TechNode

Online Retailor ZALORA Announces US$100 million New Funding

Tracey Xiang — Wed, 22 May 2013 08:52:00 +0000

Rocket Internet-backed online retailer Zalora announced that it just secured a USD100 million round of funding through its German holding company from Summit Partners, Investment AB Kinnevik, Verlinvest and Tengelmann Group. Two months ago the company announced EURO 20 million funding from Tengelmann.

The investment will be used to to scale up operations and extend its current portfolio of local and international brands and develop in-house label brands, according to the company.

Recently ZALORA delivered its one millionth order since the store’s launch in 2012. The company claims its annual revenues are double-digit million USD. It has more than 1000 employees.

Michele Ferrario, Managing Director at ZALORA said their goal is to “continue serving up world-class products and services, so everyone in South-East Asia can benefit from the wide selection of products at ZALORA, the convenience of our e-platform, and the speed of our delivery.”

Qihoo Partners with Alibaba’s Etao on Shopping Search

Tracey Xiang — Wed, 22 May 2013 07:51:27 +0000

Qihoo’s search service launched another vertical search, shopping search, under its So.com. Apparently it partners with Alibaba’s shopping search, Etao.com as its address reads 360.etao.com. All the search results are the same with those shown on Etao.com, unlike other channels of So.com that partner with several content providers and prioritize their content in the search results. Actually it was founded in late 2012 that search results from Etao were shown on Qihoo’s mall.360.cn. Also, an independent search page for Taobao stores, tao.mall.360.cn, was released back then.

It’s obvious that Qihoo can receive CPS – or CPC – based commissions. Simply placing a Taobao search box and some ad links on Qihoo browsers’ start-up page, Qihoo saw 10%-15% of advertising revenues generated from those links in 2011 and 2012.

When discussing the Q1 2013 earnings, the management disclosed that 10% of the total traffic was from the search box on Qihoo’s browsers and the start-up page. They expected to increase search traffic and usage by leveraging its huge user pool.

The company began monetizing the search service from the beginning of this year through a self-developed system and partnership with Google. Currently they are trying to register more customers to bid up prices, according to Alex Xu, CFO of Qihoo, on the conference call. They are also building sales force — – Baidu has more than seven thousand employees there – and agency network to acquire customers.

Hujiang VP on Online Education Monetization in China: Users and Quality Content are Keys

Chelsea Dong — Tue, 21 May 2013 15:15:12 +0000

Founded in 2001, Hujiang is one of the few Chinese e-learning sites that have turned profits. Xu Hua, VP of Hujiang shared his thoughts on the trend of online education in China in a recent interview. (in Chinese)

He thinks there are three monetization approaches for online education — the same with those for any online services, paid products (lessons), advertising and value-added services.“But most online education services are at an early stage with no ” “It’s not that there isn’t a clear business model but lack of execution. Most of them are at an early stage with no good products, big user base or no way to monetize traffic, so it’s hard to make a profit”, he says.

Xu Hua explained users and quality content are the keys to profitability. “Users come first. Hujiang is 12 years old now with accumulated 20 million registered users. The same with the Internet sector in general, users and traffic are the basis of profitability. To realize sustainable development, generating high-quality courses is a must. Education is rigid demand anywhere, especially in 2-tier and 3-tier cities.”

“In big cities like Beijing, reliable educational resources like New Oriental School or EF are widely available while in smaller cities resources are much scarce. Online educational courses break geographic boundaries. As long as you have a computer, you can enjoy the same courses. The relatively low price of online education is favorable and competitive. Now the physical educational institutes are still in disorderly competition. Once the high-quality educational resources brought over by the Internet come in flood, it must disrupt local markets.

image credit: hudong.com

Alibaba’s Financial Arm Made 1.1 million Loans to Online Retailers in Q1 2013

Tracey Xiang — Tue, 21 May 2013 13:38:43 +0000

In the first quarter of 2013, 25 thousand online retailers on Taobao and Tmall received loans, with an average of 11 thousand yuan per case, from Alifinance, the financial arm under Alibaba Group, according to a report by Alifinance (in Chinese). That totals 1.1 million loans, 50% increase year-over-year, and 12 billion yuan in worth.

