Sites becoming socially successful
Updated: 2012-03-23 07:46
By Lin Jing (China Daily European Edition)
Meilishuo positions itself as a social fashion media site. Staff at its Beijing office monitor the social e-commerce website. [Wang Jing / China Daily]
Unlike the us photo-sharing site Pinterest, copycats in China are succeeding in generating profits
Pinterest, the social photo-sharing website in the United States, generated more referral traffic in February than Twitter, according to Shareholic, a leading tool for online sharing that also monitors activity across numerous networking sites.
In the world of the Internet, traffic usually means business, but in the case of Pinterest, that hasn't been the case.
Not so for a number of Chinese startups, who have essentially copied the Pinterest platform into sites that are not only generating traffic, they are bringing in the cash, too.
The basic idea of Pinterest is for users to collect and share interesting pictures with others on a visual pinboard. Since the launch of Pinterest in March 2010, the website has grown quickly in both active users and traffic. From August 2011 to January, monthly visits increased by 1,745 percent, according to Experian Hitwise, which measures website traffic by collecting data from Internet service provider networks.
Although Pinterest's February tally of unique monthly visitors reached 11.7 million, it is still a profitless company. The website has been operating within the $37 million (28 million euros) of venture capital.
But for about 30 websites in China that are strikingly similar to Pinterest, photo sharing has become an easy means of pushing users to shop. Many of these, which have launched over the past six months, describe themselves as social e-commerce websites that borrowed the idea from Pinterest and modified it into a business model. One Chinese company has attracted 24 million unique monthly visitors and is well on its way to making a handsome profit.
Meilishuo.com, a social e-commerce website in Beijing, said it has generated a monthly profit of 7 million yuan ($1.1 million, 845,000 euros) for the past two months. Mogujie.com, another leading website in the social photo-sharing industry, said it has made about 4 million yuan every month since October, while Hers.com said it averaged about 500,000 yuan a month last year.
One major link to all these sites is Alimama.com, an online marketing league under Taobao, China's largest e-commerce website.
How these sites such as Meilishuo.com differentiate themselves from Pinterest is that pictures of clothing, jewelry or any product are posted not only by users but also by middle- and small-sized retailers on Taobao. These retailers will give about a 6- to 10-percent cut of sales generated by referral links from sites like Meilishuo.com as commission.
Chen Qi, CEO of Mogujie, says this major difference between Pinterest and the Chinese sites is the ability to make a profit.
"On Pinterest, users tend to collect pictures they regard (as) interesting and beautiful, while Chinese users prefer to collect pictures of apparel and cosmetics they want to buy. It will naturally lead to online shopping," Chen says.
The majority of social e-commerce users in China are women because, comparatively speaking, women are more willing to share interesting things, says Su Huiyan, an analyst with iResearch Consulting Group, a local Internet consultancy.
Data from iResearch shows that 84 percent of social e-commerce users are between the ages of 19 and 35 years old. More than 65 percent within this bracket have a monthly income of over 3,000 yuan and have both the desire and ability to shop online.
"Pinterest users tend to be well-educated middle-aged housewives, who use the online pinboard for pictures collecting for home decoration or traveling; while for China, most users are still white collars and college students, who are more obsessed with fashion and style," Su says.
The difference in users, Hu says, has provided an opportunity for Chinese entrepreneurs to cash in.
"Women are major online shoppers, that is why we focus on female fashion products," says Xu Yirong, CEO of Meilishuo.
Launched in 2009, Meilishuo currently generates monthly sales of 700 million yuan for Taobao. With more than 9.6 million registered users, the website now has 130 million daily page views and 17.6 million unique monthly visitors.
The company is also hands off to men - women are only allowed to register for the site, a policy that Xu says is the company's effort to focus solely on potential buyers.
"We position our website as 'social fashion media' and try to make Meilishuo the place where girls can have comfortable communication about the latest fashion and beauty products," Xu says.
A report from iResearch shows that the number of users of social networking sites in China reached 370 million last year, up 17.6 percent from 2010. The figure is expected to exceed 510 million by 2014.
The e-commerce sector has grown with the rising number of users, with an annual increase of 30 percent in sales between 2007 and 2010. By the end of last year, 194 million Internet users had shopped online and sales reached 750 billion yuan, according to statistics from the Ministry of Commerce.
With business growing steadily every month, many big e-commerce platforms have ventured into this sector.
Taobao launched wow.taobao.com and VANCL started star.vancl.com as social e-commerce services to better promote their products. Dangdang, a top B2C portal, says that it will launch an application for smartphones in 2012 to integrate e-commerce into social networking sites.
Xu says that the demand for social e-commerce websites such as Meilishuo will increase quickly as e-commerce grows in the future.
"Our plan is to accumulate a large consumer base and then earn our revenue by advertising, both online and offline," Xu says.
Since the beginning of the year, Mogujie has been diversifying its partner portfolio by collaborating with big brands, such as P&G, by giving free samples or discounted products online.
Chen says that nearly 90 percent of Mogujie's income is generated from Taobao commission but that in the future, he expects advertisement revenue to be another major income source.
The company now has 24.3 million unique monthly visitors and 6 million registered users. Chen says the number of users will grow by 1.5 million to 2 million a month.
With $20 million raised from venture capital of Bertelsmann Asia Investment, Qiming Venture Partners and Zhaoxin Capital, Mogujie has launched apps for iOS and Android systems and is ready to invest at least $10 million in the mobile industry in the next two years.
"We are working to transfer some of our users to mobile terminals, trying to extend their visiting time on their smartphones. By the second half of 2013, it is quite possible that the traffic, income and user viscosity on our mobile terminal will exceed that on the Web," Chen says.