Yunji Inc., together with its subsidiaries, operates as a social e-commerce platform.
The company offers high-quality products at attractive prices and incentivize its members to promote its platform and share its products with their social contacts. The company empowers prime emerging brands and manufacturers with deep understanding of market trends and customer behavior to produce high-quality innovative products to better meet the demands of its members. The company has developed several pri...
Yunji Inc., together with its subsidiaries, operates as a social e-commerce platform.
The company offers high-quality products at attractive prices and incentivize its members to promote its platform and share its products with their social contacts. The company empowers prime emerging brands and manufacturers with deep understanding of market trends and customer behavior to produce high-quality innovative products to better meet the demands of its members. The company has 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.
Members are the key participants on its platform. The company’s members gain access to a dedicated app and mini program that provides access to a curated selection of products, exclusive membership benefits and features. The company’s membership system has experienced various changes in the past few years. One can become a member of its platform by accepting invitation from existing members.
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. Members often refer others to become members and are rewarded for doing so. Members can also promote products on various social platforms and are rewarded if those users purchase its products. The company also provide support such as training, technology support and customer services to make the process easier for them.
The company offers products across a large variety of categories with the aim of catering to the various daily needs of its users and their households. The company also adds to its product offerings based on feedback and understanding of its members and users based on various analytics. Additionally, the company stays abreast of trends and carefully curate and promote seasonal best-selling products, such as seasonal fruits and festive gifts. While it offers products from mainstream and emerging brands, the company 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 advice based on its understanding of market trends and insights on customer behavior and precise marketing and customer education through its active communities.
To complement its existing merchandise sales business under which it acquires products from suppliers and sell them directly to customers, it launched its marketplace business in the first quarter of 2019 whereby third-party merchants can sell products on its platform and pay it commissions on their sales. The company attracts and select third-party merchants to offer high quality products at attractive prices to its users through its marketplace business and monitor 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, it selects a limited number of brands, fostering a healthy competitive environment where it only selects and work 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 improve the shopping experience on its platform.
Business Model
The company operates 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 at attractive prices and incentivize its members to promote its platform and share its products with their social contacts. The company operates on its platform both its merchandise sales business, under which it acquires products from suppliers and sell them directly to customers, and its marketplace business that launched in the first quarter of 2019, under which third-party merchants can sell products on its platform and pay it commissions on their sales. The company has developed several private labels whose products are sold both on its own platform and external sales channels through its merchandise sales business.
Under its merchandise sales business, the company works with a mix of mainstream brands, emerging brands, and private labels to offer products across a large variety of categories based on feedback and understanding of its members and users based on various analytics. It empowers quality manufacturers with products improvement advice based on its understanding of market trends and insights on customer behavior and precise marketing and customer education through the company’s active communities, thereby supporting the growth of its manufacturing partners and develop private labels.
To complement its existing merchandise sales business, the company has launched its marketplace business in the first quarter of 2019. The company attracts and select third-party merchants to offer high quality products at attractive prices to its users through its marketplace business and monitor 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. Products offered through the company’s marketplace business are directly sold and fulfilled by third-party merchants. The company’s marketplace business allows to improve the shopping experience on its platform.
Yunji Platform
The company conducts its social e-commerce business primarily through its flagship Yunji app. In addition, it creates visually appealing interfaces in mini programs and HTML-5 webpages available in major social platforms in China, including WeChat, QQ, 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, Douyin and WeChat video channel, to promote certain of its products or items. Through these promotional channels, potential users can learn about its 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. The promotional interfaces visually aid the shopping experience on its platform and enable viral dissemination of product information on a large scale at low costs.
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 to open up its platform and provide better user experience.
One can become a member of its platform 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 has modified the rules that administrated its membership system in the past few years.
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 a short video that showcases the product and consider whether to make the purchase. In addition to the attractive price, the app also offers features to encourage the member to recommend his/her family, friends, or other social contacts to purchase its products. In the product listings, the member can see the number of incentives he/she earns if someone purchases products via the links he/she shares through his/her social network. The company’s app provides the member with ready-to-use promotional materials containing product description, short videos, 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 his/her own and share them with other members.
The company also provides its members with community features to see what other members are buying and the sharing of their shopping experience, including product reviews, photos, and short videos. In 2019 it 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 his/her 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. Like product referrals made by members via their social networks, the live streaming hosts receive referral incentives for products sold via their live broadcasts. In 2022, the company strategically upgraded live streaming by emphasizing the development of short videos and content marketing to improve viewer conversion efficiency. By creating shorter, more digestible videos, it effectively retains those viewers who may not have enough time or patience to watch longer content.
The company caters to the needs of its members by featuring popular and in-demand products in dedicated channels, making it easier for members to find what they are looking for. It also stays up to date with seasonal trends in its product offerings.
