Babytree Files IPO Prospectus, Eyes RMB 100 Billion Market Valuation

(This article is reposted from Chuangyejia, with authorization for reproduction.)

BabyTree, a maternal and child health platform, is an internet “slow” company with a tumultuous development history.

In 2007, it rode the wave of the rise of social networking sites (SNS), leveraging Wang Huainan’s profound understanding of search engine optimization (SEO) developed over his years at Google to capitalize on traffic dividends. By 2013, BabyTree’s website traffic had surpassed that of BabyCenter, the world’s leading maternal and infant community.

In early 2013, it once again faced a make-or-break test in transitioning from PC to mobile. With the reminders and assistance of Shao Yibo, Founding Partner of Matrix Partners China, and his partner Zuo Lingye, among others, it successfully made this precarious leap.

In September 2014, after collaborating with and learning from the maternal and infant e-commerce platform Honghaizi, BabyTree officially entered the maternal and infant e-commerce market by launching its “Meitun Mama” e-commerce platform. After a period of trial and error, on July 22, 2015, it received a $250 million (RMB 1.55 billion) strategic investment from Jumei, integrating Jumei’s cross-border supply chain for maternal and infant products. Meanwhile, BabyTree established its e-commerce team separately in Shanghai, distinct from its original community team, to foster a more “down-to-earth” culture and enhance the team’s competitiveness.

In December 2015, BabyTree announced that the monthly sales volume of its maternal and infant e-commerce platform, Meitun Mama, had exceeded RMB 250 million. In June 2016, Wei Xiaowei, COO of BabyTree, stated that the company’s e-commerce business had achieved profitability and was preparing to dismantle its VIE structure to list in China.

Today, BabyTree’s monthly independent visits have reached 170 million. Wang Huainan, the founder of BabyTree, believes that with such massive traffic and extensive big data experience, BabyTree will become China’s largest club-style e-commerce platform company.

Liang Xinjun, Vice Chairman of Fosun Group, once told Wang Huainan that as long as BabyTree did not make any fatal mistakes, it had the potential to become a company with a market capitalization of RMB 100 billion.

Whether such an ambitious vision can be realized hinges on whether BabyTree can win the e-commerce battle. BabyTree has long been perceived by the public as a maternal and infant community website that advocates love, communication, and growth. Even after Jumei, a flash-sale e-commerce platform, became its strategic investor, e-commerce remained a weak link for the BabyTree team led by Wang Huainan. With a monthly GMV of RMB 250 million, BabyTree’s scale is still relatively small compared to Beibei and Mia, two maternal and infant e-commerce platforms that claim annual GMVs exceeding RMB 10 billion. Moreover, although the “community + e-commerce” model is a trend, industry players are still exploring it, and no one dares to claim outright success yet.

BabyTree’s current “destiny” to scale up its maternal and infant e-commerce business is owed to its early team that excelled at UGC content and traffic acquisition.

In the winter of 2006, Wang Huainan, preparing for his first entrepreneurial venture, conducted interviews with hundreds of mothers in Beijing’s Chaoyang and Haidian districts. He identified four fundamental needs among them: parenting knowledge, social interaction and networking, recording and sharing experiences, and shopping.

Parenting knowledge is the top priority for mothers. However, at that time, co-founders such as Wang Huainan and Shao Yibo, despite being fathers themselves, were rough-and-ready men with demanding work schedules and little hands-on parenting experience. Relying on them to compile professional parenting expertise was neither reliable nor feasible within the available timeframe.

(Shopping) They were the first to rule out maternal and infant e-commerce. At that time, Redbaby, a maternal and infant e-commerce platform, was far more well-known than JD.com, and many people believed it was on the verge of going public; Wang Huainan was no exception. “Our thinking at the time was to focus first on building traffic and brand recognition.”

“After becoming pregnant, women often experience a profound sense of isolation, feeling as though they are navigating the pregnancy journey alone. Their husbands and family members may not understand their situation; indeed, instead of offering support, they sometimes make sarcastic remarks, such as asking, ‘What do you even do at home all day?’ In reality, expectant mothers are often busier at home than they would be at work.” Wang Huainan acknowledges that among the four core needs of mothers, social interaction and community building may not necessarily be the most critical. Nevertheless, he and his team decisively chose to start with a maternal and infant community platform, rather than leveraging Wang’s expertise in vertical search platforms for the maternal and infant sector—a field in which he had previously served as an executive at Yahoo and Google. According to Wang, this decision was driven more by personal intuition than by professional instinct.

