LAHORE: In a bid to launch its eCommerce operations in Pakistan, Miniso has acquired the Pakistan operations of ToSharing for a valuation between $5 million and $7 million from Cheezmall, Profit has learned.
The acquisition, which was finalized in September, comes nearly a year after Cheezmall raised CN¥100 million ($14.97 million) in Series A from Innoangel Fund and three other investors, according to Crunchbase. Cheezmall is the brainchild of Pakistani-born Chinese national Aurangzeb Khan. The Series A was reportedly raised at a $300 million valuation.
The business is primarily based in China with the ToSharing subsidiary operating out of Pakistan. While Miniso products are listed on multiple third-party marketplaces in Pakistan, the business has considered ToSharing to be its channel partner in Pakistan, with direct online sales redirecting to the site.
As a result, the two businesses have enjoyed a healthy relationship and tracking of sales & customer success. The acquisition captures the eCommerce infrastructure of ToSharing, its talent, the data pertaining to customers, and will allow the ToSharing business to continue operating independently, without Miniso products listed.
Sources told Profit that the first phase of the investment from Miniso pertains to acquiring ToSharing for between $5 million and $7 million while the second phase will see the Chinese low-cost retailer and variety store chain invest an additional $8 million to $10 million for building eCommerce fulfillment centers and the entire infrastructure for a successful eCommerce operation in major cities of Pakistan. Representatives from Miniso and Cheezmall declined to comment on the exact nature of the valuation, including the earnings multiple applied.
According to the acquisition rationale shared by representatives of Miniso, the decision is primarily an acqui-hiring by the Chinese low-cost retailer and variety store chain. As of 21st October 2020, cross-functional teams of ToSharing across marketing, supply chain, customer care, security, and risk will have been moved to Miniso.pk the upcoming eCommerce store. The site will be ready to process product orders by the 31st of October 2020.
“This is one of the greatest strategic collaboration in eCommerce of Pakistan which has been made with Miniso and ToSharing,” said Khan, CEO of Cheezmall, in a statement to Profit. “We aim to further strengthen the Pakistan-China relationship and cross border eCommerce trade in Pakistan. We are eager to launch and introduce new concepts of eCommerce and technology in Pakistan that what we call in China as eCommerce 3.0.”
As part of the deal, all third party marketplaces in Pakistan have been informed that they will no longer be able to source and sell Miniso products on their respective platforms, with the remaining inventory allowed for sale and no fixed window on how much time they have to sell the existing stock.
Sources told Profit that the decision to cut off third-party marketplaces, which are a consistent source of revenue, has to do with inconsistent customer experiences – the backlash of which falls squarely on the Miniso brand.
In order to provide a consistent product experience, the business has decided to be the exclusive online destination for purchasing Miniso products in Pakistan.
“We have an aggressive upcoming strategy for Pakistan’s eCommerce and we will be bringing an omnichannel eCommerce model to better serve the customers and increase the accessibility of Miniso products throughout the country,” said a representative of Miniso Pakistan.
Just last week, Miniso made an IPO listing on the New York Stock Exchange at a $20 billion valuation. Sources told Profit that the acquisition of ToSharing is one part of a larger global business expansion plan, with a digital direct to consumer strategy playing its part with capturing first-party data, delivering consistent customer experiences, and achieving vertical integration. Sources told Profit that Miniso may in fact look to acquire Cheezmall as a whole, which was valued at $300 million at its Series A round in 2019.
A very wise move of miniso to cover the maximum potential of ecommerce in Pakistan. Though its bit late, but again the potential is huge in terms of growth and numbers.