It is found that women’s apparel retailers have the greatest need for loans. 1.4 billion yuan, 12% of the total, was loaned to them in the first quarter. Other categories of goods that are also hungry for funds include electronics, men’s clothing, children’s clothing and cosmetics & beauty.

The accumulated number of businesses that Alifinance has made loans to has reached 250 thousand as of Q1 2013. The biggest winner of the service is a women’s clothing retailer in Guangdong province that has received more than 300 loans since May 2011.

One interesting finding is retailers often submit applications during 1-3 pm or 8- 11 pm every day. After noon, retailers have received some orders with which they can apply for a loan. In the evening retailers would apply for a loan with orders received in a whole day and bulk buy goods for the next day.

The report asserts that businesses with loans in hand grow 30% faster in terms of transactions than those without.

Sohu’s Charles Zhang is Back with All the Hype

Tracey Xiang — Tue, 21 May 2013 09:31:09 +0000

It’d been a long while before Sohu drew public attention again. Charles Zhang, founder and CEO of the company, said he became depressed around 2010 and kind of “retreated”.

He would expect Sohu Weibo to become a hit if he didn’t left from the frontstage back then, he said so in a recent interview. Now there’s no way for any Weibo to beat Sina Weibo. Baishehui, the white-collar-targeted social networking service Sohu had put a lot of effort into by 2010, turned out to be another failure.

Charles Zhang got back this year and brought a lot hype.

Fortunately for Zhang, Sogou has been growing healthily in terms of market share and profitability, games by Changyou are still lucrative, and Sohu are in time riding the trends of online video and mobile reading.

Sogou

News broke out in early May that Sogou was looking for a potential buyer. Wang Xiaochuan, CEO of Sogou, later confirmed that Sogou was looking for strategic investors and admitted talks with Qihoo.

Charles Zhang might not see Sogou to become the market leader in Chinese Input Method when he decided to develop a search service back in 2006. With the user base, Sogou later successfully gained some search market share and made money through paid search and by monetizing the traffic in Sogou browser. Both Charles Zhang and Wang Xiaochuan had said that they’d like to see Sogou go public some day.

But its search market share is no more than 10% while Qihoo’s search engine reached that milestone within four months after its launch in last August and kept gaining market share. Zhang expected Sogou to take increasing market share from Baidu before Qihoo’s joining the search market. For Qihoo, taking over or standing together with Sogou helps fight against Baidu.

PPTV

After Baidu announced acquisition of PPS, a peer-to-peer video service, the public expect to see another rumor come true. It was reported that Sohu began acquisition talks with PPTV, a video service similar to PPS in a lot of ways, from last year.

Zhang did say that they’d like to acquire a large-sized video service. Prior to PPTV, Baofeng.com and Xunlei’s Kankan.com were reportedly also approached by Sohu, but no deal was reached.

At an event yesterday, Zhang said “Sohu hasn’t reached any deal with PPTV. Big news will be announced together with earnings release.”

Sohu bets big on online video. Tons of money is spent on buying American drama series and, more recently, one of the hottest Chinese TV shows. Sohu Video acquired talents from traditional TV industry to produce original content and promote third-party content.

But Sohu Video isn’t so successful compared with the fuss it made. Charles Zhang thinks it’s due to poor marketing and lack of user-generated content — the former is for branding and the latter for traffic.

Sohu News App

Sohu News Platform

Sohu News, who used to buy content from third-party providers, opened its platform for third parties to publish content directly and began sharing advertising revenues with them. Mr. Zhang doesn’t only expect it to be a platform, but also a profit contributor.

Its mobile app announced 100 million installs in April (in Chinese). It is said that it gained traction so fast is because tens of millions of smartphones are pre-installed with the app. Zhang kind of aknowledged it in an interview, saying in feature phone time “we were a service provider. We have experience and resources when it comes to cooperating with local telecom operators and device manufacturers ever since 2001. That’s channel power.”

