VCotton Wants to Knock Your Socks Off. And Sell You New Ones

"You know when I'm down to my socks it's time for business, that's why they're called business socks" (Image source: thegreatwahl.com)

There are a lot of specialist e-commerce sites in China, but VCotton perhaps takes the award for focusing on such a niche area that it’s practically selling only one product: socks. OK, it has leggings and panties/shorts as well, for both men and women, so it’s oriented more towards underwear; the kind of stuff that you (hopefully) throw out and buy afresh pretty often. But its area of expertise, according to its CEO Lin Wei (pictured below), is socks.

In an interesting interview today with ChinaVenture, Mr Lin describes how VCotton.com launched in November of 2010 and very soon attracted some substantial seed funding – an initial 10 million RMB (US$1.59 million) very soon after going online, rising to a full 30 million RMB ($4.77 million) raised a while later. He also details the baffled, repeated question of one Chinese venture capitalist who kept asking, “Are you only going to sell socks?” He claims to have talked to 40 serious VCs with regards its first mature funding round, but nothing has transpired quite yet.

Vcotton.com founder and CEO, Lin Wei. (Image source: ChinaVenture)

And so the B2C site’s focus on such a humble product – in contrast to, say, luxury brand online malls – seems to have prevented the site from moving beyond angel investment, and to date the site has not wrapped up any A-round funding. In contrast, the couture fashion site IhaveU settled its B-round of financing earlier this week.

Aside from issues of user numbers and market traction, it’s an interesting thought that the unsexiness of a startup – or, to be more precise, its products – could affect the willingness of VCs to back it with cold, hard cash.

But VCotton is not lacking in funds, and Lin Wei is upbeat about the situation, acknowledging that 2011 was a bad year to be a Chinese tech firm trying to raise funds, let alone a ‘single product’ site in such a specialist retail area.

He tells ChinaVenture, with reference to companies like Gillette, which was bought by Procter & Gamble (NYSE:PG):

The great majority of enterprises are pursuing the strategy of a single product, a product with strong competitiveness. Behind a single product there is a huge market, whether it is a razor, or socks. It’s fine so long as that single product is strong enough.

For now, socks account for 30 percent of sales on the site, which has also somewhat diversified in recent weeks to sell towels and scarves as well. The site faces competition from the clothing choices on Alibaba’s Tmall, Tencent’s (HKG:0700) QQBuy, and the own-brand clothes from Vancl.

[Source: ChinaVenture – article in Chinese]

Note: if you’re baffled by the main image, check out the comedy song called Business Time.