Jumei: Charming its way to an IPO

By April 22, 2014

The first time I saw Leo Chen was about 2 years ago. It was a job hunting TV show and he was one of the recruiters. It was also the first time I heard about Jumei (Since I relied more on Taobao stores for skin care & cosmetic products). Leo was representing Jumei as its CEO and founder. Although he was young and had a good educational background, he was a little flighty. Leo was a guy who didn’t give me a very good impression.

But just a half year later, at the beginning of 2013, Leo’s ads of himself representing Jumei were spreading over TV and Sina Weibo – “I’m Chen Ou, I speak for myself.” Coinciding with the popularity of this slogan was the three–year anniversary campaign of Jumei, resulting in 1 billion RMB sales within 3 days. Such a big number (even when exaggerated) made Jumei a star in the e-commerce industry.

Another B2C cosmetics vertical, Lefeng, could be mentioned in the same breath when discussing about Jumei. The CEO, Li Jing, was a well-known hostess before she established the platform. Because of this, it seemed easier for Lefeng to do the marketing, even promoting its own brand – JPlus. I have read an article about Lefeng’s financial situation. 80% of its profits come from its established brands which Lefeng tries to promote. It gives another evidence that cosmetics manufacturing is a high profit industry.

Since Lefeng has its low cost strength and celebrity charm, the advantage of Jumei is more about channels. From its reports before listing, it says that 75% of its products are authorized by the brands which include some famous international ones like Shiseido, KOSE, Laneige. Most of them are Japanese or Korean which enhance Jumei’s image as a reliable brand. What’s more interesting is that they even began to develop products just for Jumei.

The draft $400 million IPO has gotten the public’s attention again for Jumei, but rumors about its exaggerated data and fake products indicate that there is still a long and hard way for Jumei to be one of the big guns in Chinese e-commerce.

This article is written by Hana Chen, an analyst in L'Atelier BNP Paribas Shanghai

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