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Amid capital winter in China, community group-buying platform Nice Tuan scores USD 88.3 million investment joined by Alibaba

Nice Tuan merged with another group-buying platform called Niwonin late last year.

friuts 2 Photo: Tuchong

Beijing-based online group-buying platform Nice Tuan (“Shihuituan” in Chinese) has closed a new round of financing, collecting USD 88.3 million, reported 36Kr on Thursday.

Investors are Joy Capital, INCE Capital, Qiming Venture Partners, Alibaba, ZhenFund, and China Growth Capital. This is the second time that Alibaba has poured money into Nice Tuan while ZhenFund and Qiming have participated in each round.

Prior to this round, Nice Tuan, which was set up in June 2018, bagged RMB 100 million (USD 14 million) in August the same year from investors including Joy Capital and Qiming.

New funds will be mainly used for supply chain enhancement, technological research, and market expansion into smaller cities.

Chen Ying, co-founder and chairman of Nice Tuan, said in an internal letter to employees that this closed round might be a very small step in the company’s development history, but it is really good news for the company itself now. It also signals positivity for the entire community-focused retail sector, which has been caught in a capital winter where investors are holding on tightly to their purse strings.

Nice Tuan merged with another group-buying platform called Niwonin in August 2019. After the merger,the new Nice Tuan is expected to reach RMB 500 million in monthly sales in more than 50 cities, according to 36Kr, citing Nice Tuan. Nice Tuan is in charge of sourcing fresh produce including fruits and vegetables, and delivers all goods ordered online by buyers living in the same neighborhood to a group leader. The company has boasted more than 60,000 group leaders, who are in charge of marketing selected fresh produce in WeChat groups formed by dwellers in the same community, and also in charge of storing the goods temporarily before the buyers come to pick them up, and are sometimes in charge of delivery. Typical group leaders are stay-at-home mums or brick-and-mortar store owners in communities.

Chen said in another internal letter right after the merger that the community group-buy model has reduced the cost to acquire a new customer from up to RMB 300 to RMB 1 or even to zero while this model has also cut the logistics costs per order from between RMB 15 and RMB 25 to between RMB 1 and RMB 2.

However, all community group-buying companies have to compete in the wider fresh produce market in China where giants like Nice Tuan’s backer Alibaba and JD.com are all eying for a slice of the pie. Alibaba’s Hema new retail platform offers online ordering and instant delivery while JD.com’s affiliate JD Daojia has been offering such services for more than four years in the country’s large cities.