You might not have heard of Yunji, one of the latest giants of Chinese social commerce. Yet, it just went IPO on the Nasdaq, raising $121 million USD.

Who is this new booming social commerce company?

Like Pinduoduo, Yunji is a social commerce company relying mostly on WeChat sharing in order to generate sales. However, unlike Pinduoduo, Yunji uses a decentralized network of “members” who help sell products.

The process is the following:

  • Users pay a fee to become members of the platform
  • They can then access special discounts/offers along with the ability to open their own stores
  • Members promote their products to other users (mostly via WeChat)
  • If they manage to sell products or recruit new members, they receive a share of revenue (not directly through cash but through discounts for future purchases)

Members just have to handle the promotion of the products, while Yunji handles all logistics, IT integration and customer service.

Because of this model, Yunji has been under scrutiny from Chinese authorities because of suspicion of operating a pyramid scheme. In 2017, Yunji was actually fined for $1.4 million USD by a local government because of pyramid selling charges.

In order to avoid further charges, or even being blocked, Yunji doesn’t reward member with cash anymore. Instead, if members successfully promote Yunji’s products, they receive discounts for future purchases.

However, Yunji has one thing going for them: a lot of sales. Pyramid models usually rely mostly on members selling other memberships, with no real sales happening. But the Gross Merchandise Volume (GMV) of Yunji has been exploding over the last 3 years. (Source: WalkTheChat)

For the complete article, visit WalkTheChat HERE.

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