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Are social shopping sites really doing well? Doubt so.
Social shopping sites pocketed a new round of funding in this month. Meilishuo and Mogujie, two of the most well-known Pinterest-style names in the sector, announced series D and series C respectively. Tuolar.com confirmed it received another 10mn Yuan from Sina Weibo Fund. Does it feel that referral traffic to e-commerce sites can be a big business or the other way round?
It was found that, from June to September, Mogujie’s page views declined by 24%; Meilishuo’s only increased 6%. The growth rate for both sites were over 50% in the same period of last year. Both the organic growth and that from third parties decelerated on those sites. Added that there are more than 30 competitions in the market, the money spent on marketing excesses their monthly revenues.
Both Meilishuo and Mogujie rode the tide of Sina Weibo in the early days. Along the way they didn’t make their sites sticky enough that they also need referral traffic from somewhere else. Earlier this year, Meilishuo reached partnership with Tencent by joining in a WeChat program, hoping the giant would channel traffic to it (Tencent also joined in its new round of financing). If Meilishuo is a lucky bird, other sites will still be in an awkward business, buying traffic from somewhere else and selling it to retailers at Taobao.
CPA/CPS-based referral fees from Taobao Union is their major revenue source, 60%-70% of Meilishuo’s and 80%-90% of Mogujie’s. Meilishuo made about 6mn Yuan ($968,000) and Mogujie made about 4mn Yuan ($645,000) there in September. Other revenues are from advertising, such as CPM-based in-site display ads.
Taobao came up with technical fee, 10% of commissions, on some social shopping sites, last year. No matter that Meilishuo and Mogujie contributed over one billion Yuan worth of transactions to its retailers a month, Taobao is not willing to help them grow bigger. It is said that Jack Ma, Taobao’s big boss, prefers to see the referral traffic from more creeks than a small number of rivers that are powerful enough to, to some extent, control retailers’ sales.
Shall we expect consolidation like what we saw on group-buying? Will there be a ceiling to big sites given Taobao’s stance? Or, the partnership with Tencent will help Meilishuo with unlimited user traffic and access to its e-commerce inventory with a bigger revenue cut?
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