NOME, a company sells home living products, is a mix of MUJI and IKEA in its design and price. Sequoia China and China Renaissance led the series B financing of millions of dollars. The long-tail economy is growing.
NOME's physical store. Photo credit to NOME.
NOME announced on March 22nd that it had completed the series B financing in amount of CNY 600 million (USD 88 million) led by Sequoia China and China Renaissance (华兴资本) and followed by Tiantu Capital (天图资本) and Capital Today (今日资本).
Founded in 2017, NOME is a company selling home living products, which are designed by Swedish independent designers with a signature of simplicity style. Dated now, NOME has raised three rounds of funding series and Sequoia China has invested the latter two series, and Capital Today participated in every investment by far.
In 2017, NOME received CNY 230 million (USD 34.3 million) in series A from Capital Today; in May 2018, it acquired series A+ financing of CNY 180 million (USD 26.9 million) led by Sequoia China. NOME’s capability in attracting investors is beyond the public’s expectation. The uniqueness of NOME might help to explain its attraction.
NOME’s designs are all done by Swedish designers and marketed as an indie-designer brand. The visual effect conveyed by NOME’s physical store is simplicity, coziness, and brightness, which is similar to MUJI but with a taste of IKEA (well-known for Swedish design). Prevailed in China, MUJI, a home living brand from Japan and branched in all continents, represents for a life aesthetics of simplicity and a middle-class lifestyle.
MUJI has over 300 physical stores in China located in upper-tier cities and the annual revenue generated per store in FY2018 was approximately USD 2.63 million. As disclosed by NOME’s founder and CEO CHEN Hao (陈浩), the expected annual revenue per store should be approximately CNY 8 million (USD 1.2 million), which is less than half of MUJI’s FY2018 data.
The target group of NOME has few overlaps with MUJI and the targeted group has also triggered other businesses to emerge. The price of NOME’s products costs less than MUJI. For example, MUJI’s infuser costs CNY 200 (USD 29) or above and NOME’s costs less than CNY 100 (USD 15). Considering annual revenue per store expected by Chen Hao, the quantity of sale would not deviate much from the number MUJI’s since all SKUs from NOME is approximately half priced comparing to MUJI’s and hence the annual revenue per store.
The appearance of NOME and alike business with a similar targeted group can be considered as the booming of the long-tail economic. In China, those whose needs could not be satisfied by current business in the past are now being met by NOME and others like Pinduoduo and Miniso, which is an e-commerce body and the other is an express version of NOME.
The success of NOME could be attributed to finding a blank market, but due to the same reason, NOME will face a dilemma when the market changes and even vanish along with China’s economic growth. And at that time, NOME will encounter a situation: whether doing a brand upgrade to adapt to the changing market and compete with players like MUJI, or stat where it is at and serve the shrinking market.