The valuation will reach 3 billion, and the "kids version of SHEIN" plans to IPO

The United States is the world's largest children's clothing consumer market, accounting for 21% of the global market share. According to Euromonitor data, the growth rate of children's clothing in the US market will exceed that of men's and women's clothing. Currently, Carter's, the largest and oldest children's clothing brand in the country, has a market share of only 11%, which leaves considerable room for other companies to penetrate.

Today's protagonist, PatPat, is a Chinese clothing brand that has swept the European and American children's clothing markets. According to multiple surveys, PatPat ranks first in user recommendation index among all children's clothing brands in the United States. Recently, there was also news that PatPat was planning to go public.

PatPat raises over $600 million in financing in one year, rumor has it that it plans to go public

According to Bloomberg, people familiar with the matter revealed that clothing and maternity brand PatPat is conducting an initial public offering. The stock sale may be carried out as early as this year and may raise about US$500 million, and PatPat's valuation will also reach US$3 billion.

The company, which is doing business as Interfocus Inc., is considering an IPO in places such as Hong Kong, but could also choose to list in the U.S., the people said. Deliberations are ongoing and details of the offering, such as size, location and timing, could change.

PatPat completed a $160 million Series D2 round in August last year, according to a statement on the website of existing investor INCE Capital. Other investors included DST Global, Capital Today, General Atlantic and Ocean Link, according to the statement.

Just one month before this round of financing, PatPat raised $510 million in its Series C round of financing. From April to August 2021, in less than half a year, PatPat completed three rounds of financing.

The Journey of Three Science and Engineering Men to Develop Unicorns Overseas

Public information shows that the three founders of PatPat, Wang Can, Gao Can, and Hu Meng, all graduated from Carnegie Mellon University (CMU) in the United States with computer-related majors. Before starting their own businesses, they worked for companies such as Oracle and Amazon. They are a group of true "science and engineering men."

But there are also benefits for outsiders to enter the market, that is, they can break the conventional thinking. Unlike traditional clothing brands, PatPat starts from the user demand side, uses technical means to transform the supply chain, analyzes fashion trends through big data and AI, and predicts user demand and sales. On this basis, it develops and designs products and styles, solving the inventory problem of the traditional clothing industry. The technical background of the PatPat founder team has become an advantage in this situation.

With the help of the domestic supply chain and precise control of the consumer markets in Europe and the United States, PatPat has developed rapidly. It is understood that in the past few years, the user scale of its independent site has increased by more than 3 times every year.

In addition to understanding consumer needs, PatPat also pays great attention to safety and quality issues. As we all know, the safety inspection standards for children's clothing in Europe and the United States are relatively high, and children's clothing exported from China to Europe and the United States is often recalled. Therefore, if you want to gain a foothold in the US market, quality issues cannot be ignored. Therefore, PatPat has extremely strict control over quality and safety issues and implements full product inspection.

Currently, PatPat's main market is the United States, and in the future it will enter the Middle East and South American markets. It is understood that PatPat plans to complete the strategic layout of the global children's clothing market within 3-5 years and become a world-class consumer brand.

In addition, PatPat is also known as the "SHEIN of children's clothing" because it has many similarities with the fast fashion brand SHEIN. So can PatPat become the SHEIN of children's clothing?

Can PatPat become the SHEIN of children's clothing?

As China-based fast fashion e-commerce SHEIN achieved impressive results in 2021, Chinese DTC overseas brands have also begun to appear in the vision of many venture capitalists. As the leader of Chinese DTC brands going overseas, PatPat and SHEIN have many similarities, especially in content marketing, popular product pricing, and rich SKUs.

Both PatPat and SHEIN have high repurchase rates , but for different reasons: SHEIN is a fast-fashion e-commerce platform that attracts repeat customers with low prices and a wide variety of fashionable designs, while the high repurchase rate on the PatPat platform is due to the fact that children grow fast and change their clothes more frequently.

Given that many consumers value the quality of children's clothing, PatPat has been committed to developing beautifully designed and high-quality children's fashion items, rather than winning by price like SHEIN. Using the team's computing power, PatPat developed "keyword search" and "popular color trend" analysis tools to bring diversified and more fashionable clothing products to children in the US market. PatPat also aims to use these tools to solve inventory and turnover problems in the clothing industry.

PatPat 's slogan is cuteness, quality and price. Luo Yangyan, Asia Pacific director of Crowd, a global marketing service provider, said that the design of this slogan is also very clever. PatPat uses cuteness as its core selling point, which is different from most children's clothing products in overseas markets that prioritize quality and comfort. In addition, due to the high replacement rate of children's and baby clothing, PatPat children's clothing can provide product prices far lower than local brands while meeting the fashionable appearance of the products.

In addition, using social platforms for product marketing is also a major reason why PatPat and SHEIN have become popular overseas. It is reported that PatPat has been ranked in the top 10 in the OneSight and Marketing overseas brand social platform performance rankings for several consecutive quarters, even surpassing SHEIN at one point. PatPat's marketing efforts are mainly reflected on Facebook.

According to Similarweb, 52.89% of the social media traffic on PatPat's official website comes from Facebook. Currently, PatPat's official account has 6.36 million fans on Facebook, and the total number of fans of other market accounts has exceeded 1 million. PatPat has not carried out large-scale marketing promotion on the TikTok platform.

A well-executed social media marketing strategy is also crucial to the success of overseas brands. PatPat’s Facebook copywriting strategy is highly consistent with the core selling points highlighted by its slogan, namely focus and cuteness, with its diversified social presence, exquisite video content and localized copywriting.

In terms of KOL strategy, PatPat also announced the "Influencer Program" on its official website. PatPat sends children's clothing worth $40-200 to KOLs every month. Within 7-15 days of receiving the clothing, KOLs need to upload pictures or videos to their personal accounts and attach a link to the official website of the relevant product.

In addition to marketing promotion through KOLs, PatPat also pays great attention to exclusive social sharing content for local users, that is, marketing communication through the use of PatPat's real consumers. For example, on the PatPat app, there is a function called "Pat Life", which encourages users to share content in the form of point rewards, and also provides users with an opportunity to become an "opinion leader" , which can improve user engagement and retention to a certain extent.

However, as the PatPat brand has grown rapidly, some negative voices have also emerged. Some customers have complained about buying PatPat clothing with the SHEIN label on third-party review sites, and some have raised questions about the quality of PatPat's products. If a brand wants to develop in the long run, in addition to doing a good job in brand marketing and promotion, it is also crucial to improve the quality of its products.

SHEIN

PatPat