Yunji Stock

Yunji Inc. operates as a social e-commerce platform in China using a unique, membership-based model that leverages the power of social interaction. The company offers high-quality products to promote its platform and shares its products with their social contacts.

The company has also developed several private labels in the mass consumption field, which are sold on its own platform, as well as offered and sold through external channels. The company's platform has attracted a large and growing base of users, including members and non-members. These users are actively purchasing products on the company's platform.

The company's members, typically middle-class consumers, are highly social and are interested in discussing and sharing their shopping experiences and various products within their social circles. The company provides support, such as training, technology support and customer services to make the process easier for them.

The company also adds to its product offerings based on feedback and understanding of its members and users based on various analytics. While the company offers products from mainstream and emerging brands, it also strategically works with manufacturers directly to develop private labels and exclusive differentiated products. In particular, the company engages in minority-interest equity investments in high-quality innovative manufacturers to develop private labels, combining their unique manufacturing capabilities and supply channels with its deep understanding of end customers through its various user analytics to develop innovative and differentiated products specifically designed to meet the demands of its members and users.

In this way, the company empowers its manufacturer and brand partners, especially its private labels, with products improvement advices based on its understanding of market trends and insights on customer behavior and precise marketing and customer education through its active communities, thereby supporting its partners to achieve further growth.

To complement the company's existing merchandise sales business under which the company acquires products from suppliers and sells them directly to customers, it launched its marketplace business whereby third-party merchants can sell products on its platform and pays it commissions on their sales. The company attracts and selects third-party merchants to offer high quality products at attractive prices to its users through its marketplace business and monitors the third-party merchants' performance and activities on its platform closely to ensure that they meet its requirements for authentic products and high-quality logistics and customer service. In each product category in the marketplace model, the company only selects a limited number of brands, fostering a healthy competitive environment where it only selects and works with the best third-party merchants to offer its members a broad range of carefully curated high-quality products. Products offered through its marketplace business are directly sold and fulfilled by third-party merchants. The company's marketplace business allows it to further expand its product offerings, improve the shopping experience on its platform, and attract and retain more members and users.

The company focuses on the quality of its products under both the merchandise sale business and the marketplace business. The company offers an average of 7,631 SPUs on its platform on a daily basis in December 2022.

The company generates revenues mainly by selling products directly on its platform to users, including both members and non-members, and earning commissions on the sale of products by third-party merchants on its platform.

Business Model

Yunji Platform

The company conducts its social e-commerce business primarily through its flagship Yunji app. In addition, the company creates visually appealing interfaces in mini programs and HTML-5 webpages available in major social platforms in China, including WeChat, QQ, and Weibo, to promote its platform and products. To reach a wider audience, the company collaborates with content creators and post content on lifestyle platforms and live streaming platforms, such as Xiaohongshu and Douyin, to promote certain of its products or items. Through these promotional channels, potential users can learn about the company's platform and visit its mobile apps.

The company's members can easily share the mini programs and links to HTML-based webpages with their family, friends and other social contacts who may be interested in buying products on its platform.

Yunji App

The company's flagship Yunji app is used by its members and non-member users to discover, explore and purchase a wide range of high-quality products at attractive prices and to access other membership features and benefits. The company provides services to members and non-member users under the same app so as to open up its platform and provide better user experience.

One can become a member of the company's platform mainly by accepting invitation from existing members in the form of an invitation link or QR code whereby the invitee can register an account on the Yunji app or mini program. The company's membership system has experienced various changes in the past few years. The company requires new users and renewing members to pay an annual membership fee to become or continue as a member and enjoy membership benefits. In addition, members who became members through purchasing a membership package are referred to as the company's diamond members and enjoys free lifelong membership and membership benefits.

The member can choose to view the company's product offerings on its user-friendly app interface by accessing its various sales formats, such as flash sale, channels, and Yunji Dynamic Showcase.

The member can click on the desired product to view detailed product description and consider whether to make the purchase. In addition to the attractive price, the app offers features to encourage the member to recommend his/her family, friends or other social contacts to purchase the company's products. In the product listings, the member can see the amount of incentives user will earn if someone purchases products via the links user shares through user social network. The company's app provides the member with ready-to-use promotional materials containing product description and reviews, which can be easily posted on social network platforms, such as WeChat, QQ and Weibo with the seamless integration of its platform with such social network platforms. The member also creates promotional materials on user own and share them with other members.

