What happened: Chinese social e-commerce platform Yunji on Thursday filed for a $200 million US initial public offering. Founded in 2015, the services achieved rapid growth by leveraging the huge user base of social platforms like WeChat as a source for potential buyers. The company claimed to have 7.4 million members as of December 2018 and a gross merchandise volume of almost RMB 23 billion (around $3.5 billion) in 2018. The retail app covers a variety of Chinese and international brands and includes products like groceries, cosmetics, and electronics.
Why it’s important: China’s social e-commerce industry has experienced robust growth and commanded an increasing share of the overall online retail industry over the past few years. The social e-commerce market grew from RMB 38.3 billion in 2015 to RMB 217.3 billion in 2017, according to research institute China Insights Consultancy. The sector has seen the rise of upstarts like Pinduoduo. Yunji, together with competitors like Beidian and Global Scanner, are among a series of social e-commerce platforms that operate on the Supply to Business to Customer (S2B2C) business model. However, the companies have drawn concerns from the public, with worries that the marketing part of the model is a multilevel revenue sharing scheme. The industrial and commercial authority of Hangzhou fined Yunji almost RMB 10 million in 2017 over allegations of using pyramid schemes to grow.