Led by Tencent, Haoyiku Closes Several Hundred Million RMB in Series B Funding Round

On July 17th, 2018, Haoyiku, the community-based e-commerce platform, officially announced the completion of a series B funding round that brought in several hundred millions RMB. Co-invested by IDG Investment, K2VC, Vision Capital, Tencent led the investment and Chongying Capital acted as the exclusive financial advisor for this round of financing. For Haoyiku, who still places heavy reliance on the social fission in WeChat, a Chinese multi-purpose messaging, social media and mobile payment app developed by Tencent, to earn profits, Tencent’s investment means it has been officially recognized and supported by Tencent.

This is less than a month after Haoyiku announced its last financing. On June 20th, 2018, Haoyinku announced that it had obtained 100 million RMB in its series A round led by IDG Capital. Before this round of financing, Haoyiku had already secured 50 million RMB in angel investment from K2VC and Vision Capital.

Great Support and Recognition from Tencent

For startups that are making a living at the community-based e-commerce raceway and developing in the WeChat ecosystem, the importance of getting Tencent’s investment is self-evident. The prospectus recently released by Pinduoduo, a leading Chinese app for social e-commerce, has also shown that Tencent served as its second largest shareholder, accounting for 18.5%. “Having been observing the industry landscape of community-based e-commerce for a long time, Tencent believes that there are great opportunities in this market. By virtue of its vast experience on the development of multiple rounds of e-commerce, currently Tencent is choosing a relatively open strategy to capture the market by supporting related companies. Pinduoduo was just the first one to win the support of Tencent, but not the only one.” Wu Qiangqiang (his nickname – Guigu), the founder of Haoyiku, told reporters.

The manager-in-charge of Tencent’s Strategic Investment Department said that the reason why Haoyiku gained Tencent’s recognition and investment mainly lies in two ways. First, Tencent has been looking for companies with the same concept and extensive experience in the community-based e-commerce sector. The Haoyuku team has more than 10 years of experience in the e-commerce field with an edge in the supply chain and operation of non-standard products.

Second, Haoyiku can share insightful ideas in the community-based e-commerce sector with Tencent. “After several rounds of communication between Haoyiku and Tencent, it took about a month for both sides to finalize the financing plan. We have discussed a wide array of issues with Tencent, including the development path of the community-based e-commerce market; the role that Tencent should play in boosting the industry, the distribution methods of traffic and the innovative approaches of operation; etc. Having experienced the development of the B2C e-commerce era, Haoyiku team has abundant experience on platform management for future reference.”

At present, Haoyiku team has already completed synergization and cooperation with Tencent in several business segments, like WeChat, Mini Program (mini apps in the WeChat system created by business owners), Official Accounts (a platform enables personal and organization users to interact with subscribers) and WeChat Pay (a digital wallet service). “For e-commerce companies in the WeChat ecosystem, if Pinduoduo is much equal to the early Taobao, then the companies like Tmall and JD will be gradually emerge. Branding is the core of this trend.”

It is reported that there are more than 300 brands to cooperate with Haoyiku, including Semir, Peacebird, Li-Ning, Anta, mainly based on mainstream consumer brands in low-tier cities. The average price for transactions is around 100 RMB.

Branding: the Unmissable Trend

Wu Qiangqiang estimated that the community-based e-commerce sector soon after will usher in its first key milestone – a large number of brand owners will settle in platforms. In the era of WeChat Business, many products have no brand endorsement and the quality cannot be fully guaranteed. But with the upgrade of consumption, users are keen to buy branded goods.

Users need branded goods and brands are seeking for new channels as well. Qin Hao, General Manager of the E-commerce Department of Fujian Seven Brand Group Ltd., a renowned Chinese garment provider, admitted that the traffic dividend of e-commerce has disappeared. The difficulty for brands getting involved in the community-based e-commerce sector are normally at two aspects. One is the data integration, and the other is the coordination with stores and shopping guides. “Unlike past membership management, which might be unidentifiable with low interactions with members and high maintenance costs without the support of online network, the community-based e-commerce platform can help us find ‘key opinion leaders’(KOLs) to promote goods and collect user information. In this regard, instead of putting ads towards the mass market, brands can conduct precise marketing and sales. Where the user is, where the money should be spent.”

“In the past, brands were looking for users; now everyone is an Internet-user and gets immersed into the online community. Similarly, people were searching for goods and products they wanted in the old days; now goods and products are looking for people with all kinds of information coming. There was not so much traffic supply in the previous-generation e-commerce environment. The e-commerce platform has owned profound contents and marketing tools, but it can’t connect to the community. Therefore, once the community-based e-commerce platform operates the content and marketing tools well, it may usher in an explosive growth.” Wu Qiangqiang told reporters.

Wu Qiangqiang also believed that all the stories that appeared in the previous generation of e-commerce development may appear in current community-based e-commerce environment again, e.g., Taobao mode, Tmall mode, Vipshop mode, JD mode. In addition to its sociability and fissionability, the community-based e-commerce itself will offer the market a larger scale and a faster growth rate.

“The open platform of big platforms cannot fulfill in-depth merchandise operation and goods operation. It is not enough for brands to open online stores and settle in the big platform. Instead, someone needs to guide the brand to have a better understanding of the new market, the new crowd and the new traffic. ‘Shopping-with-friends purchase’ and ‘group purchase’ are just the beginning. More purchase practices will be introduced in the future. For instance, people can vote for new of products and brands in the online community. Information can be quickly conveyed and communicated amid the community.” Wu Qiangqiang added.

Another clear difference between community-based e-commerce and traditional e-commerce consists in that although the ad campaign released by community-based e-commerce platforms occupies the user’s private domain traffic, the user in fact has limited tolerance for ad spamming on Moments (a signature function of WeChat renowned for its social feed of friends updates). They might keep only one or two Daigous (personal shopping agents) for each product type. Wu Qiangqiang held that Daigous perhaps draw useful lessons from WeChat business and keep constantly evolving approaches to sales and operations.

“At the earliest time, WeChat merchants used to spam ads on Moments roughly. Users felt uncomfortable and repugnant and tended to screen such ads. Unlike previous operations, today’s daigous would just release specific product ads on Moments, and then pull the people who have consulted into the WeChat group. By so doing, sales and recommendations will become more accurate.” Wu Qiangqiang said that some daigous will create two groups. One is the group for basic users, mainly for activating users by chatting and communicating. The other is the group for VIP users. This is the exact online community that can generate plenty of orders.

In response to the needs of the daigou group, Haoyiku also announced the launch of Sesame Cloud Warehouse and Sesame College. Sesame Cloud Warehouse is a useful daigou-oriented tool for daigous to relay broadcast, fish for new clients and place orders. At the same time, it can also help them to expand and bind clients and realize automatic account checking. The Sesame College is a shopping school for Haoyiku to provide daigous with training activities.

“Haoyiku intends to connect millions of daigous and over ten thousands of brands to create a better life for people.” This is the vision set by Wu Qiangqiang for Haoyiku.

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