Warburg Pincus has invested $100 million in Chinese B2B e-commerce platform Yijiupi's follow-on Series D funding.
Proceeds will be used to expand Yijiupi’s services and to build a retail presence.
Yijiupi started life as a wine wholesaling platform in 2014. It received more than $159 million between 2014 to 2016, from investors such as Meituan, Lighthouse Capital and Source Code Capital. In September last year, it raised $200 million from Tencent, China Everbright Limited, Meituan and others.
With support from big players like this, Yijiupi expanded its business to non-alcoholic beverages in 2016, and then to supply chain finance in 2017. The platform has lent out an accumulated Rmb8 billion ($1.2 billion) and achieved a gross merchandise volume of Rmb13 billion last year.
Traditional wine retail channels have suffered years of decline, but growth in the online wine retail sector is showing year-on-year growth of 50%, according to research published by JD.com and 21st Century Business Herald. Because it is part of the fast-moving consumer goods (FMCG) sector, it is also moving towards an online supply chain and integrated storage.
The Chinese FMCG industry is likely to more than double from Rmb150.7 billion in 2017 to Rmb391.6 billion in 2020. Most of the momentum of that growth is now coming from third and fourth-tier cities in the country, according to Iresearch.
Warburg Pincus has its eyes on the whole FMCG market, according to managing director Jericho Zhang. At the moment, traditional offline channels control China's retail industry. “The Chinese market has huge potential with its 6.8 million retail stores,” Zhang said. As it expands the range of products it offers, Yijiupi hopes to have sales of Rmb500 million this year.
All the internet giants are trying to gain market share in the FMCG market. Alibaba claims to serve more than 1 million offline retail stores via its internet supply chain. And JD.com has also upgraded its retail service department and named it as the company’s priority.
The number of business-to-business platforms in the retail industry might have decreased, but they are still raising a considerable amount of money. Yijiupi’s expansion into the market will definitely intensify the competition.
