RedBaby, one of China’s earliest specialized e-commerce sites, was once the belle of the ball. In 2008, the baby-products specialist site brought in nearly one billion RMB in sales ($158 million), and the next two years saw the company hit 1.5 billion RMB ($238 million). But then things started to falter. Increasingly powerful competition has stopped RedBaby’s growth completely, raising questions about the specialist e-commerce model as RedBaby loses money.
Interestingly, though, industry insiders told the National Business Daily that electronics retailer Suning (SHE:002024) is interested in buying the floundering RedBaby. According to one anonymous industry source:
Suning’s acquistions finance team have already been at RedBaby for nearly a month, and they’re in the process of auditing the accounting, but as soon as a firm price comes out, [the acquisition] should be announced publicly.
It’s always important to take anonymous quotes with a big grain of salt in China’s tech industry, especially when quotes are sometimes planted in news stories by competitors’ PR teams. It’s not clear whether or not that’s what’s happening here, but if the rumor is true, it would certainly be an interesting move on Suning’s part. On the one hand, the company just saw its shares plummet following a 30 percent profit slump; why would it want to acquire another company that seems to be entering a similar quagmire? On the other hand, RedBaby does have some e-commerce expertise that Suning lacks.
If the RedBaby-Suning rumors are true, we should hear confirmation quite soon, as it sounds like the negotiation process is pretty far along. Personally, I don’t see how buying an e-commerce company that’s struggling to compete and focused on a totally different demographic is going to help Suning in its own struggle to compete, but hey, what do I know?
[National Business Daily via Sina Tech]
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