In this May, the To B market is becoming increasingly fierce. On May 15, JD Industrial Products, a subsidiary of JD , completed a round of financing of with a total amount of US$230 million, and the investors in this financing included GGV Jiyuan Capital led investment, Sequoia Capital China Fund, CPE and other institutions. JD Industrial Products, which has a valuation of more than US$2 billion, has also become the highest valuation company in the field. A major war in the industrial products field is about to begin.
Although JD Industrial Products has been launched as a primary channel as the main site, it has only been about 18 months. But in the eyes of industry insiders, it can be said that JD.com's acquisition of such financing is a natural result. In fact, competition in the To B field has lasted for quite some time. Even in 2019, which is considered a "capital winter", VC and PE have not diminished at all. Taking the VC star company Jinshajiang Venture Capital as an example, in the past year, its To B project investment projects have exceeded To C.
The reason why investment institutions are so optimistic about the To B field is because this field has the advantages of high gross profit and high stability, as well as sustainable monetization advantages. In the international market, the gross profit margins of industrial products companies such as Mismi and Gu'anjie are above 30%, and cash flow is also extremely stable. For investment institutions, targets with stronger application capabilities and better monetization capabilities are the most worth investing in at the moment.
and JD Industrial Products is exactly this target. According to an insider of JD.com, more than 50% of JD.com's transactions are completed through procurement platforms independent of JD.com's main website. The uniqueness of the category and the independent business model that have been formed make JD.com's cash flow more stable.
Of course, JD.com is not the only entrant in the domestic industrial products track. At present, there are three main types of players in the current market: foreign-funded enterprises (such as Gu'anjie), local professional enterprises (such as Zhenkunxing, Gongpinhui), and e-commerce giants (such as JD.com and Alibaba). The reason why JD Industrial Products has gained popularity among investment institutions is that it has established differentiated advantages compared with each camp.
In the view of industry insiders, if growth and commercial monetization capabilities determine the lower limit of valuation, the height of the commercial moat determines the upper limit of valuation. Whether it has the gene of disruptive technological innovation and the accumulation of resources that similar companies are difficult to catch up with, constitutes the core of the sustainable competitive advantages of enterprises. The continuous monetization ability + the threshold of commercial moat constitutes two major factors that JD Industrial Products is optimistic about in its first round of financing, and is also the key to gaining a "value of US$2 billion".
(Editor in charge: Wang Qingyu)
