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Alibaba-backed parenting site Babytree starts taking orders for downsized IPO

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A lot of Chinese millennials may be delaying or opting out of childbearing, but those who have committed to parenting often go all out to ensure their children grow up healthy and do well in school.

One company capitalizing on China’s booming mother and infant industry – which is expected to double in market valuation between 2015 and 2018 to top $520 billion, according to consulting firm Roland Berger – is Babytree. The Beijing-based firm started trading on the Hong Kong Stock Exchange on Tuesday.

Founded in 2007, Babytree operates an online platform for parents to exchange know-how, shop for baby goods, and purchase early education services.

The firm debuted at HK$6.91, or $0.88, compared to its IPO price of HK$6.80. That values Babytree at HK$11.5 billion, or $1.47 billion, well below its May valuation of $2.19 billion after it inked a strategic investment from Alibaba that saw the partners collaborating on multiple fronts, including ecommerce, advertising, and paid content.

Last week, Babytree slashed its IPO by 70 percent to $282 million amid waning investor interest in Hong Kong.

Babytree, in which Alibaba owns a 9.9 percent stake, was started in 2007 by venture capitalist Shao Yibo – who founded Matrix Partners’ China subsidiary and EachNet, which Ebay bought out in 2003 to take on Alibaba’s Taobao – and former Yahoo and Google executive Wang Huainan.

Babytree’s other major investor is Chinese conglomerate and investment firm Fosun International, which has also backed its smaller competitor Qinbaboao, a social media service for young parents to share photos and knowledge.

The parenting portal reached an average of 175 million monthly active users between July and September, according to its IPO prospectus. Qinbaobao claimed to have more than 70 million registered users when it raised hundreds of millions of RMB in a series C funding round in October.

Babytree generates most of its revenues from advertising fees and ecommerce transactions, but Wang the co-founder said recently that paid content is one of the company’s fastest-growing segment. The parenting site posted revenues of 408 million yuan, or $58.6 million, in the first half of 2018, up 12 percent from the same period a year ago. Its adjusted profit increased by 30 percent to 122 million yuan, or $17.6 million, during the same period.


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Ecommerce Tips: How To Handle Post-Holiday Returns

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Post-holiday returns are a reality for merchants of all shapes and sizes. Last year, UPS projected a whopping 1.4 million returns on what it dubbed “National Returns Day,” or January 3, 2018. That number represented roughly $90 billion in unwanted gifts, totaling to nearly a quarter of the year’s returns.

As ecommerce gains momentum and consumers do more of their shopping online, returns are expected to increase, too. U.S. return deliveries are on track to cost $550 billion within the next two years—a gigantic 75% increase over 2016. Ecommerce returns will smash those numbers, increasing almost 95% over the last measured five-year period.

Here are some tips for merchants to get a handle on post-holiday ecommerce returns to keep customers happy and chargebacks at bay.

Clear Crisp Return Policy

Having an easy-to-understand, fair return policy is essential. According to Shopify research, 67% of consumers will check a merchant’s return policy before buying and more than half are not satisfied with return policies or how returns need to be made.

Offering a friction-free return policy can actually entice shoppers to buy from you. A great strategy is to offer a 30-day window for free returns. Customer service of this kind can actually be angled as a form of marketing, driving new business during an especially busy time of year.

No matter what type of return policy you offer, be sure it is easily found on your website and can be read and understood in under a minute. This type of clarity is greatly appreciated by consumers and is likely to garner trust—and a purchase.

Automate, Automate, Automate

A simple returns policy should be easily executed. By breaking down the entire return chain into smaller chunks, you can find ways to automate each of the steps, saving time and money. For example, figure out how to automate things like labels, tracking, and refunds.

The less time you spend manually executing on any of those items, the more time you have to focus on the core business and ROI-generating activities. It’s also imperative to look for ways to save time during crunch time; Black Friday and Cyber Monday will bring swarms of customer into your store and onto your site. Spending time on shipping labels is best left to machines. Merchants should focus on great marketing and keeping customers happy during the buys holiday rush.

