FBI-揭开中国电子商务新兴企业云集：社交商务平台（英文）-2019.5-18页.pdf

1In todays rapidly evolving and highly competitive online marketplace,emerging e-commerce platforms provide another option for businesses to market and sell their products.Fung Business Intelligence has identified some of these fast-growing players,each focusing on a specific area such as group-buying,O2O lifestyle services,social commerce,vertical online platforms and short videos.In this series of articles,we provide an overview of the key business and developments of these emerging player;we also identify their strengths,weakness,opportunities and threats.In this issue,we look at the business model and latest developments of Yunji a membership-based social e-commerce platform in China.It adopts a S2B2C model to sources products directly from suppliers(S)and sells to micro-store owners(B)on its platform;micro-store owners then distribute the products to their social contacts,i.e.final consumers(C).Yunji has been growing fast and was listed on the Nasdaq Stock Exchange in May 2019.In 2018,Yunjis GMV amounted to 22.7 billion yuan.Asia Distribution and RetailMay 2019Social commerce platform-Yunji Inc.Uncovering the emerging players in Chinas e-commerce-Issue 62Company backgroundFounded in May 2015 by Xiao Shanglue,Yunji Inc.(“Yunji”)is a membership-based social e-commerce platform in China.Yunji sources products directly from suppliers or brands,and sells via micro-store owners on Yunji platform;micro-store owners then share products with their social contacts and lure them to make purchase.As of 31 December,2018,Yunji had accumulated 7.4 million micro-store owners.The customer base of Yunji has been increasing fast since it started operation in 2015.The number of customers increased from 2.5 million for the year ended 31 December,2016 to 23.2 million for the year ended 31 December,2018.GMV in 2018 was 22.7 billion yuan,up 134.4%year-on-year(yoy).During the 2018 11.11 Global Shopping Festival,Yunji recorded 2.59 billion yuan of GMV during the seven-day promotion period from 5-11 November,2018.Yunji was listed on the Nasdaq Stock Exchange on 3 May,2019,raising US$121 million in its initial public offering.3Exhibit 1:Business model of Yunji Source:Fung Business IntelligenceThe business Business Model a snapshotYunji is a membership-based social e-commerce platform in China.Currently,it adopts a S2B2C model.Yunji sources products directly from suppliers(S)and sells to micro-store owners(B)on its platform;micro-store owners then distribute the products to their social contacts,i.e.final consumers(C).With its strong relationships with the suppliers,Yunji is able to source products at favorable pricing terms and supply to micro-store owners at a discount.Exhibit 1 demonstrates Yunjis business model.Under Yunjis membership-based business model,both micro-store owners and consumers are considered as its members the former are referred to as“diamond members”,while the latter are referred to as“VIP members”.4Two types of membershipsDiamond members(micro-store owners)Diamond members pay an annual fee of 398 yuan for a membership package,upon which they can have access to a variety of benefits(Exhibit 2)and discounts as well as the permission to open their own micro-stores on Yunji.Yunji empowers diamond members to help extend Yunjis reach by sharing their shopping experiences and promoting products through their social networks,mainly via WeChat,QQ and Weibo.Diamond members successfully selling to others and recruiting new members are rewarded in terms of Yun-coins Yunjis virtual money.Yunji also provides tremendous support including supply chain,IT technology system,logistics,customer services,content generating tools,and training.As of December 2018,there are 7.4 million diamond members accumulated.VIP members(consumers)VIP members are people who only purchase on Yunji without paying a fee to become micro-store owners.VIP members(consumers)can buy Yunjis products at a discount from diamond members(micro-store owners).They can simply enter an invitation code provided by diamond members;diamond members can earn commissions once VIP members purchased products from them.Exhibit 2:Members benefits provided by Yunji*Yun-coin can be used as credits when making purchases on Yunji platform,Yun-coins cannot be redeemed for cash.Members may transfer Yun-coins to others.Source:Yunji IPO document A package of selected productsRights to receive member exclusive discounts for products sold on Yunji appRights to participate in member-exclusive trainingAccess rights to Yunji app and its member-exclusive featuresRights to receive Yun-coins*upon a successful new member referralCertain units of Yun-coins0102030405065Profile of Yunjis membersAccording to iResearch,80%of the micro-store owners of Yunji are female,and 70%are aged 26-35.Many of the micro-store owners are full-time mothers,or owners of boutiques or mom-and-pop stores,who usually run their micro-stores on Yunji during their free time.Micro-store