Beijing-based Zhongshang Huimin E-Commerce, operator of B2B grocery platform Huimin.cn, recently announced completion of RMB 1.3 bln in Series B funding from China Innovation Investment, Western Capital Management, China United SME Guarantee Corporation, Fortune Venture Capital, Renzhong Capital Management, and other investors. A source familiar with the matter said that Huimin had a pre-funding valuation of USD 2 bln.
Zhongshang Huimin, established in May 2013, positions itself as an O2O business, but the company's main revenue stream comes from providing a B2B fast moving consumer goods (FMCG) platform for family-owned convenience stores. Zhangshang Huimin connects brand merchants with convenience store vendors through its self-operated e-commerce platform, offering delivery service for daily life products to local communities, business districts, and university campuses. Zhongshang Huimin's self-operated and logistics business models are similar to the B2B service offered by Chinese e-commerce platform JD.com (Nasdaq: JD).
By connecting brand merchants directly with convenience stores, Huimin can cut out multiple layers from the upstream supply chain. Products sent from a manufacturer to a convenience store generally have to go through 4-6 middlemen, each taking a profit margin of 3-5%, effectively making products more expensive for convenience stores. In addition, wholesalers only dispatch their goods once they can fill a delivery truck, thereby reducing the overall efficiency of the logistics process and requiring convenience stores to stockpile goods.
The Huimin platform currently operates in 22 cities through more than 450,000 vendors and has set up 50 storage and delivery centers. Zhang Yichun, chairman of Zhongshang Huimin E-Commerce, said that the company's total sales volume is expected to reach RMB 10 bln in 2016.
Editor's Note: For more information on this topic, please see "Grocery O2O Site Huimin Completes USD 9-digit Series A," MD 1/29/15 issue.