Flexibility is Key

Consumers want options and convenience. By offering both, you can reduce costs associated with returns and keep customers happy, even if they didn’t particularly enjoy an item from your store. Most mega retailers offer gratuitous returns options. While you may not be able to match that, it’s important to remain as flexible as possible. Some alternative options include:

The option to exchange for a new item of similar value
Refunding the order in the original payment form
Refunding the order in the form of a gift card, store credit, or other branded currency
The option to receive a refund in the currency form of the customer’s choice, but offering an incentive for branded currency options (e.g. deducting a fee for a cash refund but offering gift card refunds without a fee)

Gift cards are an especially appealing refund option for merchants as they are able to keep the money allocated to their brand and improve cash flow.

Streamlining post-holiday returns not only keeps customers happy and returning, but it can cut down on chargeback fraud. Sometimes, when ecommerce customers are dissatisfied with a return policy, they will claim they never received an item and dispute the charge with their issuing bank to receive a refund without dealing with the merchant. This circumvention costs merchants in shipping and merchandise as well as fines incurred from the chargeback.

Providing a clear returns policy that supports automation on the merchant’s backend and flexibility on the consumer-facing side is a win-win. Merchants should conduct post-mortems after each holiday season to see what can improve and how previous years’ experience can inform future years’ policies and processes.

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India’s Meesho, which enables social commerce via WhatsApp, raises $50M

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Meesho, a Bangalore-based social commerce startup, has closed a $50 million investment to grow its business in its Indian homeland ahead of future international expansion.

This Series C round means that Meesho, which graduated Y Combinator in 2016, has now raised three funding rounds in the past year. Its $3.4 million Series A came in October 2017 with an $11.5 million Series B closing in June of this year. That’s quite the rollercoaster and over the last year, Meesho has seen its top line revenue grow by over 100X so co-founder and CEO Vidit Aatrey told TechCrunch in an interview.

This time around, the $50 million raise includes new investors Shunwei Capital from China, DST Partners and RPS Ventures, as well as returning backers Sequoia India, SAIF Partners, Venture Highway and Y Combinator.

Meesho has adjusted its focus considerably since it graduated YC, and today it operates as an enabler for people in India wanting to sell products using social media. Primarily the focus is WhatsApp, the world’s most popular messaging app which counts India as its largest market with over 200 million monthly users.

The company providers sellers with products (which it sources from suppliers) and inventory management and other basic seller tools. In turn, sellers hawk their catalog to friends and family as they please. Meesho handles all payment and logistics, providing a cut of the transaction to sellers.

Interestingly, there’s no fixed price for products. That means that sellers can vary the price and even haggle with their customers just as they’d do in real life.

“We want to simulate the exact experience that happens offline,” Aatrey explained. “Sellers have the liberty to sell to 10 different people at 10 different prices.”

Sales typically happen between friends and family because there is a trusted relationship. Selling consistently to family members doesn’t seem like an easy task, but Meesho operates in a range of verticals, including fashion, living, cosmetics and more, which the company said makes repeat custom easier. The firm is working on technology that helps sellers figure out which products to push to their customer list, but Aatrey believes a good seller has a knack for what their customers will want on a given day or week.

Aatrey — who started Meesho with fellow IIT-Delhi graduate Sanjeev Barnwal in 2015 — told TechCrunch that the startup is picky about who it selects as a seller, and those who are not active enough are removed from the platform — although he said the latter doesn’t happen a lot. Instead, Meesho offers training and skill development programs to sellers who perform well.

“We go and intentionally invest more to scale up the sellers who show more promise,” he explained.

(Left to right) Meesho founders Sanjeev Barnwal and Vidit Aatrey

Meesho says it has registered some two million sellers to date but the goal is to reach 20 million by 2020. A majority 80 percent are female because the startup first targeted housewives, but increasingly, Aatrey said, it is seeing male sellers grow. Nearly one-third of sellers are students and many others use the app part-time to add to an existing income source.

In one example, Aatrey explained that typically households that earn 30,000 INR ($410) per month can make 8,000-10,000 INR in additional capital if one of the homemakers uses Meesho full-time. That’s a pretty significant addition.