owners can gain 5-35%commissions on referral sales and new members bringing to Yunji1.According to Yunji,their target members are typically middle-class consumers who are highly social and are interested in discussing and sharing their shopping experience and product-user experience on social media.As shown in Exhibit 3,Guangdong has the highest numbers of Yunji app users,accounting for 13.4%of total number of users2.Exhibit 3:Users of Yunji app,by region,2018 Source:iResearch,Liu He Consulting,compiled by Fung Business Intelligence 6Suppliers of YunjiYunji adopts a“Three 500s”strategy when working with suppliers it targets to cooperate with 500 major brands,500 innovative brands,and 500 high-standard factories3.Unlike many other e-commerce platforms which sell a wide range of goods,Yunji offers 6,613 popular standard product units(SPUs)of products on its platform as of December 2018.Yunji partners with mainstream and emerging brands,and manufacturing partners in various categories including cosmetics,personal care,maternity and baby products,food and beverage,home products,home textile,digital products,home electronics,apparel and affordable luxury goods.Yunji has 1,369 suppliers on its network as of 31 December,2018.Meanwhile,Yunji also adopts the customer-to-manufacturer(C2M)model.Yunji helps suppliers to develop new and customized products to better fit users preferences.In some cases,Yunji also co-develops private label products with manufacturing partners,thus commanding better prices.Solo Life,Yuan Sheng Huang and Unibeauty are some of the examples.Yunji Zhiwzao(literally“manufactured by Yunji”)Private labels of YunjiSource:Yunji app,Fung Business Intelligence Yunji AppPreviously Yunji had two apps Yunji app for diamond members(micro-store owners)and Yunji VIP app for VIP members(consumers).They were combined into one Yunji app in February 2019.Micro-store owners can search for newly listed products,generate product sharing links with their social contacts,attend training sessions,etc.via the app.They can also invite others to join the platform and become diamond members and get commissions or Yun-coins in return.Meanwhile,consumers who do not pay membership fee can view products,track logistics information,and enjoy coupons and collect Yun-coins via the app.7Become member by one clickGain 40 Yun-coinsMore packagesInvitation PageMembership Package PageMembers Benefits PagePersonal Information PageChoose membership package to become a memberEnjoy various membership benefits and discountsEnter name,phone number and verification codeMembership packages with various productsProduct price/incentivePromotion of the dayProduct informationBrand promotion bannerProduct categoriesPromotion bannerShare with friendsPromotion launch time/statusAcquire promotional materials and shareFlash Sales PageSupermarket PageBoutique Virtual Shops PageProducts on saleSource:Yunji IPO documents,Fung Business Intelligence Screenshots of selected pages of Yunji app8Incentive amountLinks to social network platforms and othersFollowProduct description and reviewPost/download the materialCreate promotion materialFlash Sales PageProduct Promotion PageProduct review shared by membersNumber of members who“liked”the post“Discover”Follow the memberYunji certified memberNumber of followers and“likes”receivedProduct description and reviewsShare the postFlash Sales PageMembers Product Sharing PageSource:Yunji IPO documents,Fung Business Intelligence Screenshots of selected pages of Yunji app9CBEC businessYunji started its cross-border e-commerce(CBEC)business in January 2016 to source popular overseas products via CBEC channels.It has launched a dedicated section Yunji International for diamond members to browse and source CBEC products.Diamond members can then share products to their social contacts to earn commissions.Yunji has six bonded warehouses in China(located in Hangzhou,Ningbo,Zhengzhou,Guangzhou,Chongqing,and Yiwu)to handle cross-border imported products and one warehouse in Hong Kong to handle imported products via direct mail.In 2018,total sales value on Yunjis CBEC platform is estimated to reach around 5.4 billion yuan4.In November 2018,Yunji launched a traceability function for CBEC goods on its platform,allowing consumers to verify the authenticity of products and logistics information by just one-click.Yunji InternationalAfter-sale services providedDaily flash salesSelf-operated business/direct sourcingAuthenticity guaranteedTop selling itemsInternational brandsCBEC products(tax-included)Source:Yunji app,Fung Business Intelligence 10Logistics infrastructureYunji provides logistics services to micro-store owners.It currently has over 40 self-operated warehouses including 17 central warehouses,17 regional warehouses,five front distribution centers and two supermarket warehouses in 23 cities across China.88%of the orders can be delivered to customers across China in three days.Some orders may be delivered directly from suppliers too.Yunji