Wanda E-Commerce raises $161M to take on Alibaba

Steven Loeb · January 5, 2015 · Short URL: https://vator.tv/n/3b24

Wanda E-Commerce is a joint venture former last year between Wanda Group, Tencent and Baidu

When you think of Chinese e-commerce, the first, and probably, only name that comes to mind is Alibaba. And for good reason: after all, the company raised $21.8 billion for the biggest U.S. IPO in history in September. It's obviously a giant.

It's rivals in China, however, are not laying down so easily. In fact, three of them came together last year to form a joint venture called Wanda E-Commerce, a move that just paid off in a big way.

Wanda E-Commerce has raised $161 million in funding from Centec Networks and Xude Rendao, it wasannounced on Monday. The deal gives Centec Networks a 3% stake in the company, while Xude Rendao now has a 2% stake.

According to the company, the investment has quadrupled its valuation to 20 billion yuan, or roughly $3 billion.

Wanda was formed in August of 2014 by three of China's biggest companies, Wanda Group, Tencent and Baidu. The company is controlled by Wanda Group, which has a 70% stake, while Tencent and Baidu each hold a 15% stake. The three companies intiailly invested five billion RMB, or $814 million, into the joint venture, with a plan to increase that to  20 billion yuan over 5 years.

So how will Wanda challenge Alibaba? By putting its focus on converting online-to-offline sales. Wanda happens to have over 100 malls around China, making it the largest shopping center builder in the country, and it will use that advantage to differentiate itself against its rivals.

In December, Wanda Group bought a controlling stake in 99Bill, China’s fourth ranked online payment platform. It has also completed pilot beacon technology trials completed, has another data center in construction, and "dozens of O2O software services under development." Wanda E-commerce is expected to be fully operational in the fourth quarter of 2015.

E-commerce in  Asia

In Asia, e-commerce has, to put it mildly, exploded in recent years. 

In China alone, e-commerce went from being only 3% of retail in 2009, to a projected 15.4% in 2014,according to AdAge. The Chinese e-commerce sector even surpassed that of the U.S. in 2013

And its not only China, but that other giant Asian country that has embraced e-commerce: India.

Two companies in particular raised funding in the billions of dollars:  Flipkart, which is also the largest e-commerce company in India, raised nearly $2 billion in three rounds. First it picked up a $210 million investment led by DST Global in May and than a whopping $1 billion round, led by Tiger Global and Naspers, in July. Last week it raised another $700 million.

Meanwhile, Snapdeal, which is one of Flipkart's biggest rivals, raised at least $860 million in four rounds in 2014. 

The first investment in the company was in a round led by eBay in February, in which it invested $133.7 million. The round also included Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital. That was then followed by another $100 million from Temasek, BlackRock, Myriad, Premji Invest and Tybourne in May, and then an undisclosed personal investmentfrom Ratan Tata in August. The company then added another $627 million from Softbank in October.

Both of those companies will have to deal with Amazon, which announced in July that it was going to be investing $2 billion in its Indian operations. 

(Image source: fiducia-china.com)

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