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, apparel, shoes and bags, beverage, food and fresh produce, computer, electronics and home appliances, childcare products, baby and maternity products.
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 in 2021; beauty and personal care, food and fresh produce, apparel, bags and cases in 2022; and beauty and personal care, food and fresh produce, apparel and shoes and bags, household goods in 2023. Within each product category, the company offers carefully curated items meeting the preferences of its users with attractive pricing.
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 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 adjust its product mix to achieve a balanced and complementary product offering across different product categories to maximize sales.
Channels: The company organizes all 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 its users. Specifically, it operates category-based channels, such as food, beauty and personal care, apparel, and overseas products.
Yunji Dynamic Showcase: The company creates graphics, texts, or short promotional videos to showcase its featured products on its main event page, effectively displaying its promotional offerings. 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 also sold through external sales channels, such as third-party e-commerce platforms and live streaming platforms, such as Tmall and Douyin.
Suppliers and Third-Party Merchants
Seeking to offer a balanced mix of products of mainstream brands, emerging brands, and private labels on its platform, the company provides values to a variety of suppliers and third-party merchants. It helps owners of mainstream brands expand their business in China or certain specific regions in China. It often cooperates with third-party mainstream brands to help launch and market their new products on its platform, providing feedback on the new products based on various user analytics and effectively introducing the new products to its members and users through its active social communities. The company also supports owners of emerging brands in reaching a wider customer base and gaining better recognition and reputation. The company particularly focuses on establishing partnerships with top emerging brands that produce quality products in different industries to generate more high quality Yunji exclusive products that appeal to its customers and accelerate its supply chain differentiation. For example, in 2020, it partnered with a top healthcare emerging brand to develop an exclusive weight loss dietary supplement which achieved over 600 million in sales through the effective promotion by its service managers on its platform.
In addition, the company engages in minority-interest equity investments in high-quality manufacturers and innovative brands, combining their unique manufacturing capabilities and supply channels with its deep understanding of end customers through its various user analytics to develop innovative products through private labels specifically designed to meet the demands of its members and users, such as Yunji exclusive products. The company’s suppliers and third-party merchants included merchants of mainstream brands and emerging brands and manufacturing partners it cooperates with. The company’s private labels include Suye, Qing Zi Yang, Yuan Sheng Huang, Unibeauty, P&S, Li Ba Tian, and Bai Yue Shan, among others. In 2021, it launched several private label food brands to sell high-quality food products and strengthen its food category offerings. Some of the products under its private labels are also offered and sold on other third-party e-commerce platforms and live streaming platforms such as Tmall and Douyin.
Fulfillment and Customer Service
The company delivers a compelling customer experience by fulfilling orders quickly and accurately. It provides centralized and comprehensive fulfillment and customer service to users regardless of whether they purchase products on its apps directly or through the introduction of its members. The company’s fulfillment infrastructure for the prompt receipt, storage and shipment of products is primarily comprises a nationwide warehouse and delivery network, which it operates mainly through collaboration with contracted third-party logistics service providers.
Products offered through its marketplace business are directly sold and fulfilled by third-party merchants, who take responsibility for the entire fulfillment and customer service process. The company closely monitors the speed and service quality of the third-party merchants through customer surveys and feedback from its members to ensure member satisfaction.
The company’s products are strategically stored at warehouses it uses and the suppliers’ warehouses. The volume of products to be stored at the warehouses and the choice of warehouse to be placed are determined based on customer demand. When a user places an order and makes payment, the company’s warehouse management system automatically processes the order and assigns it to the warehouse or warehouses with the appropriate inventory. The third-party logistics service provider that it has hired in the region picks up the order at the warehouse to make the delivery. Once the order has shipped, its warehouse management system automatically updates the inventory level for each product in the order, ensuring that additional inventory will be ordered as needed. For some of its products that are not stored at the warehouses, such as fresh produce or home appliances, the third-party logistics service providers will pick up the order from the facilities of the respective suppliers to make the delivery. To further enhance inventory accountability and security, it tracks its inventory at all stages of the receiving and order fulfillment process. The company’s users can track the shipping status of their orders through its platform at each step of the process.
Payment
The company provides its users with several payment options, including credit or debit cards or e-wallets. It cooperates with major third-party online payment platforms such as Alipay, WeChat Pay, JD Pay and UnionPay to provide these options.
Customer Service
Providing superior customer service is its priority. Its commitment to users is reflected in the high service levels provided by its customer service staff as well as in its product return policy.
Customer service team: The company has a customer service team in its Hangzhou headquarters to provide real-time assistance to its users. Users can communicate with online representatives through its mobile apps. The company trains its customer service representatives to answer user inquiries and proactively educate potential users about its products and promptly resolve customer complaints.
