China E-commerce Research Center: China E-commerce Financing Monitoring Report for Q1 2012

In 2012, the global liquidity flood benefited developing countries, while the huge consumer base boosted the high growth and sustainable development of China's e-commerce. In the first quarter of 2012, my country's vertical e-commerce enterprises ushered in new development opportunities, with leaders in various sub-sectors.

The China E-Commerce Research Center predicts: In the future, small and medium-sized vertical self-operated e-commerce companies will still have great development prospects by intensively cultivating the market.

Analysis of total e-commerce financing in Q1 2012

According to the China E-commerce Research Center's "2012 China E-commerce Q1 Financing Monitoring Report" on April 28, 2012, there were 13 financing events in China's e-commerce in Q1 2012, including 12 venture capital events with a total amount of more than RMB 2.8 billion and one IPO event with a total fundraising amount of RMB 750 million.

In the first quarter of 2012, capital continued to pursue e-commerce, with investment amount increasing by 24% compared with the same period last year.

The successful listing of luxury B2C represented by Vipshop indicates that the secondary market still maintains a certain degree of enthusiasm for e-commerce companies.

Zhou Xiang, assistant analyst at the China E-Commerce Research Center, believes that the frequent short selling of concept stocks and the investment risk of the burst of high valuation bubbles are the direct reasons for the decline in e-commerce investment enthusiasm. However, due to the warming of the global economy in 2012, e-commerce companies under the concept of mass consumption still have the opportunity to get good investment opportunities.

Analysis of single amount of e-commerce financing in Q1 2012

In the single investment of e-commerce enterprises in Q1 2012, the single investment amount was mainly concentrated below 100 million yuan, which was lower than the average level of last year. This shows that in 2012, venture capital investment in the e-commerce industry no longer pursued blind valuation improvement, but paid more attention to value discovery and invested in potential companies in subdivided industries.

In this regard, Zhou Xiang, assistant analyst at the China E-Commerce Research Center, believes that compared with mature foreign companies, Chinese e-commerce companies are still in the early stages of development as a whole, especially in niche areas. The overall valuation is still relatively low and there is a lot of room for investment returns. This is one of the reasons why they continue to attract foreign venture capital.

Analysis of e-commerce financing industry in Q1 2012

In the first quarter of 2012, there were 13 investment and financing events disclosed in China's e-commerce sector, mainly involving e-commerce sub-industries such as pharmaceutical B2C, department store B2C, cosmetics B2C, e-commerce service providers, clothing B2C, watch B2C, footwear B2C, and luxury goods B2C.

Through case studies, it was found that footwear B2C and e-commerce service providers received greater attention from capital in the first quarter.

Feature 1: E-commerce service providers take advantage of the situation

The operation of B2C platform is extremely complex, and the main links involved are supplier supply, logistics company providing transportation services, warehouse inventory management, platform front desk display, consumer purchase, courier company delivery services, etc. If the enterprise completes all the links by itself, the funds required are huge. As a B2C enterprise, it is unrealistic to develop such a system alone.

Undoubtedly, each link provides an opportunity for the development of e-commerce service providers. At present, China's e-commerce service providers are still in the initial stage, and the investment value is relatively clear. Therefore, AppHui, Chuangyuan, and Guanyi Software e-commerce service providers have all received good valuations.

Feature 2: Footwear B2C shows signs of differentiation

At the beginning of this year, the competition in the footwear B2C industry entered a white-hot stage and began to show signs of differentiation. The entire footwear B2C industry has not yet achieved profitability. The competition in the footwear B2C industry will not slow down this year. Its marketing and promotion, warehousing and logistics, procurement costs, and human resource expenditures will not decrease, and it will be relatively difficult for companies to make profits. Of course, the current valuation level of footwear B2C is still relatively low, and there is a large room for appreciation. The successful financing of well-known websites such as Yougou.com, Letao.com, and Paixie.com still shows that venture capital has confidence in footwear B2C, and the valuation level of footwear B2C will continue to rise in the future.

Monitoring and analysis of e-commerce financing cases in Q1 2012

For VC/PE investors, department store B2C companies such as JD.com and Dangdang are overvalued. The investment space for department store B2C is already saturated, and vertical segmented B2Cs are beginning to be favored by investors, such as Kaixinren in the pharmaceutical industry, Maihao.com in the cosmetics industry, Apphui, Chuangyuan, Guanyi Software in the e-commerce service provider industry, Lanmiao in the clothing industry, Shiguang100 in the watch industry, Yougou.com, Letao.com, Paixie.com in the footwear industry, and Vipshop in the luxury goods industry, all of which have received a large amount of venture capital. Driven by capital, the B2C market will face very fierce competition this year.

As the global economy declined in 2011, the wait-and-see atmosphere in the investment community became increasingly strong. The international environment will become more complicated in 2012, the domestic economic downturn risk will increase, the financing function will weaken, and there will be a wave of bankruptcies of small and medium-sized enterprises, and the capital chain will be tight. Most e-commerce companies are losing money, and the more they invest, the more losses they suffer.