The government is looking to amend rules to stop citizens from receiving duty-free “gifts and samples” valued at under Rs 5,000 from overseas companies. This follows media reports that some Chinese ecommerce players were shipping cheap products to customers in India directly from China, labelling them as gifts to evade custom duty.
Club Factory’s founder, Vincent Lou, told ET that all orders are being fulfilled only by local sellers, of which 70% are SMEs.
India does not allow foreign ecommerce companies to sell directly to consumers, but allows them to invest fully in platforms where independent sellers can list and sell their own products.
Lou said Club Factory is ramping up investments in India to create a strong e-commerce ecosystem for itself. “We are looking to make significant investments in warehousing, delivery, technology and marketing to strengthen our presence further by scaling up operations in an endeavour to further connect with masses across the country,” Lou wrote in an email response to a query from ET, adding that the company fulfils all orders in India through local sellers.
He, however, did not disclose the amount the company is looking to invest.
ET had reported in June that the Mumbai customs port had seized hundreds of packages of firms including Sino India Etail and Globemax, which were acting as importers on record for Chinese firms SheIn and Club Factory, respectively. They were reportedly undervaluing the imported items to be able to comply with local laws.
Hangzhou-based Club Factory said its Indian operation does not import items from China.
An email query sent to Club Factory seeking information on what operation model the company was following when it started functioning in India in 2016 remained unanswered till as of press time.
Lou said the Indian government‘s policy on ecommerce business is the right move. “We think the Indian government is looking to protect the rights of sellers and buyers and build a healthy ecommerce ecosystem via the new policy. We are completely aligned with this policy and believe in facilitating a level playing field which will only benefit the industry in the long term,” he said.
In 2017 and 2018, Club Factory had closed Series B and C funding in China, raising $20 million and $100 million, respectively, from top-tier venture capital funds. The company is funded by investors including Bertelsmann, IDG Capital, and Qiming Venture Partner, among others.
With the latest round of funding, Lou said, Club Factory will expand its range of products in India across categories. The etailer is also looking to use the funds to enhance its data technology capability to make Indian retail more efficient.
According to Lou, Club Factory is doing extremely well in India. The company achieved more than 10 times growth in the past six months for its Indian SME business.
One of the largest Chinese e-commerce company to operate in India, Club Factory said it had registered 700% growth in terms of order volume during this Diwali as compared to last year. “More than 100 local sellers achieved a record of 15,000+ orders per day during the Club Diwali Sale through Club Factory,” Lou said. Lou is hopeful of increasing this number manifold in the years to come.
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