Yunji, a startup that enables social commerce via WeChat, files for $200M US IPO

TechCrunch | 3/25/2019 | Staff
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China’s Pinduoduo was all the rage in 2018 as the ecommerce upstart quickly rose to challenge Alibaba and raised $1.63 billion through a Nasdaq listing. Much of its success was attributable to its link to WeChat, China’s messaging leader. Now, another emerging ecommerce player that has leveraged WeChat is gearing up for a listing in the United States.

Yunji, which was founded in 2015, the same year Pinduoduo launched, is raising up to $200 million according to its prospectus filed with the Securities and Exchange Commission last week. Reuters reported citing sources in September that Yunji planned to raise around $1 billion in the IPO at a valuation of between $7 billion and $10 billion.

Pinduoduo - Yunji - Bills - Ecommerce - Service

Like Pinduoduo, Yunji bills itself as a “social ecommerce” service, which means it takes advantage of social relationships on apps like WeChat to acquire, engage and sell to users. The pair differ, however, in how exactly they make money. Pinduoduo generates the bulk of its revenues — nearly 90 percent in the fourth quarter — from advertising fees collected from merchants. This is akin to Alibaba’s marketplace play of connecting buyers and third-party sellers. Yunji, which was started by ecommerce veteran Xiao Shanglue, focuses on direct sales like Alibaba’s arch-foe and derived 88 percent of its fourth-quarter revenues from selling to users.

In terms of size, Yunji was about $15 million behind Pinduoduo in revenue last year. It was, however, much closer to achieving profitability than Pinduoduo, which spent most of its money on sales and marketing. Most of Yunji’s expenses went to fulfillment and logistics.

Inception - Yunji - Ecommerce - Model - People

From inception, Yunji has boasted of its “innovative” membership-based ecommerce model. To join, people typically pay a fee, upon...
(Excerpt) Read more at: TechCrunch
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