To be honest, Sohu News moves fast. In contrast, Sina News who was leading the market of online news on the Web, moved slowly that launched a revamped mobile app as recently as in this month.

Zhang also knows about the threat from WeChat that everyone can subscribe to a news source through the WeChat official account platform.

Chinese MIIT Clears Policy on Mobile Virtual Network Operator

Tracey Xiang — Mon, 20 May 2013 12:19:15 +0000

As expected, Chinese Ministry of Industry and Information Technology (MIIT) announced the policy on mobile virtual network operators (MVNO) on May 17. Qualified companies can apply for it by July 1, 2014 and a trial period will end by the end of 2015.

A qualified applicant must be a company whose biggest share holder is a mainland private company and that more than 50% of it is held by private investors, or an overseas-listed mainland company whose shares held by foreign investors must be less than 10% and that the biggest share holder must be Chinese.

MIIT requires telecom operators to publish their plans in detail on their websites. Operators are asked to reach deals with at least two private companies within four months after any applicants submit proposals.

Suning and Gome (electronics chains), Dphone (mobile phone chain) and JD.com (e-commerce platform) has made clear that they’d apply for a license.

image credit: fahrial.web.id

Airizu, the Samwer Brothers-backed Airbnb Clone,Has Reportedly Laid off 80% Employees, Funding Cut off

Charlie Sheng — Mon, 20 May 2013 07:52:34 +0000

It is reported that Airizu, founded in 2011 as one of the earliest Airbnb clones in China, is in a pickle now. It is said that Rocket Internet who takes controlling stake in it has cut off funding, and almost 80% of the Arizu team have been laid off. The remaining 30-staff team has been running without a CEO (former CEO Adrian LI had quit in last June).

However, at the same time Airizu’s peer players impressed local investors. Mayi and Xiaozhu both announced raising $10m; Tujia has secured RMB400m; ChengToo’s A round funding has been in full swing; meanwhile with the backup of Sofang’s traffic and plentiful cash, Youtianxia is also in good health.

Insiders commented that the possible reason for Airizu’s recent collapse could be the poor management of the costs. Unlike average startups, Airizu isn’t owned by the founding team but Rocket Internet, the investment and incubation business run by the German venture capitalists Samwer brothers. The establishment of Airizu was initially aimed to build a brand and conquer the market within very short period of time before selling it to next investors.

Now Rocket Internet has suddenly called off the support into this original plan and required the company to cut down the team and the costs as well. The truth is earlier this year eLong and Homeway both offered to acquire Airizu with respectively $20m and $30m; however, Samwer rejected the offers as not satisfied with the offered prices. Later, the company lost its CEO Adrian Li, which also marked the beginning of the downturn of Airizu.

Baidu Integrates PC & Mobile Advertising Systems

Chelsea Dong — Fri, 17 May 2013 09:20:25 +0000

Baidu will release the integrated advertising system for both PC and mobile search marketing this weekend so that customers only need to manage one account.

Customers can put their ads on different screens as they wish. Bidding prices can be set different on the two platforms and customers can change the budget ratios between the two. Baidu also rolled out a package of tool for mobile search marketing, including tools for setting up mobile sites, online consulting, and app marketing, etc.

According to Baidu, with regard to search behavior, users do searches on PC mostly at working hours. And mobile search traffic would soar on weekends, which makes a good complement for the PC advertising.

One Third of Sina Weibo’s Ad Revenue Generated from Mobile in Q1 2013

Tracey Xiang — Fri, 17 May 2013 08:39:34 +0000

As of Q1 2013 76.5% of Sina Weibo users logged in through mobile devices and 34% of ad revenue was from mobile, up from 25% quarter-over-quarter, disclosed Sina management on the earnings conference call today. Sina Weibo recorded $18.8 million in advertising and $11.1 million in value-added services; of the latter $2 million is from membership subscriptions and the rest from web games (or browser game), which is a 180% increase.

