduced to about 18,000 as Mogujie becomes more selective with the brands that it wishes to incubate. The active reduction of merchants has naturally resulted in a dip in revenues, Chen said.