Economic Observer, 4/28/12
Zhang Huijun, CEO of Chinese online fine wines e-tailer Wine9 (formerly Pinwine), said recently that the company is in talks for a second round of funding in which it plans to raise between RMB 100 mln and RMB 120 mln. "We will do everything in our power to achieve profits in the tens of millions this year," Zhang said, "after which we will meet ChiNext board profitability requirements in 2013, and will work for a 2014 listing on the ChiNext board."
Zhang said Wine9 had been visited in person by no fewer than 10 venture capitalists since the start of the year to discuss second-round funding, and had been contacted by still more.
According to Zhang, the majority of Chinese fine wine B2Cs procure between 70% and 80% of their wines from domestic distributors, while Wine9 procures 80% of its wines directly from overseas vintners, and makes up the remaining 20% with procurements from domestic distributors. The company has established long-term, stable relationships with vintners in nearly 20 countries over the past three to four years, Zhang said.
Wine9 currently has 2.8 mln registered users, mainly in cities like Shenzhen, Guangzhou, Shanghai, and Beijing.
In August and September 2011, Wine9 officially put its Beijing and Shanghai warehouses into operation. Construction on its Shenzhen warehouse was completed in October 2011, giving the company a total of 14,000 square meters of warehouse space around China. Wine9 is currently constructing two more regional warehouses in Wuhan and Chengdu.
"Offline sales of fine wines have a gross profit of roughly 60% to 70%," Zhang said. "Our gross profit margin is roughly 15% lower than this - but that profit margin is not at all low by the standards of the e-commerce industry."
At present, Zhang says, fine wine sales through e-commerce platforms account for less than 1% of the total sales market in China. He predicted that online sales would increase to 10% of the total market by 2015.