Mogu’s long journey: From rejecting Alibaba’s advances to US IPO

TechCrunch | 12/6/2018 | Staff
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Mogu, a Tencent-backed service that offers fashion content and products to young women, has joined a string of Chinese tech companies pressing ahead to sell their shares through initial public offerings in the US before the year-end.

Mogu priced its sale at $14 per share on Wednesday, toward the lower end of a marketed range. That values the unprofitable company at $1.3 billion, a drop from the estimated valuation of $3 billion after Mogujie acquired its chief competitor Meili to form Mogu in 2016.

Firm - IPO - Content - Development - Piece

The firm is poised to raise $66.5 million from the IPO, which will help it fund content and technological development to vie for a piece of China’s $390 billion online fashion market.

While Alibaba has long dominated how people buy clothes online, a few smaller players including Pinduoduo and Mogu have managed to carve out a niche.

September - Report - Analytics - Firm - QuestMobile

According to a September report by mobile analytics firm QuestMobile, Mogu controlled an 8.1 percent penetration rate among ecommerce apps targeting women under 24 years old. Alibaba led the game at 98 percent.

Now a formidable rival, Alibaba has played a key role in Mogu’s early day growth.

Chen - Qi - Engineer - Designer - Alibaba

In 2009, Chen Qi, a former engineer and designer at Alibaba, founded Mogujie — which means “mushroom street” in Chinese — with the aim to create a digital magazine for young women.

The firm’s initial incarnation was a Pinterest -type pinboard that let users share fashion items with links to third-party ecommerce platforms. Back then, a majority of the products on display came from Taobao, Alibaba’s marketplace for small and medium-sized merchants.

Taobao - Dominance - Space - Products - Chen

“We have to recognize Taobao’s dominance in the retail space. It was inevitable that most of our products came from there,” Chen told TechCrunch.

As such, Mogujie generated a big chunk of its revenues from Taobao’s referral commissions early on.

Return - Alibaba - Traffic

In return, Alibaba also benefited from the traffic that...
(Excerpt) Read more at: TechCrunch
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