Fensitong, or promoted feed ad program, now has over one thousand customers that have deposited money. Currently most customers that place budget on Weibo are still brand advertisers who has been doing marketing with Sina’s properties, but Sina wants to popularize it among SMEs, according to Charles Chao, chairman and CEO of Sina Corp. Several agencies in Zhejiang and Jiangsu provinces are managing those customers for Sina.

As offering games is a proven way to monetize a large user base in China, Charles Chao said they’d continue to work on it.

When it comes to its partnership with Alibaba, Charles Chao hopes “over the longer term it will create opportunities in social commerce and mobile commerce which both companies believe are of great potential”, but currently what we have seen on Weibo is targeted ads from Taobao and Tmall. Alibaba has been doing targeted advertising on third-party sites with Alimama program. The ads shown are based on user behaviors such as searches on Alibaba’s properties. What makes those shown on Sina Weibo different is Weibo user behaviors’ may be also taken into account thus Alibaba can push more targeted ads. To Sina, what would be added is just more CPC/CPS-based revenues.

Earlier this month it launched the mobile-only-for-now Page that anything, a location, a topic or a good, can set up a webpage for other users to follow — it sounds like what Douban, an interest-oriented social site, has been doing. It is expected to have users consume more content and spend more time on Weibo by following Pages they like. It’s also possible that it can be used by advertisers to do content marketing.

Daily active users increased about 8% to 49.8 million. Sina Corp. reported $121.3 million non-GAAP revenue with $94.3 from online advertising and $15.9 million from mobile value-added services.

More Chinese Startups Are Moving to Second-tier Cities

Tracey Xiang — Thu, 16 May 2013 15:01:21 +0000

Chuangtouquan (ctquan), a startup investing network, released a report that shows second-tier Chinese cities are hosting more startups in terms of percentage. In 2011, 84% of Chinese startups were located in first-tier cities including Beijing, shanghai and Guangzhou. The rate decreased to 77% in 2012. Second-tier cities including Chengdu, Hangzhou, Nanjing and Wuhan became the new startup scenes.

It’s driven by no more than cost and talent, according to the report.

1 Costs. The average office space rental rate in the first-tier is 3.5 to 4 times of that in the second-tier and is increasing at 30% to 40%.

67% of engineers who earn 10,000 yuan or more a monthly salary are in first-tier cities. The monthly salary range for an engineer in second-tier cities is 2000 to 5000 yuan.

2 No shortage of talents. Some second-tier cities such as Nanjing, Wuhan, Xi’an and Chengdu are full of colleges that can meet the talent needs.

3 Governments of some second-tier cities, like what some big cities began doing ealier, have set up funds to support entrepreneurship.

Earlier this year, Quwan, a social shopping site, moved its headquarter from Beijing to Chengdu. In an interview on it, Zhou Pin, founder of Quwan, says the major reason is his team cannot see a better life in Beijing; for instance, some of them cannot afford an apartment, “I want them to have a better life so that they can do a better job”. Also he wants his team to “settle down” in the next three to five years developing products and services. (in Chinese)

Some employees didn’t want to move. But what to his surprise is all the senior managers and most mid-level managers agreed to move. It turns out that young people would like to stay in Beijing where they think is full of opportunities and future returns will be high. But those middle aged managers know that only a small percentage of people in big companies like Baidu and Tencent can afford a home in cities like Beijing.

Average office rental rate is 1/3 or even 1/6 of that in Beijing. Average apartment price is 1/3. Local senior engineers earn 80% of the monthly salary of their Beijing-based peers’, but average local employees earn much lower a salary. Now Quwan is headquartered at Chengdu tech park, which is established by the local government, who offers them free office space for a three-year period.

But, Zhou Pin said, marketing and business development divisions must still be in Beijing. Fu Sheng, CEO of Kingsoft ijinshan, doesn’t think a Beijing-based Internet company should leave at all. He thinks that Internet technologies are changing too fast that you’d be easily lag behind if you leave an environment that everyone is exciting about and talking about tech, and pushed forward by it.

image credit: spencerinsurance.com