China-based social commerce app Haoyiku has raised “hundreds of millions in RMB” in its Series B round led by local tech giant Tencent, according to a report by 36Kr. 36Kr is KrASIA’s parent company.
Other investors in this round that roughly equals a double-digit million amount in US dollars include IDG Capital, K2VC and Vision Capital.
This announcement comes on the heels of the startup’s Series A round reported less than a month ago when Haoyiku secured 100 million RMB (about US$15 million) led by IDG Capital.
Founded in 2017 by ex-Alibaba hire Wu Qiang Qiang, the company allows users to sell apparel and other items to others directly using their WeChat accounts, supported by the Haoyiku app. The concept is popular with Chinese consumers, especially when it comes to luxury items bought abroad (a practice called ‘dai gou’) because these products sell at a higher price in China compared to countries like France or Italy.
Speaking to 36Kr, Wu shared that sellers on Haoyiku save on overheads and other starting costs that come with establishing a brick and mortar store. He added that in a social commerce context, buyers care about who the sellers are and that social connection reduces the likelihood of refunds.
He also said, “When the PC era shifted to the mobile era, big companies were able to transition smoothly because accounts could be shifted, and theoretically, the way to do things like distributing traffic remained the same. However, with social commerce, traffic has become decentralised, and all big and small companies are at the same starting line. The first wave of WeChat e-commerce has ended. Last year, there were at least a few hundred companies competing. This year, there are only ten to twenty of such companies left. The market will evolve faster than the previous generation of apps, and it will stabilise within the next two to three years.”
Social commerce is also a popular trend in Southeast Asia, where many small business owners may not have the capital or management skills to set up a physical store or professional online shop and instead prefer using Facebook, Instagram and other social channels to sell. This type of informal commerce accounts for 30 percent of all digital sales in this region, according to an eMarketer report from 2016. Payment for social commerce in Southeast Asia typically happens offline and through bank transfers, although some companies are working on ways for people without bank accounts to pay via mobile wallets.
One particular startup in Thailand leveraging social commerce is Page365, a company helping sellers on Facebook, a classic scenario in the Southeast Asian country. Its dashboard, for example, helps sellers manage orders, send automated answers to typical questions, and create invoices.
Editor: Nadine Freischlad