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 VC系列： 红鲱鱼VC in Asia系列: Is Dangdang.com China’s Amazon? (转贴) |
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安普若
[博客]
[个人文集]
头衔: 海归元勋
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加入时间: 2004/02/21
文章: 26038
来自: 中国美国的飞机上
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作者：安普若 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
VC in Asia: Is Dangdang.com China’s Amazon?
Mastering the vagaries of online retail in the Middle Kingdom.
April 30, 2004
Peggy Wu, founder and co-president of Dangdang.com, knows how it feels not just to survive, but to triumph – though she is too modest to say so outright.
“We set out to do what we planned, selling books on the Internet. We wanted to offer the largest selection. Later, we added the DVDs, CDs, games, and software,” says Ms. Wu. “Our motto is good selection at lower prices.”
If it sounds simple, it was not. Her company, China’s largest online retailer of books, videos, CDs, and DVDs, once faced hundreds of competitors at the height of China’s Internet boom who all dreamed of being “the Amazon.com of China.” Since the bubble burst in 2001, most died off, while Beijing-based Dangdang not only survived but prospered, cornering more than 50 percent of the online book and music retail market. Her feat is all the more remarkable in a country lacking widespread credit cards or the equivalent of a FedEx or UPS.
Today, Ms. Wu is sitting on $11 million in newly secured Series B funding from Tiger Technology Private Investment (managed by hedge fund trader Julian Robertson out of New York), while continuing to receive solid support from original funders IDG and Softbank, who put in $6.2 million in 2000. Meanwhile, she’s receiving serious consideration for additional backing from the likes of Palo Alto, California-based Allegis Capital and others who find the company, and its Western-educated founder, impressive.
“It’s a huge market opportunity, and Peggy has figured out the Chinese market,” says Barry Weinman, managing director at Allegis. “We’ve looked at retail before, and we’ve always been afraid. She’s figured out the two things that plague the online market: payment and delivery."
The obstacles were literally huge, and Ms. Wu developed a system that simultaneously tackled the two biggest ones. China covers nearly 10 million square kilometers, and lacks any nationwide delivery service. Meanwhile, credit cards account for less than 1 percent of all retail transactions in China, compared to 12 percent in India. Currently, 15 percent of Dangdang customers pay online with credit cards. For most of the rest, Dangdang pioneered a cash-on-delivery service, using 40 different courier companies in 22 cities. Dangdang is aiming for 30 cities by the end of this year. Customers outside the network pay by wired postal money order and receive their books by post.
It’s beautifully simple: Dangdang – the name in Chinese mimics the sound of a cash register – receives orders online and ships books by air to the various cities, where they are taken to the couriers’ distribution center. For a flat fee of 5 Renminbi ($0.60) per delivery, bicycle messengers deliver the goods and collect payment, which they then remit to Dangdang by wire transfer. (To ensure prompt remittance, Dangdang holds a deposit for each courier firm, from which a penalty is deducted if payment is late).
It’s an ingenious system that makes everybody happy: the customer gets to inspect their goods at the time of payment, and Dangdang gets its cash up front. Better yet, the company gets what amounts to a free “float,” because it has 45 days to pay its CD and DVD vendors, and three months to pay book publishers. It’s “negative working capital,” explains Ms. Wu. “The operation itself does not require cash, it throws out cash.”
Dangdang has its own warehouse with a limited inventory of just its top-selling titles; the rest of its stock is taken from what she calls the “just-in-time” warehouses of partner suppliers, tracked via a PC network. “We pay for those titles as we take them. In this way we can offer nearly 300,000 titles and still keep our inventory at reasonable levels,” says Ms. Wu. The system has been perfected to the point that turnaround time from order to delivery in Beijing is one day, while for major cities like Shanghai or Guangzhou it is two or three; smaller regional cities take a week.
Ms. Wu, who holds an MBA from New York University, says she stumbled into the business “by accident.” Her husband had been in book publishing for a decade, and the couple admired Amazon.com. In the late 1990s, they spent three years, on and off, researching the retail and online book trade, attending the Frankfurt Book Fair, visiting international publishers and huge retailers like Barnes and Noble. “We did a lot of homework, with retailers and wholesalers, before we started,” says Ms. Wu. “That’s one reason Dangdang survived.”
Will the real Amazon.com someday pose a threat? In a September 2003 report, technology research firm Forrester Research briefly notes that Amazon intends to look to Asia for its future growth.
“There are a number of obstacles to doing business in China, and Dangdang has been very creative in addressing them,” notes Sam Zucker of law firm O’Melveny Myers, which advises Ms. Wu and has a large China practice. “Just setting up a system like that requires intense knowledge of the local market; it’s a significant barrier to entry. That achievement would have to be duplicated by any new entrant.”
Meanwhile, Dandang’s sales are growing 100 percent annually, by unit; this year, first quarter sales were $7 million. Branching out a bit, she recently added a “new products” group to test out things like cosmetics and souvenir items. But Ms. Wu isn’t straying too far from her core business: books represent 47 percent of total sales. “Our bread and butter business will always be published products,” she says.
Freshly armed with new funding, Ms. Wu says her current goals to improve the IT infrastructure, and build her customer base. “Essentially, we are competing for China’s new consumerism. People who are now buying cars, cosmetics. Education is a big selling category.”
She points out that the Chinese consumer market is much less homogeneous than in the United States. “Regional consumption, what people are buying in different cities, is really different. People in Shanghai buy recipes, home decoration, wine tasting books. People in Shenzhen are buying Seven Steps to Getting Rich. Beijing is the most diversified, it’s like Manhattan – technical books, memoirs, political – they buy everything,” she says. Among her top selling titles? The Adventures of Tin Tin.
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VC in Asia is an online column focusing on the rising influence of venture capital in Asia, and its role in the region’s growing economy. Have thoughts or suggestions for VC in Asia? Email the column editor at [email protected].
For more information on the column, see VC in Asia.
作者：安普若 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 VC系列： 红鲱鱼VC in Asia系列: Is Dangdang.com China’s Amazon? (转贴) -- 安普若 - (6797 Byte) 2004-5-29 周六, 08:49 (1800 reads)
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