Luxury Chinese e-retailer Secoo Holding Ltd. plans to raise about $100 million in an initial public offering on Nasdaq. The company’s previous major investors include IDG Capital Partners and Bertelsmann Asia Investment Fund.
Driven by a strong demand from wealthy consumers in China, the volume of purchases on Secoo.com for the six months ended June 3o reached 3.47 billion yuan (US$511.9 million) in 2016, up 35.0% to from 2.57 billion yuan a year ago.
Launched in 2011, Secoo sells luxury products directly to consumers through its website Secoo.com and via its mobile app. Mobile is a significant sales channel for the retailer: Secoo says 83.8% of sales are generated from smartphones. The e-retailer, No. 112 in the Internet Retailer 2017 Asia 500, offers about 300,000 SKUs, covering more than 3,000 global brands such as Louis Vuitton, Prada and Dior.
Secoo says it has expanded its collaborations with top global brands recently. About 1,000 global brands, such as Tod’s, Salvatore Ferragamo and Versace have begun to supply Secoo products directly or through its authorized distributors. Some brands like Tod’s also create products exclusively for the retailer. Secoo also operate a marketplace business and sells products supplied by individuals and distributors.
The retailer has opened about 10 offline centers in popular shopping destinations and central business districts in China, Hong Kong, Italy, the United States, Japan and Malaysia. Secoo also cooperates with brands to allow customers to pick up Secoo.com orders in brands’ physical stores.
Chinese consumers with middle and high-level incomes have shown a growing propensity to purchase luxury products and services on online platforms, according to Secoo.
Demand for upscale products in China has experienced fast growth and is expected to increase in the next few years at a much faster pace than other regions in the world.
China’s middle and high-income population grew 13.2% in 2016 and is expected to account for 42% of the total population in China in 2021, according to a recent report from research company Frost & Sullivan. The report also claims that total online retail sales of upscale products and services in China reached 250.1 billion yuan ($36.9 billion) in 2016 and are estimated grow on average at 18.2% annually in the next five years.
Secoo recorded $198.65 million in revenue for the first half of 2017, a 30% year-on-year increase. Meanwhile, it posted a net profit of $7.7 million in the period compared with a net loss of about $11 million in the first six months of 2016.