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Billion Dollar Unicorns: Online-to-Offline Focus Helps Huimin Enter the Club

Posted on Tuesday, Oct 11th 2016

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According to iResearch Consulting Group, the online-to-offline (O2O) market size is estimated to have grown 38% over the year to RMB 335 billion (~$53.78 billion). The market is expected to grow by over 20% each year through 2018 to be worth RMB 626 billion (~$100.501 billion) in China. China’s Zhongshang Huimin is the latest O2O player to enter the Billion Dollar Unicorn club.

Zhongshang Huimin’s Offerings

Zhongshang Huimin was founded in 2012 by entrepreneur Zhang Yichun. The company is a B2B e-commerce platform that focuses on small scale super markets. It also operates a logistics service for these smaller stores. The service was officially launched in 2013.

Huimin was set up to leverage the Internet to provide community service. Its pioneering online platform is committed to building a leading community O2O platform. It is a countrywide community e-commerce service and urban micro-logistics platform. It also acts as a convenient integrated services platform that offers services such as factory docking and merchant financial services as well.

Its platform connects brand merchants with convenience store vendors through a self-operated platform, thus eliminating the middle layers from the upstream supply chain. Its logistics platform provides delivery capabilities for daily products to local communities, business districts, and university campuses, thus improving efficiency of delivery of goods. It operates storage and delivery centers to facilitate logistics. Wholesalers would traditionally wait to dispatch goods once a delivery truck is filled, thereby delaying the logistics process and requiring convenience stores to stockpile goods. Huimin’s platform reduces the delay by connecting the brands directly to the small scale stores.

The platform has been received well by the local Chinese market. It now operates in 22 cities through more than 450,000 vendors. Huimin has also set up 50 storage and delivery centers to help with the logistics platform.

Zhongshang Huimin’s Financials

Huimin is venture funded and does not disclose its detailed financials. Financing details for the company are also not widely known. But in September this year, Huimin had raised $195 million from China Innovation Investment, Western Capital Management, China United SME Guarantee Corporation, Fortune Venture Capital, and Renzhong Capital Management at a valuation of over $2 billion. Prior to this round, Huimin had raised $100 million from Shenzhen Fortune Venture Capital, GP Capital, CITIC Private Equity, and ZheShang Venture Capital at an undisclosed valuation in January 2015. Huimin plans to use the funds to accelerate national marketing, supply chain infrastructure, storage facilities, and logistics system.

According to a McKinsey report, nowhere in the world has China’s dynamism been more evident than in the online-to-offline sector. The fast paced adoption of O2O services has been driven by the sheer density of population and by the presence of startups that successfully leverage apps, email, and other digital tools to entice shoppers to buy from physical stores or to purchase real-world services. McKinsey believes that the high levels of smartphone use, liquidity from stock market, and deep-pocketed primary investors are essential drivers in propelling O2O sales as part of Chinese e-commerce. The country offers services ranging from ride sharing to food delivery and has attracted players like Alibaba and Baidu in the race as well. Some even estimate that the industry is currently worth $157 billion and clearly players like Huimin are counting on getting a bigger share of that pie.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

Photo Credit: Yuya Tamai/Flickr.com

This segment is a part in the series : Billion Dollar Unicorns


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