BEIJING: E-commerce China Dangdang Inc., a leading Chinese web retailer of books, music, video and other media, reported continued sales growth in the second quarter. But the e-retailer swung to a loss as Dangdang increased spending on sales and promotions for its growing selection of nonmedia products.
The Beijing-based web-only retailer’s total net revenues in the second quarter of 2015 were 2,312.3 million yuan ($373.0 million), a 29.8% increase from 1781.65 ($280 million) in the corresponding period in 2014. Net loss for the quarter was 21.2 million yuan ($3.4 million), compared to net income of 28.8 million yuan in the second quarter of 2014, or 1.6% of total net revenue in that quarter.
“During the second quarter of 2015, we expanded our leading position in China’s books and media market, gained additional share in the baby, children and maternity destination category and continued to enjoy some of the highest conversion rates in the industry,” executive chairwoman of Dangdang Peggy Yu Yu said in a statement accompanying the earnings report.
Dangdang.com was founded by Chinese book publisher Li Guoqing and his wife Peggy Yu Yu, who says she was inspired by Amazon.com when she studied in the United States. In terms of sales, Dangdang.com is one of the largest book and media e-retailers in China and the company has gradually expanded into other categories, such as electronics and apparel.
Dangdang also has invested heavily in serving mobile shoppers. “Mobile orders remained close to record levels at 40% of total orders, and we improved monetization of our mobile platform with a sharp increase in mobile advertising revenue,” Yu said. “Our digital business is gaining momentum, driven by our growing catalog of e-books, including original content.”
Dangdang’s size is still small compare to leading e-retailers, however its executives contend it can challenge the Chinese e-commerce leaders, Alibaba Group and JD.com.
“I don’t think the position of those leaders is secure. As we all know, the size of the business is not equal to competitive advantage and competitive threshold. The market will be settled only if the marketing leaders have some unique edges and generate difficult barriers to entry,” Dangdang cofounder and CEO Li Guoqing said last month in a speech at the One Thousand E-commerce Professionals Seminar in China. “Alibaba’s sales only account for about 5% of retail sales of China and that is not enough barrier to entry. At same time, JD.com’s electronics sales only represent 2% to 5% sales of electronics products in China. If some companies get a new business model, there are still plenty of chances to beat those leaders.”
Also, Li said few people knew Vipshop, No. 4 in the Internet Retailer China 500, and Yihaodian, No. 7, three years ago, but now they have become e-commerce leaders in their categories in China. Wal-Mart Stores took full control of Yihaodian in July. Vipshop is a discount fashion retailer.
Dangdang.com is No. 10 in the Internet Retailer 2015 China 500. JD.com is No. 1. Alibaba is not ranked in the China 500 because it does not own merchandise but rather provides a platform for more than 8 million merchants to sell. However, the gross merchandise value of goods sold on Alibaba’s online marketplaces totaled $109 billion in the first quarter, while JD.com reported $18.5 billion in GMV. By contrast, Dangdang’s GMV in the second quarter was 1,890.6 million yuan ($304.9 million), a 32.1% increase from the same period in 2014.
For the second quarter ended June 30, Dangdang reported:
The combination of product revenue from its own sales and GMV from marketplace sellers reached 4,130.3 million yuan ($666.2 million) and grew 31.8% year-over-year.
Active customers were 9.7 million, an increase of 15% from 8.4 million 2014.
Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from 16.4 million in 2014.
For the first six months of 2015, Dangdang reported:
Net revenues were 4093.99 million yuan ($644.30 million), up 18.5% from 3454.25 million yuan ($543.58 million) in the same period of 2014.
Net income of 7.62 million yuan ($1.2 million), compared with a $35.1 million yuan ($5.52 million) net loss in same period of 2014.