At the time, Wang Huainan’s second child was one year old, and Shao Yibo’s third child had just turned one. Wang had served as Chief Marketing Officer (CMO) at Google China, while Shao had founded EachNet and sold it to eBay. Both were relatively financially independent and thus not particularly eager to chase quick profits. Instead, they were more interested in building a platform that could support mothers and promote the healthy growth of their children. “Even if we ultimately failed, would we have done something meaningful for mothers?” Wang Huainan recalled. They also held a prediction at the time that the future opportunities in China’s internet development lay in vertical sectors such as food, clothing, housing, and transportation.

Wang Huainan defined BabyTree as the “Facebook of the maternal and infant sector.” “At that time, mobile phones were not yet prevalent; the landscape was dominated by PCs. We chose to encourage mothers to upload photos of their babies to gain community recognition and facilitate interaction. This phase lasted two and a half years,” said Wang Huainan. “We initially focused on communication and social networking, and later incorporated parenting knowledge. Throughout both stages, we consistently integrated the needs for recording and sharing.”

“When we entered this field, entrepreneurs in the sector had a limited understanding of search. Given my background in search, I placed great emphasis on search engine optimization (SEO), which proved to be a significant advantage for us. I still remember that in the second year, Mark Yang (Yang Haoyong), a former Google colleague of Wang Huainan, visited our company and asked, ‘Do you practice search engine optimization?’ I replied, ‘Of course we do,’” said Wang Huainan.

The fundamental principle behind search engines crawling information and ranking it prominently is as follows: when users submit queries, the pages that provide the most comprehensive, precise, and user-preferred answers will rise to the top.

Wang Huainan’s approach is to enable experts, influencers, and experienced mothers to answer parenting questions on the BabyTree community. “From the newborn stage up to age six, mothers are at their most willing to share. We allow this maternal instinct to flourish during this period, turning mutual support and knowledge sharing among mothers into the best foundation for search engine optimization (SEO). We do not plagiarize, nor do we maintain a large editorial team; 99.999% of all Q&A content and knowledge is provided by users themselves.” Wang Huainan’s eyes lit up as he spoke about this point.

“Of course, relying solely on user-generated content (UGC) is insufficient. BabyTree has also established a dedicated content operations team. ‘Our operations team engages with users to guide them in creating high-quality content. Based on user interests, we then feature this content in communities and forums as discussion topics to stimulate engagement and encourage users to generate more conversations. This approach helps boost our platform’s activity levels,’ said Zhang Feng, Head of Content at BabyTree.”

After 2009, the emergence of Weibo and WeChat raised concerns at BabyTree that it might be displaced by these new forms of social media: “At the time, many users indeed migrated from traditional social networking sites (SNS) to Sina Weibo. There was a concern that, upon reflection, users might choose to post quick complaints on Weibo, while reserving BabyTree exclusively for sharing more thoughtful reflections on parenting.”

“Weibo’s volume of mother-and-baby content was on the rise, and so were the number of diary entries and photos on BabyTree. Then Weibo declined, yet BabyTree continued to grow. When WeChat emerged, you realized it remained a community for acquaintances and semi-acquaintances. A mother wouldn’t constantly boast about how wonderful her child is; instead, she would share what she had for lunch, where she went with colleagues, or how she was feeling that day.” Wang Huainan concluded that general-purpose platforms could never become full-fledged competitors to vertical platforms, because “to excel in their domain, they must necessarily compromise on doing what we do to the same degree of excellence.”

In early 2013, Wang Huainan needed to make a major resolution.

At that time, Matrix Partners China’s investment focus had already begun shifting toward the mobile internet. Shao Yibo, founding partner of Matrix Partners China, was a co-founder of BabyTree, and Zuo Lingye, a partner at Matrix Partners China, was an investor in BabyTree. “They kept reminding me to prepare for the mobile era and have the courage to let go,” Wang Huainan admitted. For quite a long period, he remained skeptical about whether mobile internet was merely a fleeting illusion or would eventually become mainstream in the years to come.

Wang Huainan admitted that there were times when he was resistant to feedback, but Lingye Zuo continually reminded him that many of his former colleagues in the United States were also developing mobile products. As these voices converged, he realized that the trend might indeed be arriving. “If we don’t disrupt ourselves, someone else will disrupt BabyTree.”

