Online men’s apparel B2C retailer PPG (Perfect Products Group) has bagged US$100 million in fourth-round financing from an unnamed American department store operator, as reported by the China Business News. PPG had in March this year announced a Nasdaq IPO in the pipeline, which the company stated will now be delayed for four to five years.
More than 40% of China’s cyber population bought something online over the past year and that number is likely to hit 60% one year from now, Xinhua reported, citing China Internet Network Information Center figures released at the recent China Internet Conference.
Riding on the coattails of China’s rapidly expanding Internet market, now surpassing the US with more than 250 million users connected, competition in the evolving online B2C retail sector is also heating up.
Founded in October 2005, PPG was a B2C trailblazer in a specialized niche that successfully implemented the online direct sales business model. More players have since jumped on the Internet B2C bandwagon and are posing a real challenge to the traditional Chinese clothing industry.
PPG was selling 10,000 shirts a day toward the end of last year and its 2007 turnover was 50 times more than the previous year. By comparison, China’s largest 15-year old brick-and-mortar brand, Youngor Group, sold an estimated 13,000 shirts a day during the same period. Currently, up and rising star VANCL looks set to be the next serious contender for the position of B2C men’s wear market leader.
Shanghai-based PPG integrates aggressive above the line advertising with an ecommerce web logistics business model, which relies on the Internet and about 200 staff at its call centers, in the absence of conventional physical retail stores.
PPG’s strategy of selling affordable shirts, signing movie-star endorsers (American-born Hong Kong star Daniel Wu) and targeting aspiring and upwardly mobile young, white-collar males appears to be paying off.
The company’s closest rivals are eBONO and VANCL. VANCL is a relatively new entrant in the B2C men’s wear, having started operations only in January this year. Yet the startup had recently completed its third round of funding and secured US$30 million investment within eight months of operations. BONO had received US$11.7 million financing from Zhejiang Baoxiniao Garment.
PPG had earlier received US$80 million financing from TDF Capital, JAFCO Asia, KPCB and San Shan Capital Partners. 80% of its new funds will be used to finance PPG’s expansion and development in the United States, with its California subsidiary due to open in late October, and the remainder used to establish a global procurement center.
Internet shoppers from 19 major Chinese cities spent 16.2 billion yuan (US$2.37 billion) in the first half of this year. FedEx is seeking to enlarge its share of China’s domestic express delivery market, which has seen growth rates rise by 30% this year from increased acceptance of ecommerce in the country.
A recent MasterCard survey had projected that online shopping sales in the Asia Pacific region will grow at an annual rate of more than 23%, reaching US$168 billion by 2011. The report also predicts that China will overtake Japan and South Korea to be the largest online shopping market by 2010.
