After Shein, another cross-border e-commerce unicorn was exposed by the media to be listed.
According to financial reports, super unicorn Patpat is considering an initial public offering (IPO), and the stock offering could take place as early as this year, possibly raising about $500 million and valuing it at around $3 billion, and said the company is considering listing locations including Hong Kong or may also choose to list in the United States.
As consultations are still ongoing, people familiar with the matter said details such as the size, location and timing of PatPat's issuance may change. In response to the listing rumors, Patpat did not immediately respond to the request for comment.
With a valuation of $3 billion, how did Pat Pat develop?
Three polytechnic men create a unicorn of children's clothing brands
PatPat was founded in 2014 in Silicon Valley, USA, with the American company Interfocus Inc. and the Chinese company Shenzhen Infous Technology Co., Ltd. and Hangzhou Infous Technology Co., Ltd. The company is a DTC cross-border e-commerce company, its products are mainly suitable for infants and young children aged 0-12, with a user size of more than 20 million.
One of PatPat's three founders, Wang Can, graduated from Carnegie Mellon University, has a fledgling experience in selling domestic animation films abroad.
Although it sounds a bit incredible that a high-caliber student who graduated from college and was a former chief engineer at Oracle sounds a bit incredible, Wang Can has made his first venture a success. According to the information of The Beluga Whale, he sold more than 150 cartoons at that time, each of which had overseas distribution rights, and the total annual sales were more than 10 million yuan.
The reason why Wang Can has done a good job is that he has established a two-layer translation system, so that the details of domestic films reflect the European and American style, making them look like international brands. It is also these accumulations that make Wang Can very aware of how to build a brand, and also allow three science and engineering men who have no experience in making clothing to successfully create a B2C export mother and baby e-commerce platform PatPat.
According to the enterprise investigation, as of August 2021, PatPat has had several rounds of financing, of which the D round has completed a financing of 510 million US dollars, refreshing the largest single financing record disclosed by the domestic cross-border e-commerce industry at that time. Subsequently, in the D+ round, the SoftBank Vision, founded by the internationally renowned investor and the weather vane in the VC/PE circle, Son Zhengyi, invested $160 million exclusively.
In addition, PatPat's investors also include Sequoia Capital, IDG Capital, Transatlantic Investment, etc., which can be described as the darling of capital.
PatPat has not only won the recognition of the market, but also the love of the public, and has been recommended by Apple's iTune Store on the homepage of North America many times. And according to the data of the public account cross-border hunting technology, PatPat has a considerable number of fans on social platforms such as Facebook, Instagram, TikTok, Youtube and so on, of which the number of likes and fans on the main Facebook account has exceeded 6 million.
In the track of cross-border e-commerce, why can PatPat seize some markets in the field of children's clothing?
What does PatPat rely on to go to sea?
In recent years, the domestic market has gradually saturated and industry competition has intensified. According to the data disclosed by the agency, in the e-commerce retail platform market, the top five market share are Taobao (51%), JD.com (20%), Pinduoduo (15%), Douyin e-commerce (5%) and Kuaishou e-commerce (4%), while the remaining less than 5% of the market share is jointly divided by other platforms.
Under this trend, going to sea has become a good opportunity for many e-commerce companies, and the epidemic has accelerated the development of online retail platforms, providing a broad space for platforms such as PatPat.
Moreover, from the data of Zhihu Arayu, the North American market for PatPat is one of the markets with the largest demand for infant and young children's clothing at this stage. According to the data, in 2021, the sales revenue of infant and toddler clothing in the North American market will account for 17% of the global baby clothing market, reaching a scale of nearly 7.1 billion US dollars.
At the same time, the DTC model adopted by PatPat has certain operational advantages.
First of all, the traditional export model adopts the factory-exporter-brand-distributor-retailer-user model, which has financial costs and time costs, and profits are easy to be swallowed up by exporters and so on. The DTC model opens up the intermediate links, so that the goods can be sent directly from the factory to the user's hands, which can save most of the costs, thereby reducing costs and supporting PatPat to set low prices for goods.
Secondly, the DTC model relies on private domain traffic, that is, it can directly reach users. This enables real-time analysis of user needs, competitiveness, and reduced customer acquisition costs. And infants and young children grow up fast, which leads to the fact that maternal and infant products themselves are an industry with a relatively high repurchase rate.
As mentioned in the preface, Wang Can has experience in building a brand. He set up a 5-human case team for PatPat, two of whom were American employees, responsible for polishing the Chinese and English translations, and also hired professional designers and photographers in the local area to improve the style of the product. And in order to better adapt to the US market, PatPat has also established a local team to better understand the habits and culture of users.
This makes PatPat's products look more European and American, which is very helpful for building a brand, and will also make consumers feel more cost-effective.
In addition, since 16 years, Patpat has set up offices in Shenzhen, Guangzhou and other places. In terms of logistics, PatPat has created its own overseas warehouse in Europe and the United States, controlling the logistics transportation time at 4-10 days, and its founder also said that it will eventually build its own logistics.
It should also be noted that PatPat adopted the way of building independent stations and established its own website, so last year's Amazon "banning tide" did not affect the brand, and cross-border large-scale sales of "Youshu" were blocked 340 sites, and the frozen funds reached 130 million yuan. According to the statistics of Shenzhen Cross-border E-commerce Association, the industry loss is estimated to exceed 100 billion yuan.
From the above aspects, it is not a difficult thing for PatPat to gain the favor of capital and users.
However, as a DTC cross-border e-commerce company, PatPat may be affected by the policy. And Amazon is at the head of cross-border e-commerce, its popularity and market rate are very high, according to 2020 Statista data, 26% of global consumers preferred cross-border e-commerce platform amazon.
However, PatPat's market is too vertical, and compared with giants such as Amazon, the volume is certainly not large enough, so it may not be easy for the brand to seize more market share in the future.
At the same time, although PatPat has received a lot of praise, but there are also many low scores, a user who scored three points on apple's App Store left a message that PatPat is not easy to cancel orders, which shows that the brand's App also needs to be improved. A mother also wrote in a shopping evaluation on the sunbathing ring that PatPat's clothes are generally good, but there are also some small flaws, such as small clothes labels are a little difficult to remove, and there are several small threads at the stitches.
Even if these problems seem harmless, quality issues can still affect the brand's image, and in the long run, they will damage the interests of the brand.
epilogue
Gong Ting, Managing Director and Managing Partner of Sigheena Asia, has said that he is firmly optimistic about the market opportunities for China's supply chain to go overseas and cross-border DTC, and expects PatPat to continue to strive to become the world's leading children's wear brand. GGV Jiyuan Capital has also said that PatPat is the team it sees pursuing the ultimate in all aspects, and believes that it can become the world's leading DTC brand in the future.
Although PatPat is not perfect, after the future listing, it is likely to gain more development opportunities after it is favored by the market. And as Munger said, there's a mistake of doing nothing. So maintaining existing strengths and moving forward, while fixing flaws, may be what PatPat should do before and after it goes public.