After months of deliberation, Wang Huainan finally concluded that mobile internet would become the mainstream. At this point, persuading the entire company to migrate from a PC platform that had already achieved success to the mobile internet was no easy task for Wang Huainan. “Mobile internet is quite different from traditional internet; we were unfamiliar with the production process of mobile internet products.”

In early 2013, Wang Huainan decided to allocate 90% of the company’s capital and personnel entirely to mobile initiatives.

“This decision has raised concerns. ‘What if the operations safeguarded by our 10% of staff suddenly collapse, and meanwhile, the other side fails to deliver?’” said Wang Huainan.

During the PC era, BabyTree favored building comprehensive, all-in-one products. In the mobile internet age, traditional internet companies often replicated this approach, launching dozens of apps—a strategy they referred to as an “app matrix.”

After a period of experimentation, Wang Huainan rejected this approach. “It is logically understandable to develop 20 products and then fully support the one that resonates most with users, but in practice, it is unworkable. In the mobile space, you must go all-in on one or two precise areas.”

Prioritizing users’ essential needs in the order of parenting knowledge, social interaction and friendship-building, record-keeping and sharing, and shopping, Wang Huainan weighed the pros and cons and placed his bets on the two core demands—parenting knowledge and social sharing. He subsequently developed two apps, BabyTree Pregnancy and Xiao Shiguang, integrating record-keeping and sharing horizontally into both platforms.

It took BabyTree Pregnancy at least 12 months to evolve from having no initial understanding of what constitutes a high-quality mobile product to achieving a significant surge in app users and mastering the dynamics of mobile products. Today, Xiao Shiguang is following the same trajectory.

“We have recruited many product managers with a decade of experience from companies we hold in high esteem, such as Tencent, Sina, 360, and Yahoo. In the past, I was somewhat superstitious about them, thinking, ‘They must understand something we don’t and will surely do a better job with our products.’ Later, I realized that this assumption largely does not hold true,” said Wang Huainan.

“Top talents within large institutional frameworks rarely possess substantial experience in truly leading product development. Instead of seeking out such high-profile individuals, we should look for candidates who are genuinely passionate about the industry, committed to excellence, dedicated to meeting user needs, and possess strong learning agility.”

“External hires are unlikely to provide the critical support or finishing touches we need; that ‘coal’ and that ‘dot,’ in my view, must be delivered by the founding team. Unless founders are fully committed and exercise sound judgment, such outcomes will not happen automatically. This is certainly the case for BabyTree at its current stage, as well as for most Chinese startups in their seventh to ninth year,” said Wang Huainan.

“The rise of mobile has not completely killed our PC business. Mothers who wish to read extensive knowledge still do not consider smartphones the best tool. It is difficult to view 2,000-word articles on parenting via mobile devices, as they would require numerous screens to display.”

“If you want to read long-form, continuous content, it’s best to return to the PC experience. Mothers on BabyTree’s PC platform tend to browse before 10 a.m. and after 9 p.m. During these limited windows of time, whether at home or in the office, they engage in extensive, in-depth reading of parenting knowledge. After declining for a year and a half, BabyTree’s PC traffic is now seeing a slight uptick,” said Wang Huainan.

Wang Huainan stated that in the first stage, many people would consider PC-based experience a burden. However, once traditional internet professionals began to grasp the dynamics of mobile technology, such expertise proved advantageous rather than restrictive. For BabyTree, its PC platform had already achieved profitability by 2009, and its transition to the mobile internet did not significantly impact its revenue. “At one point, 10% of our team supported the remaining 90%.”

As early as 2008, Wang Huainan began exploring BabyTree’s business model and launched an open early-education platform, which has remained a very small-scale operation to this day. “At that time, my good friend Hong Bo (an internet critic) advised us, ‘You must enter the e-commerce sector—immediately.’” However, Wang Huainan and Shao Yibo believed that BabyTree needed to first build traffic volume and brand recognition before venturing into e-commerce.

Around 2010, as BabyTree’s traffic surged, Wang Huainan leveraged his prior experience as a brand manager at Procter & Gamble to persuade maternal and infant brands such as Pampers to shift their advertising budgets from offline channels to online platforms, particularly vertical internet platforms in the maternal and infant sector like BabyTree. “We were able to capture approximately 70% to 80% of internet advertising spending targeted at the maternal and infant sector. In other words, for every 100 yuan spent, we could secure 70 to 80 yuan. This is a source of considerable pride for us, and it also yielded relatively high profit margins.”