The company also provides its members with community features to see what other members are buying and sharing, including product reviews, photos and short videos. In 2019, the company introduced the live streaming function where members can host live video broadcasts to express their opinions on, share their experience with and promote to other members products on its platform. During the live streaming session, as the host member is sharing user experience and interacting with other users viewing the session, direct links to the products being discussed are displayed on the screen to facilitate convenient purchasing of the products. Similar to product referrals made by members via their social networks, the live streaming hosts receive referral incentives for products sold via their live broadcasts.

The company caters to the needs of its members. Due to the COVID-related restrictions in 2022, there has been a significant shift in consumer demand towards food and other essential items. The company addresses this demand by placing the food channel under recommended channels, making it easier for members to find food-related content and products.

Member Community

The company's member community is driven by social connections. Users access the company's platform mostly through invitation and recommendation by its existing members via their social networks both online and offline. As a result, new users come to the company with established trust in their own family, friends and neighbors, as well as shared interests and similar purchasing preferences with the company's existing members. Therefore, they are more likely to find the company's platform credible and refers its platform and products through their social networks to other friends, neighbors and family members. The company keeps close contacts with its member community to learn their changing consumption needs and preferences, which serve as crucial references to product curation and procurement for its supply chain team. The company has also established professional vertical product category communities in food, beauty and healthcare based on its insights on the members' interests and brought well-trained service managers to these communities to increase engagement of its members.

Members

In order to stimulate the company's users' interest in transacting on its platform and attract more members, it refines its membership enrollment system by allowing any user to become a member and enjoy membership benefits free of charge for one year by simply registering for an account on the Yunji app. The company's members enjoy more attractive prices than non-member users when purchasing products on its platform, and receive incentives for promoting and initiating transactions of its products via their social networks and for inviting new members to its platform. The cumulative number of the company's members was approximately 29.5 million as of December 31, 2022.

The company provides members with benefits both in the form of Yun-coins and cash incentives. Through these benefits, the company attracts members to its platform and encourages and motivates its members to share product reviews and promotional materials of its products via their social networks.

Additionally, members enjoy exclusive discounts when purchasing products on the company's platform, and receives referral incentives for products sold via the links they share through their social networks. Additionally, the company may provide extra incentive to a member depending on the number of completed promotions or purchases made as a result of the member's referral. The referral incentive is allocated to the member's account immediately following payment for the transaction. The company also provides members with a variety of tools and support to enable them to promote its products via their social networks, including ready-to-use product promotional materials, online and offline training to facilitate product sales, and centralized order fulfillment, product delivery and real-time customer service.

The company's members generally come from middle-class households and make purchase decisions for their respective households. The majority of the company's members are female. The company's members typically spend much time on social networks and take an interest in discussing trends and sharing shopping experience and product information among their social contacts both online and offline. The company offers social experience as an integral part of its member experience.

Many of the company's members promote its products via their social networks, and some of them become influential opinion leaders within their social networks affecting the consumption preferences of many others. The company's members also form groups and engage in interactive activities both online and offline based on their existing social network, geographic locations and interests, which allow them to obtain relevant product information more easily, establish trust relationships amongst themselves and keep them engaged with its platform. The company facilitates member groups to provide support to members and enables further communication among members. The grouping system helps the company enhances member engagement and promote community value.

In particular, the company encourages members to form neighborhood-based groups based on geographic proximity, which allows for easier and more frequent organization of offline events to foster social interaction and enhance the trust relationship amongst its members. The majority of the company's offline events were not intended to drive product sales or promotions, but instead to provide its members with opportunities to learn something new, share their experience and better interact with each other.

Service Managers

The company outsources some member services to third-party service companies and they hire service managers based on the standards it provides in its agreements with the third-party service companies. Most of service managers are also the company's members. Third-party service companies select service managers based on their capability in facilitating members' product sales and in training members, and assigns them to provide services to a group of members. The member groups operate both online on social network platforms, such as WeChat, QQ and Weibo; and offline through trainings and experience-sharing gatherings hosted by its neighborhood-based groups, generating diversified forms of interactive social experiences as an integral part of its member benefits.

The company promotes the use of short videos to better introduce its products to its members and users and promote further social sharing. Accordingly, the company has on-boarded a group of service managers with the appropriate skills to create content-driven short videos introducing and selling the products on its platform.

Starting in the second quarter of 2020, the company began to develop professional vertical product category communities based on its insights on the members' interests and service managers' capabilities. For each vertical product category, the company brings in lecturers experienced in marketing and training in such product category to provide its service managers with highly relevant training session that help to improve the quality and the authenticity of the product-related content produced by these service managers and thus increase engagement of its members. The company has established professional vertical product category communities for food, beauty and healthcare categories and achieved high user engagement in those communities.

