Dangdang De-Emphasizes Book Sales
CCID, 4/26/10
Zhang Ying, senior marketing director at Chinese B2C e-commerce site Dangdang, recently said that Dangdang will invest heavily in 2010, not only on personnel, facilities construction, and national expansion, but also on new product lines to bolster the company's B2C merchandise offerings.
Zhang said that Dangdang began expanding from books to general merchandise in 2004, and launched a platform for merchants selling other general goods in 2008. While Dangdang does its own sales of a select range of highly profitable products that are relatively easy to store and ship, other products are handled and sold by cooperating merchants. Dangdang currently offers five to six general merchandise categories with hundreds of thousands of items.
Dangdang's sales revenues for published materials reached RMB 2.2 bln in 2009, representing a 50% share of China's online bookselling market and 15% of the national bookselling market (excluding textbooks).
Zhang said that general merchandise accounted for 20% of Dangdang sales revenue in 2009 and is expected to reach 50% in 2010. This, however, is only a short-term target, while Dangdang's long-term goal is for general merchandise sales to outstrip book sales, pushing book sales far below 50% of the company's revenue. Dangdang has created a layer of facilities to support its general merchandise expansion plans in the past six months, expanding its six warehouses from 120,000 square meters to 160,000.
Regarding to previous announcements by Dangdang's senior management that the company plans to list publicly in 2010, Zhang said that an IPO could not be ruled out, but will depend on whether or not Dangdang can meet funding requirements. Dangdang has sufficient cash flow, and does not need additional funds at present.
Zhang added that Dangdang reached sustainable profitability in March 2009, and will maintain this momentum in 2010, but that in order to expand its general merchandise products footprint, it will need to control its profitability rate appropriately.
Keywords: Zhang Ying strategy profit e-commerce Internet IPO revenue target B2C Dangdang sales volume
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