Rumor: Fashion B2C Xiu.com Fails to Gain Third-Round Funding
Ebrun.com, 6/21/12
An informed insider close to senior level management at fashion B2C e-commerce site Xiu.com recently revealed that the company has failed to obtain third-round funding, and may have to consider a strategic contraction.
The source reported, "Xiu.com has been unable to obtain a third round of financing because the company's pace of development has not been satisfactory to investors."
According to the source, "Xiu.com has approximately 1,000 employees and should be able to handle 8,000 to 9,000 orders a day, when in fact it is recording only about 4,000 to 5,000 orders per day. If every order amounts to an average price of RMB 300, then Xiu's daily sales revenue is approximately RMB 1.5 mln, while its competitor VIPShop records daily sales revenue between RMB 15 and RMB 20 mln; Xiu is too far behind. Moreover, Xiu obtained USD 120 mln in its second round of funding, so the third round would necessarily need to bring in more than that; with the e-commerce market in such bad condition right now, no one would easily give that money away."
When www.ebrun.com contacted Huang Jin, chief strategy officer and co-founder of Xiu.com, Huang asserted that operations at the company were robust, but did not mention a third round of funding.
A former Xiu.com employee has also disclosed that in 2011, Xiu.com brought over several senior level employees from Amazon, who brought their own teams along with them. The former employee reported, "George Ji, Xiu's CEO, attaches great importance to these executives, but the experience they have from Amazon does not actually fit with what is required of them at Xiu. Under their management, Xiu.com's order volume has decreased by 50%, resulting in over RMB 100 mln in unmoving inventory."
Additionally, an informed insider at Xiu.com recently revealed that at present, orders come mainly from two sources: the first being the official website, and the second being Xiu.com's own group buy site, Tuan.xiu.com. Order volume from Tuan.xiu.com accounts for approximately 50% of Xiu's total order volume. The source explained, "Xiu.com relies too heavily on its group buy platform; the gross margin is extremely low."
Keywords: George Ji e-commerce Internet funding revenue B2C third-round Huang Jin Xiu.com tuan.xiu.com online fashion luxury HR group buying
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