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Home / SmartTech / Rejection of Alibaba's US IPO – TechCrunch

Rejection of Alibaba's US IPO – TechCrunch



Mogu, a Tencent-backed service offering fashion content and products to young women, has joined a number of Chinese technology companies selling their IPO IPOs before year-end.

Mogu has sold its $ 14 a share sale on Wednesday at the low end of a marketed range. The unprofitable company estimates this to be $ 1.3 billion, down from its estimated $ 3 billion after Mogujie acquired its main competitor Meili in 2016 to found Mogu.

The company is poised to raise $ 66.5 million from IPO, which will help it With content buying and technology development, we're vying for a slice of China's $ 390 billion online fashion market.

While Alibaba dominates the way people buy clothes online, some smaller players like Pinduoduo and Mogu have managed to build a niche

According to a report by mobile analytics company QuestMobile in September Mogu controlled a penetration rate of 8.1

percent for e-commerce apps targeting women under the age of 24. Alibaba led the game with 98 percent.

Now, Alibaba, a formidable rival, is a key player in Mogu's early growth.

Under the Shadow of the Giant

In 2009, Chen Qi, a former engineer and designer at Alibaba, founded Mogujie – which means "mushroom road" in Chinese – with the goal of creating a digital magazine for young women to create.

The original incarnation of the company was a Pinterest Pinboard which allowed users to share fashion articles with links to third-party e-commerce platforms. At that time, much of the exhibited products came from Taobao, Alibaba's market for small and medium-sized traders.

"We must recognize the dominance of Taobao in the retail space. It was inevitable that most of our products came from there, "Chen told TechCrunch.

  Mogu

Chen Qi, co-founder and CEO of Mogu / Credit: Mogu

As such, Mogujie generated a large portion of his Revenue from Taobao referral commissions at an early stage.

In return, Alibaba also benefited from the traffic that the social e-commerce startup sent to Taobao, and it came as no surprise when Titan Mogujie made an investment offer in which Hope to add a community component to his ecommerce business, but Mogujie declined to progress.

"Our visions were very different, we wanted to be a fashion destination," Chen said about Mogujie, which made it possible for all retailers to advertise a way as a journal does.

Alibaba, on the other hand, wanted Mogujie to be a vertical e-commerce service focused on dressing dealers, promoting things and locking users in instead of sending them to third-party platforms.

"If the content developers wanted to share something that happened to be rivals of [Alibaba’s]we'd have to stop them. This clearly contradicted our value proposition of a fashion destination, "said Chen.

A New Ally

The rejection soon followed with a ban on Taobao, as Alibaba wanted complete control over the origin of its traffic. It also shed the ability to connect with Alibaba by directing buyers like Mogujie to Taobao, both of whom set up their own e-commerce platforms shortly after they parted company with their main revenue driver.

Mogujie got through a little later the acquisition of Meili a new partner, which Tencent counted as an investor.Tencent manages no e-commerce business directly, but has drawn shares in some prominent players, including Pinduoduo and JD.com to provide them with tools for Alibaba

Pinduoduo, for example, has started Tencent's popular WeChat messenger, which helps clients groupg to arrange business.

Likewise, WeChat has fueled Mogu's growth in recent months. WeChat's mini-programs – a kind of slimmed-down apps running on larger platforms – accounted for 31.1 percent of Mogu's total revenue in the six months ended September 30, compared to 14.4 percent a year ago, according to a government official Registration.

Like Alibaba Tencent strategically chooses which allies leave it in its turf. Links to its rival Alibaba had long been inaccessible on WeChat, which had more than one billion active users per month since September.

  mogu

Mogu has introduced a new live streaming strategy to boost ecommerce sales. / Credit: Mogu

The drawback of a powerful teammate like Tencent is that an eroding relationship can hurt the smaller player, as Mogu has seen with Alibaba. But Mogu does not worry about the confidence in the game and the social colossus.

"Customers who like us will eventually download our native app, which provides a much better user experience. As most WeChat partners would agree, mini-programs are an effective way to attract new users rather than being a threat, "argued Chen.

Among the numbers

Mogu lost for the March 31 ending $ 81 million compared to $ 136 million a year ago, however, sales decreased from $ 161 million to $ 142 million, with Chen reporting a decline in the company's "very strong performance" in 2017 after the Merger, which forced the competition between dealers on Meili and Mogujie to double marketing costs.

The fashion e-commerce company's total revenue, on the other hand, increased 24.6 percent from $ 1.71 billion to 2 $ 14 billion.

The display-serving marketing services accounted for nearly half of Mogu's revenue, but fell in favor of e-commerce commissions, which accounted for 43 percent of revenue.

ver compared with 30 percent in the previous year.

The new development means Mogu is evolving into a community of influencers who sell clothing to fans through live streams. In this segment, 11.8 percent of Mogu's total revenue was generated compared to just 1.4 percent in 2017.

Chen's appeal about live broadcasting is that it improves apparel manufacturing efficiency. A traditional process is as follows: making clothes, selling, and selling items that are not sold, discounting margins, and raising retail prices.

Selling through live streams helps traders determine how popular they are in real time a design.

"Manufacturers do not even have to move the clothes forward. Our live broadcast moderator will showcase their audience, summarize orders, and tell the factory how many and how many sizes are to be made, "Chen said. "This significantly speeds up the production process and lowers prices for consumers."


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