E-commerce App 5miles Raises $30M, Plans Expansion Beyond Dallas
Dallas—The garage sale has gone mobile.
5miles, a year-old online marketplace, is based in China but has its U.S. headquarters in Dallas. Last week, it announced a Series B+ fundraising round of $30 million from IDG, Morningside, and individual investors in Alibaba, the Chinese e-commerce company, among others. The company raised a Series B round last year of about $20 million.
Company founder and CEO Lucas Lu says 5miles—which is so named because the idea is to connect neighbors with goods they want to buy and sell—offers a measure of security that online juggernaut Craigslist doesn’t. “Everyone has a profile and people will review each other,” he says. “We do do some background checks. If you are registered as a seller, we need to verify e-mail, phone, and social connections like Facebook.”
For Lu, the hedge against fraud is personal. Two years ago, he contacted a Seattle Craigslist poster about a printer on sale for $75. “We met and I bought it, but you can’t test it in a parking lot,” he says. “Afterwards, I found out there was something broken inside; it didn’t work. I tried to contact the person, sent an e-mail to him, and no response.”
The company says it currently has five million users and has sold about $1 billion in merchandise so far. The site is free to use for individuals. Right now, the company is trying a revenue model through which 5miles charges small-to-medium businesses a fee for marketing wares on the site. Right now, those customers are mostly independent car dealerships that pay about $99 a month, to get premium placement and promotion on the 5miles app. 5miles want to expand this approach to other types of small-to-medium businesses.
As it does this, 5miles will be using the funds to build out its U.S. markets with the aim of covering most major American cities by the end of 2017, says Mark Brinkerhoff, a company spokesman. 5miles is also investing in app improvements that it plans to unveil at this year’s South By Southwest festival in March, he adds.
Increasingly, entrepreneurs are seeing opportunity in our ever-increasing comfort with shopping via our mobile phones, as my colleague David Holley reported last year. Mobile commerce is now about 39 percent of e-commerce transactions, according to research firm Forrester. By 2018, the firm says that will increase to 54 percent.
5miles chose Dallas as its U.S. perch in part because Lu, who formerly worked at Alibaba and Light in the Box, got his doctorate in physics at Southern Methodist University, which is located in the North Texas city. And Texas—Houston and Dallas–are the company’s largest markets. “There are a lot of technology startups on both coasts,” Brinkerhoff says. “It’s a strategic move to try to base our initial growth here, and expand outward.”