But clearly, Wang Huainan and Shao Yibo remained deeply committed to the e-commerce venture.

“Compared with other online communities, mother-and-baby communities are the most suitable for e-commerce. Any issue discussed by mothers ultimately boils down to finding a solution, which generally involves purchasing products or services,” Wang Huainan told VCBeat.

“However, building a social (community) e-commerce platform is not something that can be achieved overnight. We spent three to four years educating users, letting them know that BabyTree is a place where they can shop,” said Zhang Feng, Head of Content at BabyTree, noting that BabyTree had made several attempts in the e-commerce sector.

In May 2012, BabyTree announced the joint establishment of a lifestyle and consumption channel with Redbaby. BabyTree users could log in to Redbaby’s platform directly to shop and enjoy various membership benefits, including points redemption, while Redbaby users could log in to BabyTree’s website to post content and access services such as news updates and points-based rewards. BabyTree later launched an overseas shopping platform called Yangtaopai, but it unfortunately failed to gain traction due to unfavorable market timing.

“It’s not that we gained nothing; without those efforts, BabyTree wouldn’t be what it is today,” said Zhang Feng. “Initially, we indeed faced the challenge that users viewed BabyTree merely as a communication platform and believed they shouldn’t purchase products there. We first introduced an e-commerce section on BabyTree to raise awareness that shopping was available on the platform.”

In the view of Wei Xiaowei, COO of Babytree, it was indeed largely unviable for maternal and infant communities to engage in e-commerce during the PC era, as the cost of switching platforms was extremely low. “Users would see a product they liked on Babytree, click to save it, then search elsewhere to find where it was sold and make the purchase. Moreover, most users did not even register accounts on PC-based websites.”

“In the mobile era, user switching costs are extremely high. ‘If a user sees an appealing product on BabyTree Pregnancy, they have to close the app, open another e-commerce app, register or log in, search for the product, and then make the purchase. This assumes the user has already downloaded that e-commerce app. If not, they would need to note down the product details, search for it, download a new app... Therefore, integrating social commerce within the app becomes viable. This is not an achievement attributable solely to BabyTree, but rather an advantage brought about by the changing times,’ said Wei Xiaowei.”

Wei Xiaowei also stated that without the accumulation of big data, Babytree’s app would not have been able to develop into a community-based e-commerce platform.

During the PC era, websites could only track users via cookies. However, since average Chinese users cleared their cookies on a monthly basis, websites lost track of them after the second month.

At that time, big data was virtually nonexistent; all so-called big data were merely hypothetical and thus lacked value. Only big data can resolve the interrelationships among e-commerce, advertising, online communities, and third-party payment services. In the mobile era, every app requires user registration, meaning each user generates corresponding data.

“In the app era, tracking an individual’s behavior relies primarily on two identifiers: the registered mobile phone number and the device ID. Every mobile phone has a unique device ID; even if the user switches to a new phone, as long as the phone number remains unchanged, we can continue to track them. If the phone number is changed but the device remains the same, we can still track them. Even if both are changed, we can still track the individual because they have registered with us, and the registration ID allows for continued tracking. This is when big data analytics becomes truly effective.”

“There is another unique aspect to the maternal and infant sector: we know the expected due date and the baby’s age. This allows us to anticipate 70% of users’ basic needs. It is an industry norm that certain products are essential immediately after childbirth and when the baby reaches four months of age. By leveraging big data analytics, this prediction accuracy can be increased to 70%–90%. When users browse our community, we strategically place relevant content along their behavioral journey. As a result, they do not perceive it as advertising, since it aligns precisely with their immediate needs.”

“For example, a mother reads an article stating that teething and drooling can cause eczema in infants. Right below the article, there are recommendations for eczema cream and teethers—exactly what she needs. She does not perceive this as intrusive and clicks to view the products. Whether she ultimately makes a purchase depends on her trust in us.”

In July 2014, BabyTree officially launched its e-commerce business, Meitun Mama.

