LemonBox announces they have attracted seed funding from Y Combinator with the completion of a pre-A round of $2.5 million led by Panda Capital and followed by Y Combinator .
LemonBox tries to differentiate itself from other import businesses on two levels affordability and personalization. Weng, who previously worked at Walmart where he was involved in the retail giant’s China import business.
“In China, most supplements are sold at a big markup through pharmacies or multi-level marketing companies like Amway,” Weng said. “But vitamins aren’t that expensive to produce. Amway and the likes spend a lot on marketing and sales.”
LemonBox designed a WeChat-based lite app, where users receive product recommendations after taking a questionnaire about their health conditions. Instead of selling by the bottle, the company customizes user needs by offering daily packs of various supplements.
“If you are a vegetarian and travel a lot, and the other person smokes a lot, [your demands] are going to be very different. I wanted to customize user prescriptions using big data,” explained Weng, who studied artificial intelligence in business school.
A monthly basket of 30 B-complex tablets, for instance, costs 35 yuan ($5) on LemonBox. Amway’s counterpart product, a bottle of 120 tablets, asks for 229 yuan on JD.com. That’s about 57 yuan ($9) for 30 tablets.
Selling cheaper vitamins is just a means for LemonBox to attract consumers and gather health insights into Chinese millennials, with which the company hopes to widen its product range. Weng declined to disclose the company’s customer size, but claimed that its user conversion rate is “higher than most e-commerce sites.”
With the new proceeds, LemonBox is opening a second fulfillment center in the Shenzhen free trade zone after its Silicon Valley-based one. That’s to provide more stability to its supply chain as the COVID-19 pandemic disrupts international flights and cross-border trade. Moreover, the startup will spend the money on securing health-related certificates and adding Japan to its sourcing regions.