Netease Tech, 7/11/11
Chinese online consumer electronics mall 500CCC.com launched in Beijing today with the announcement that it had received investment from angel investor Charles Xue.
500CCC uses a "one city, one website" model to build B2C platforms for local consumer electronics suppliers together with local logistics and delivery firms. Unlike other online 3C vendors such as 360Buy and Taobao, which have invested in building their own warehousing and logistics systems, 500CCC leaves these responsibilities to local suppliers and manufacturers.
Before its official launch, 500CCC carried out trials in 60 cities and began working with 2,000 suppliers -- a figure it plans to increase to 10,000 by the end of the year.
With training from 500CCC, suppliers have already begun setting up their own online retail stores. 500CCC CEO Gong Shanbin noted that while other channels charge double-digit commissions for their services, 500CCC charges less than 10%. Gong added that in addition to lowering the transaction costs for suppliers, 500CCC also uses cash-on-delivery and other payment strategies to shorten suppliers' turnover period from two weeks to less than one week. He predicted that these advantages would help 500CCC attract 100,000 suppliers over the next three years, allowing the site to achieve its planned RMB 100 bln in transactions during the period.
Gong said that 500CCC had drafted a set of service standards, including punitive measures, for its suppliers. The standards require next-day delivery for orders in the same city as suppliers, as well as after-sales support requirements, including order return and exchange request processing within 24 hours of submission.
Gong said prices on 500CCC would be no higher than at retail outlets like Gome (0493.HK) or Suning (002024.SZ), and added that 500CCC would spend more on promotion than other B2C electronics retailers, with 500CCC splitting promotion costs with suppliers. Gong said that product prices were still determined by manufacturers, and that only manufacturers had the power to offer large discounts.
Charles Xue will serve as deputy chairman of 500CCC, where he will oversee future financing for the site.