A toddler versus giants

Some products on offer via Mia

When stay-at-home mom Liu Nan decided to start her own business in 2011 – the year her daughter was born – she chose an area she was starting to get to know: baby care products.

The journey wasn’t straightforward. She tried to negotiate for the distribution rights to a foreign diaper brand but was rebuffed because she was a housewife at the time. So she pivoted into a virtual storefront on Taobao, calling it Miya Baobei, that she used to offer flash sales of discounted diapers and baby formula she was able to source from overseas.

It was a success, raking in over Rmb10 million in its first year. By 2014, Liu had departed Taobao to start her own rebranded sales website Mia.com. The following year she added physical stores through franchising and later created a private label range of baby skincare products.

The business model of Mia.com not only struck a chord with consumers but also with investors. Over the years, the company has concluded five rounds of fundraising. The last was in 2016, with a list of backers that included Baidu, Sequoia Capital and China Renaissance.

Baidu, which led the Series D round of $150 million financing, valued the company at Rmb10 billion. There were rumours that Liu was looking to take the company public in 2018 though the plan never materialised.

Mia’s fortunes have taken a turn for the worse since then and it has just announced that it will terminate services on its smartphone app in September. The decision was made because of “changes in users’ shopping habits”, the platform said.

The move is another setback for the company. In late 2020, when the country was struggling with the impact of the Covid-19 outbreak, Mia.com had taken the decision to close its physical stores too. Now, without the mobile app, the only distribution channel left is the company’s WeChat mini-programme. And according to Blue Whale Media, a lot of the products there are shown to be out of stock.

Mia’s rivals have also struggled to stay competitive. Beibei, an e-commerce site specialising in infant and toddler products went bust last year. Separately, Better life for Babies (local name: Mu Ying Zhi Jia), another e-commerce site that carried similar goods, went public on the New Third Board back in 2016 but was delisted in 2019 after four consecutive years of losses.

Industry observers say vertical e-commerce businesses (online retailers that choose to sell goods across a single category only) have struggled to compete with the giant e-commerce firms that sell a fuller range of products. Mia.com ranked behind JD.com, Vipshop and Tmall in the range of brands offered in the baby-and-mom goods segment, says e-commerce consulting firm 100ec.cn. Its prices were also higher than those offered by the biggest e-commerce platforms.

“At a time when internet traffic has reached its peak and against fierce competition from e-commerce platforms, there’s little room for growth for vertically integrated platforms like Mia.com. Its advantages have long been overtaken. Many others have struggled to find new areas of growth and it is only a matter of time before they run into financial and operational trouble,” predicted 36Kr.

China’s slowing birth rate hasn’t helped the longer term sales forecasts either. When Mia was founded in 2011, the birth rate was 13.27 babies for every 1,000 people. It had dropped to 7.52 last year, says the South China Morning Post.

“The main reasons [for Mia’s problems] are: first, the decline in birth rate has led to a slowdown in the demand for mother and infant care products. Second, large e-commerce platforms (like Tmall and JD.com) have driven down prices for vertical e-commerce players,” Zhang Yi from iiMedia Research told Securities Daily.

Mia.com has had problems more of its own making too. There have been complaints about its tiered loyalty programme, for instance (it later closed its multi-level marketing system, some of which have been dubbed ‘pyramid schemes’). Liu, the founder, then tried to pivot again, this time to e-commerce livestreaming during the pandemic. But sales weren’t sufficient once the novelty factor had worn off and Liu reduced the number of streaming sessions from once a week to once a month.

“The short-term gains of livestreaming couldn’t sustain the long-term growth of Mia.com. To have sustainable growth, it needs to tell a better story,” was the biting verdict from 36kr.

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