One of the more intriguing pieces of the Meshoo business is that by tapping into people’s trusted relationships and offer them incentives to sell products without requiring operating capital, the business has cut a lot of the expensive overheads associated with e-commerce. Customer acquisition cost is low, for example, while there’s no need to dole out discounts, both of which are expensive line items for Amazon India and its rival Flipkart, which is owned by Walmart.

“We don’t burn a lot of money,” Aatrey said, although he declined to provide specific financial information.

With this new money in the bank, Meesho is working to go deeper into its existing areas of business. That’ll include offering more product categories, bringing on more suppliers, extending its supply chain and developing tools to help sellers sell better.

Aatrey also confirmed that the company is also looking to develop a supply chain in China, that’s where Shunwei and its network will come into play. He also revealed that the company is beginning to think about the potential for its own labeled product — an Amazon-style move — although that isn’t likely to happen just yet.

Another longer-term objective is international expansion.

“For the next 12 months we won’t go beyond India,” Aatrey explained. “But what we are doing here is very similar to Southeast Asia, Latin America and even the Middle East so at some point we’ll think about venturing overseas.”

With three funding rounds in the past year, the Meesho CEO revealed that the company is well capitalized but he didn’t rule out the potential to raise money again.

“If we get a good offer that makes sense for the growth of the business, we are open to it,” he said.


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Naspers is in talks to invest in Southeast Asia’s Carousell

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Naspers, the South Africa-based firm that famously backed Chinese giant Tencent in its infancy, is in talks to invest in Singapore-based startup Carousell, according to two sources with knowledge of discussions.

Carousell offers a mobile app that combines listings with peer-to-peer selling across Southeast Asia, Taiwan and Hong Kong. That makes it well-aligned with Naspers’ portfolio, which features some of the world’s largest classifieds services including OLX, which covers 45 countries, Letgo in the U.S. and Avito in Russia.

TechCrunch understands that Naspers is pursuing a deal with Carousell with a view to making it the firm’s key play in Southeast Asia and other parts of the APAC region.

Discussions are at a relatively early stage so it isn’t clear what percentage of the company that Naspers is seeking to acquire, although it would be a minority investment that values the Carousell business at over $500 million. The deal could be a first step towards Naspers acquiring a controlling interest in the business further down the line, one source said.

Carousell declined to respond when asked for comment.

“It is our company’s policy to neither acknowledge nor deny our involvement in any merger, acquisition or divestiture activity, nor to comment on market rumors,” Naspers told TechCrunch in a statement.

Timing of the discussions is notable since Carousell announced a $85 million investment round in May. (TechCrunch broke news of the round the previous October.) That deal — the startup’s Series C — took it to $126 million from investors to date and added big names to the Carousell cap table. EDBI, the corporate investment arm of Singapore’s Economic Development Board, and Singapore’s DBS, Southeast Asia’s largest bank, took part in the Series C, which also included existing backers Rakuten Ventures, the VC linked to Japanese e-commerce giant Rakuten, Golden Gate Ventures, Sequoia India and 500 Startups.

Earlier this month, Carousell CEO and co-founder Siu Rui Quek told Bloomberg that the company had turned down acquisition offers in the past.

Carousell is highly-regarded in Singapore for being one of the first home-grown startups to show promise — its three founding members each graduated the National University of Singapore, NUS.

Aside from raising significant investor capital, it has scaled regionally it is battle against larger and better-funded e-commerce rivals Alibaba -owned Lazada and Shopee, a business from NYSE-listed Sea. In May, Quek told TechCrunch that Carousell has helped sell over 50 million items between users and it currently has over 144 million listings.

Naspers, meanwhile, has upped its focus on Southeast Asia in recent times, although its sole deal is a $5 million investment in crypto startup Coins.ph.

The firm remains best known for its Tencent deal, which is legendary in investment circles. Back in 2001, it bought 46.5 percent of Tencent for $32 million. Over time that was diluted to 33 percent, but it grew significantly in size as Tencent’s business took off, going on to become Asia’s first $500 billion company last November. Naspers resisted the urge to sell until March 2018 when it parted with two percent of the firm in exchange for around $9.8 billion.

Another of Nasper’s big wins this year was Flipkart’s sale to Walmart which earned it $2.2 billion in returns.


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