has a warehouse management system which can automatically process consumers orders and assign them to the most suitable warehouses with inventory.Yunji uses third-party logistics service to provider last-mile delivery.It has partnered with more than 20 logistics companies including SF Express,EMS,Yunda and JD Logistics.Yunji in the pastIn the early days,Yunji adopted a pyramid selling model,or multi-level direct selling model,which is forbidden in China.In May 2017,Yunji received a formal notice from the local Administration for Market Regulation in Hangzhou,saying that it has violated the Regulations on the Prohibition of Pyramid Selling*;Yunji was fined approximately 9.6 million yuan for violating the law.In February 2016,Yunji adjusted its business model to comply with the Regulations on the Prohibition of Pyramid Selling and other related regulations.To avoid crossing the red line of awarding micro-store owners with material or financial benefits,Yunji resorted to virtual Yun-coins,which are not redeemable for cash and can only be used as coupons for future purchase.Although Yunji has modified its business model,it also warns in its prospectus that China could at any time redefine what constitutes pyramid selling;the company needs to keep a close watch on regulatory changes.*In August 2005,the State Council promulgated the Regulations on the Prohibition of Pyramid Selling,which prohibits individuals and entities in China from engaging in pyramid selling.11Financials and other key factsYunji showed stunning financial performance during 2016-2018 in terms of GMV,number of orders and revenue.In 2018,Yunjis GMV amounted to 22.7 billion yuan,total orders fulfilled totaled 153.4 million,and revenue increased by 102.0%yoy to reach 13,015.2 million yuan.87.5%of its revenue came from sales of merchandise,while 11.9%came from membership program(Exhibit 4).The number of consumers and transacting members on Yunjis platform has been increasing fast in 2018,the former increased from 2.5 million in 2016 to 23.2 million in 2018,while the latter rose from 0.6 million in 2016 to 6.1 million in 2018(Exhibit 5).The cumulative members(total number of members Yunji has accumulated since it started operation in 2015)were 7.4 million.In 2018,66.4%of Yunjis GMV were from purchases made by its members.The repurchasing rate was high at approximately 93.6%among Yunjis transacting members.(million yuan)2016%2017%2018%RevenuesSale of merchandise,net1,12987.95,91291.711,38887.5Membership program revenue15512.151181,55211.9Other revenuesn/an/a210.3740.6Total1,2846,44413,015Source:Yunji,compiled by Fung Business IntelligenceExhibit 4:Revenue breakdown of Yunji,2016-2018Exhibit 5:Number of customers purchasing on Yunji,2016-2018Source:Yunji,compiled by Fung Business Intelligence12(million yuan)201620172018Total revenues1,284.46,444.113,015.2Total operating costs and expenses 1,331.56,558.313,114.6Loss from operations-47.1-114.2-99.4Source:Yunji,compiled by Fung Business IntelligenceExhibit 6:Operating costs and expenses of Yunji,2016-2018However,Yunji has yet to make profit.It recorded operating loss of 47.1 million yuan in 2016,114.2 million yuan in 2017,and 99.4 million yuan in 2018(Exhibit 6),raising questions about the profitability of its business model.13Recent developmentsYunji listed on Nasdaq Stock ExchangeOn 22 March,2019,Yunji filed for an IPO in New York and it successfully listed on the Nasdaq on 3 May,2019,raising US$121 million in is initial public offering.In its IPO prospectus,Yunji stated that it intends to use around 30%of the proceeds of the offering to expand its business operations,around 35%to enhance technological capabilities and technology infrastructure,around 25%to improve fulfillment facilities,and the rest for general corporate purposes.Yunji announces completion of Series B financing of USD$120 millionIn April 2018,Yunji announced the completion of its Series B financing of US$120 million,turning the company from a startup to a unicorn in the industry.CDH Investments led this round of financing and Huaxing Capital Partners and other funds made co-investment.Yunji said that this round of financing would be used to further integrate its upstream supply chain,improve AI big data infrastructure and enhance logistics&warehousing capacity of each region.Exhibit 7 shows the financing rounds of Yunji.SeriesDateAmountInvestorsA8 December,2016US$36.1 millionCrescent Point Capital,Eastern Bell Venture CapitalB23 April,2018US$120 millionCDH Investments,Huaxing Capital PartnersSource:Yunji,compiled by Fung Business IntelligenceExhibit 7:Financing rounds of Yunji,as of December 2018Yunji signs cooperation agreement with various companies as sourcing partnersDuring the 2018 China International Import Expo in November 2018,Yunji signed agreement of purchase intent with several overseas brands including Nestl,LG,Nittaya,with total sourcing value of around 5 billion yuan5.In December 2018,Yunji signed a cooperation agreement with Kotemein