Rumor: 360Buy Third-Round Funding in Jeopardy
CCID, 12/30/10
According to a source close to the company, Beijing-based IT products B2C e-commerce platform 360Buy has not only not yet completed third-round funding, it has not signed any agreements and is currently in talks with investors and hammering out financing conditions.
CEO Liu Qiangdong previously announced that 360Buy had raised more than USD 500 mln in third-round funding from six investors, including a strategic investment from Walmart. A Walmart spokesperson later said that it had announced no such agreement and declined to comment further.
Subsequent rumors claimed that Walmart invested on terms aimed at ultimately taking a controlling interest in 360Buy, rather than a simple strategic investment. Walmart is reportedly strongly upset that 360Buy made the announcement before any agreement had been signed. On December 27, Liu posted a message on his microblog that all reports regarding 360Buy's funding were rumors.
According to an industry source, 360Buy has already burned through most of its previous funding. The company has an average gross profit margin of approximately 5%, and is recording average losses at a rate of about 10% of overall sales revenue. Based on 360Buy's sales reaching RMB 10 bln in 2010, loss for the year could reach RMB 1 bln.
Another rumor claims that 360Buy is currently using funds originally allocated towards paying suppliers to maintain operations as pressure for more funding increases.
Editor's Note: For more background on this topic, please see "360Buy Third-Round Funding Exceeds USD 500 Mln" MD 12/23/10 issue.
Keywords: Liu Qiangdong e-commerce Internet funding margin loss profit B2C 360buy IT products third-round Wal-Mart
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