Product returns: The company generally allows users to return unused goods within seven days, counting from the date when the user receives the product. Once a user submits a return application request on its mobile app, its customer service representative reviews and process the request or contact the user through its mobile app or by phone if there are any questions relating to the request. Upon receipt of the returned product, it credits the user’s payment account with the purchase price. The same policies apply to products sold through its marketplace business.
Technology
The company’s operations are supported by its technological capabilities. The company’s technology team, coupled with its proprietary technology and infrastructure and the large volume of data generated and collected on its platform, has created opportunities for continuous improvements in its technology capabilities. The key components of its technology include big data analytics and artificial intelligence (AI), which are also the focus of its research and development efforts.
Big Data and Artificial Intelligence
The company is able to obtain feedback timely from users on its platform, and gain access to a large volume of transaction and user behavioral data. It develops and leverage big data analytics to enhance the accuracy of user behavior predictions and user profiling, optimize targeted marketing and platform operations, and deliver best-in-class user experience. The company utilizes AI and machine learning technologies to conduct modeling exercises and data mining to gain actionable and effective insights from the data. For example, it looks into the basic order information and user behavioral data, and then build predictive and statistical models based on the data it has accumulated. Its big data capabilities enable it to better analyze market trends and understand customer behavior, and it reflects such understanding in SPU selection and when working with its suppliers and third-party merchants. This customer-to-manufacturer (C2M) model allows it to source products in response to evolving customer needs and preferences and enables it to help its suppliers and third-party merchants, especially the company’s manufacturing partners, provide products better designed for end customers and manage regional inventory storage.
With access to a massive amount of data, the company is in a strong position to capitalize on the use of AI and machine learning technologies in the new e-commerce arena. As of December 31, 2023, it had applied various AI and machine learning technologies on its platform in multiple areas, such as personalization of product recommendation, intelligent inventory management, automated risk assessment, automated fulfillment process, and automated question answering. It continues to explore the application of the big data and AI technologies on its platform and use them in more areas such as intelligent customer services to enhance user experience.
Intellectual Property
As of December 31, 2023, the company owned 108 computer software copyrights in China relating to various aspects of its operations and maintained 1,211 trademark registrations inside China and 23 trademark registrations outside China. The company had 62 trademark applications inside China. The company had 6 patent applications pending in China.
As of December 31, 2023, the company had registered 42 domain names, including www.yunjiglobal.com, among others.
Marketing
The company relies on word-of-mouth referrals via users’ social networks and organization of offline interactive events to attract and retain users and members. The company’s ability to do so depends on whether it can continue to provide superior user experience and promote and enhance its community value. To enhance its brand awareness, the company also engages in offline marketing and brand promotion activities. For example, the company hosts offline promotion campaigns for the shopping festival on November 11 each year in major cities in China.
The company maintains official accounts on various social networking and live streaming platforms in China to continually engage and communicate with its members and to promote awareness of its brand. The company utilizes diverse content formats for its online marketing, such as short-form video and live streaming, which enables it to better present and promote its products sourced from its quality supply chain, especially its private label products and products developed through its collaboration with emerging brands. The company also engages passionate members and service managers as well as KOLs to host live streaming sessions to promote its products on various live streaming platforms.
In particular, the company has established online store and video account on Douyin’s e-commerce business and utilizes the live streaming platform to introduce and promote more quality products sourced from its supply chain to a broader range of consumers. In addition, the company organizes product category-specific educational live streaming sessions through its official accounts to help consumers gain general knowledge that helps them make well-informed consumption.
Moreover, 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.
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 of each year. Furthermore, sales are significantly higher in the fourth quarter of each calendar year (year ended December 2023) 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 it 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.
Technology and Content Expenses
The company's technology and content expenses were RMB53.5 million (US$7.5 million) in 2023.
Regulations
In May 2017, the company received a formal notice from the local Administration for Market Regulation in Hangzhou, which ruled that its sales and marketing practice adopted in its early stage of development prior to February 2016 violated the Regulations on the Prohibition of Pyramid Selling and imposed a penalty of approximately RMB9.6 million (U.S.$1.4 million). The company fully paid this fine in June 2017 and has adjusted its business practices since February 2016 to comply with the Regulations on the Prohibition of Pyramid Selling and other applicable regulations.
The company is also subject to regulations relating to online trading platform services provided for distribution of publications, including books and audio-video products. According to the Provisions on the Administration of the Publication Market, which were jointly promulgated by General Administration of Press and Publication and the Ministry of Commerce in May 2016 and implemented in June 2016, an online trading platform that provides services for the distribution of publications shall complete record-filing formalities with the competent publication administrative authority, and is required to examine the identity of a dealer distributing publications through the platform, verify its business license and Publications Operation Permit, establish a mechanism to prevent and control the trading risks and take effective measures to rectify illicit actions conducted by the dealers distributing publications on the platform.
History
Yunji Inc. was founded in 2015. The company was incorporated under the laws of the Cayman Islands in 2017.