As of December 31, 2022, the company members were served by more than 110,000 service managers. Service managers provide training and support to the company's members, including teaching members how to use its apps and platform, responding to questions from members on a daily basis, and organizing both online and offline training courses to share their sales experience. Service managers also facilitate members' product sales, including monitoring and collecting member feedback on a real-time basis, designing and implementing marketing strategies for popular products in the member group, and helping to address member queries related to its products.

Non-Member Users

Through its members' word-of-mouth referral via their social networks both online and offline, the company's platform has garnered trust and attracted a large and growing base of users. Users actively purchase products on its platform. Since its platform is recommended by family, friends and neighbors, users may find the company more credible and have more confidence in the quality of products offered on its platform. In addition, users could purchase the company's private label products through third-party channels, and they are also considered its non-member users.

Product Offerings

The company offers broad coverage of product categories from mainstream brands, emerging brands and private labels on its platform under the combination of its merchandise sales business and its marketplace business with an aim of catering to the various daily needs of its users and their households, including beauty and personal care, healthcare products, household goods, cloths, food and fresh produce, computer and electronics, apparel, bags and cases, baby and maternity products and home appliances.

The company's top product categories that each contributed to more than 10% of its GMV are beauty and personal care, food and fresh produce, apparel, bags and cases, computer and electronics and online virtual services, beauty and personal care, food and fresh produce, apparel, bags and cases, and beauty and personal care, food and fresh produce, apparel, bags, and cases. In December 2022, products offered under the company's marketplace business accounted on average for 83% of SPUs for sale on its platform on a daily basis.

Sales Formats

The company offers products in various sales formats on its platform, such as flash sale, channels and Yunji Dynamic Showcase, through each of which users could view its product offerings.

Flash Sale: The company organizes flash sale events every day to sell a finite quantity of discounted products for a limited period of time beginning at 9:00 a.m. (Beijing time) each day. To foster user interest, the company periodically analyzes historical data, seasonality and user feedback to determine the types of products it should offer for different hours and days. In addition, the company carefully adjusts its product mix to achieve a balanced and complementary product offering across different product categories so as to maximize sales.

Channels: The company organizes all of its product offerings on its Yunji app and mini programs based on product characteristics, such as category, functionality and brand into different channels on its Yunji app and mini programs to facilitate easy browsing by the company's users. Specifically, the company operates category-based channels, such as food, beauty and personal care, apparel and overseas products.

Yunji Dynamic Showcase: The company creates short promotional videos for its featured products. The showcase features a wide range of products selected from its private labels, gourmet food, and trending mega-hit products from the live streaming channels. Service managers can explore the showcase's products, choose the ones they are interested in, and conveniently generate product-related content to share with members or on social media.

In addition to sales on its own platform, the company's private label products are sold through external sales channels, such as third-party e-commerce platforms and live streaming platforms, such as Tmall and Douyin.

Marketing

To enhance the company's brand awareness, it engages in offline marketing and brand promotion activities. To promote its private label brands, such as Suye, Qing Zi Yang and Yuan Sheng Huang, the company has launched various marketing initiatives, including appointing celebrity brand ambassadors, featuring them in promotional materials, conducing marketing events through video and short-video platforms, KOL promotion on livestreams and offline advertising activities.

Intellectual Property

As of December 31, 2022, the company owned 101 computer software copyrights in China relating to various aspects of its operations and maintained 1,131 trademark registrations inside China and 23 trademark registrations outside China. As of December 31, 2022, the company had 288 trademark applications inside China. As of December 31, 2022, the company had 27 patent applications pending in China. As of December 31, 2022, the company had registered 43 domain names, including www.yunjiglobal.com, among others.

Seasonality

The company experiences seasonality in its business, reflecting a combination of seasonal fluctuations in internet usage and traditional retail seasonality patterns. For example, the company generally experiences less user traffic and purchase orders during the Chinese New Year holiday season in the first quarter (year ended December 2022) of each year. Furthermore, sales are significantly higher in the fourth quarter of each calendar year than in the preceding three quarters. E-commerce companies in China hold special promotional campaigns on November 11 each year that boost sales in the fourth quarter relative to other quarters, and the company holds a special promotional campaign in the second quarter of each year, on May 16, to celebrate the anniversary of the founding of its platform. All other components of the company's expenses generally continued to increase as it grows its business and expanded its user base.

History

Yunji Inc. was founded in 2015. The company was incorporated under the laws of the Cayman Islands in 2017.