Unlike general e-commerce platforms, the operational logic of Meitun Mama requires that categories supplied by agents for brands that are otherwise unavailable be stocked in its warehouses. These products are collectively referred to as “self-operated” items and currently account for approximately 20% to 30% of its offerings, with the remainder supplied directly by brand owners. “BabyTree has been engaged in advertising services for many years and is the largest maternal and infant opinion-shaping platform, so our collaboration with brand owners runs smoothly. However, we do not allow brand owners to independently operate channels or list products; their role is limited to supplying and shipping goods,” said Wei Xiaowei.

Initially, Meitun Mama also engaged in price wars with competitors and even ran outdoor advertising campaigns. “That was because we needed to use certain tactics to let users know that we had entered the e-commerce sector.” In its early stages, Meitun Mama primarily relied on traffic redirected from the Babytree platform, but it soon encountered challenges stemming from a mismatch between its community-oriented DNA and e-commerce operations.

Wei Xiaowei stated that, in his view, community building emphasizes an ethos of emotional connection, whereas e-commerce is defined by a battlefield culture. “You can imagine the kind of people who excel at operating Zhihu; there is a saying in the e-commerce industry that it is ‘farmers’ work.’” This is precisely why, after several months of experimentation, BabyTree decisively established its e-commerce headquarters in Shanghai.

However, in 2014, many players entered the Chinese maternal and infant e-commerce market, such as Beibei.com, incubated by the e-commerce referral site Mizhe.com, and Mia Baby, which transformed from a Taobao store. Beibei, which had a GMV of only tens of millions of yuan in 2014, saw its figure soar to RMB 4 billion in 2015.

In June and December 2014, Mia Baby announced that it had secured investments of $20 million and $60 million, respectively. Perhaps sensing competitive pressure, BabyTree announced in July 2015 that it had received a $250 million strategic investment from Jumei, and with Jumei’s support, rapidly launched its cross-border e-commerce business for maternal and infant products.

According to data from Meitun Mama, its monthly sales exceeded RMB 250 million by the end of December 2015. In April 2016, Meitun Mama announced that it had achieved profitability for the first time. Wang Huainan has publicly stated that in the future, 90% of BabyTree’s revenue will come from e-commerce.

“Only one player can ultimately succeed in the maternal and infant e-commerce sector; there is no reason for others to survive.” Wei Xiaowei told VCBeat that all e-commerce companies are unable to escape this pattern:

Significant patient influx in the first year,

Strategic loss in the second year,

Third year break-even,

Modest profit in the fourth year,

The fifth year is when we truly start monetizing users.

However, maternal and infant e-commerce faces a challenge: by the fifth year, user needs shift from maternal and infant products to broader family-oriented goods. Consequently, maternal and infant e-commerce enterprises without proprietary traffic either face the awkward situation of increasing losses as sales grow, or they expand into full-category e-commerce, competing directly with comprehensive platforms such as JD.com, Alibaba, and Vipshop. BabyTree’s confidence stems from the e-commerce traffic conversion driven by its 170 million monthly unique visitors.

Wang Huainan stated that GMV was once the sole metric for evaluating e-commerce platforms. However, if such GMV is purchased with money, anyone can do it; it merely depends on how much loss and financing an entrepreneur is willing to endure, and who will ultimately take over. “This business model is unhealthy and has no foreseeable future.”

Liang Xinjun stated that BabyTree has the profile of a company with a market capitalization of RMB 100 billion.

“Over the long term, it is relatively difficult to make money in the maternal and infant sector, as it has a ceiling. BabyTree aims to expand into the broader maternal and child market, targeting mothers aged 25 to 40 who hold decision-making power within their families,” said Wang Huainan, who has held discussions with industry leaders such as Guo Guangchang, Chairman of Fosun Group, and Liang Xinjun, Vice Chairman and CEO. Liang Xinjun stated that as long as BabyTree does not undermine itself, it will undoubtedly become a company with a market capitalization of RMB 100 billion.

“I am deeply convinced of this. The inelastic demand among the populations we serve is enormous, as are the breadth of related products and the range of age groups involved.”

Wang Huainan’s vision is to lead BabyTree in becoming China’s largest club-style family e-commerce platform. By leveraging the trust and traffic bridges established by BabyTree, he aims to bind family decision-makers with BabyTree’s online and offline services, helping its monthly user base of 200 million secure the best products and services at the most competitive prices. Wang Huainan stated that if successful, BabyTree would become a massive platform for boosting household consumption in China.