Major e-commerce pioneer Dangdang struggling to survive
Updated: 2013-05-23 10:54
The company's book sales, which serve as a pillar for the company, have been threatened by competitors, particularly 360buy, which has relied on a low-price strategy to beat its rivals.
China's online book market is valued at 30 billion yuan, much less than the value of the home appliance market, but still enough to support Dangdang when it was still dominant.
However, fierce competition has compelled Dangdang to diversify its business and improve its margins.
Dangdang's business report for the fourth quarter of 2012 showed that its sales volume for general merchandise totaled 1.15 billion yuan, while book sales totaled just 930 million yuan.
Yu said the data reflects the realization of Dangdang's diversification.
Li said in March that garment sales will become the company's third-largest source of revenues following books and maternity products.
However, Dangdang's general merchandise business is not expected to show impressive performance, as its counterparts' general merchandise offerings are more developed and mature.
In order to prop up its flagging sales, Dangdang opened an online outlet in October 2012 on Tmall, a B2C platform operated by Taobao, China's largest online retailer.
Li admitted the decision was a compromise to preserve the company's development, as it lacks sufficient capital because of a long-time deficit.
Tmall and 360buy took 52.1 and 22.3 percent of China's online shopping market, respectively, by the end of 2012. Dangdang, on the other hand, had a market share of just 1.2 percent.
Although cooperation between Dangdang and Tmall may benefit both, experts believe it will ultimately impair Dangdang's brand value.
The company's net deficiency in 2011, the year after it was listed in New York, was 229 million yuan. 2012 saw the deficiency grow 94 percent year on year in 2012 to 444 million yuan.
Li said the company's losses will come to an end in 2013.