The next Amazon?
Who will become the Amazon.com in China's online B2C (Business-to-Consumer) market?
The answer to that frequently raised question is often either Joyo.com or Dangdang.com. The debate surrounding the two major Chinese e-commerce websites is warranted.
Yu Yu, Dangdang's co-chief executive officer, provides a simple answer, as, in her opinion, being big creates the sense of safety.
"We are China's No 1 dotcom in the B2C market," she says. "We will remain so over the coming decade, although Joyo is also doing well."
As an online-discount retailer, the key to success includes a larger product catalogue, lower prices and convenient shopping.
"That's what we are offering, and striving to offer, on our website," Yu says.
Dangdang, which has a catalogue that includes 300,000-plus products, will continue extending the list this year, "mainly by adding more electronics products and groceries," she adds.
Yu explained Dangdang is already the leader of China's B2C dotcoms, in terms of books and audio-visual products.
The dotcom is "extending the catalogue, and is prepared for business expansion over the coming five years," Yu says.
Having a larger catalogue than that of its competitor means Dangdang offers greater choices and better discounts to consumers.
"Admittedly, price wars are unavoidable in retailing," Yu says.
Joyo's catalogue contains 20,000-plus goods, a majority of which are books and audio-visual products.
Joyo is widely believed to be targetting consumers with better education and higher incomes-people at the higher levels of the social hierarchy.
"It's up to the buyers where they place their orders-Dangdang or Joyo-when purchasing CDs or books," Yu says.
"But Dangdang is their only choice if they need something in other categories."
Despite having fewer categories, Joyo has a higher percentage of orders compared with Dangdang, suggests Kelly Huang, general supervisor of iResearch, a domestic market research house.
Huang, who quoted statistics released in a survey by iResearch, said about 60 per cent of Joyo's website visitors make purchases, compared with a 50 per cent for Dangdang.
The two arch-rivals last year expanded into groceries, retailing, cosmetics, clothing and decorative items, where both profit margins and costs of logistics are higher compared with those for books and CDs.
Says Yu: "We offer many more choices to buyers; they just display more colourful web pages."
Dangdang is now busy expanding its regional coverage, from 28 cities to 60 cities. The firm will also offer "cash-on-delivery" service.
Apart from Beijing, Shanghai and Guangzhou, where Dangdang and Joyo have been competing for better sales revenues, several secondary cities, such as Nanjing, in East China's Jiangsu Province, and Tianjin, have been added to the firms' lists.
"We have been focusing on northern cities, while Joyo has better performance in the south," Yu says. "But the geographical differences do nt mean so much to online business."
Regarding services, Dangdang is better at process management and offers more flexible payment options. In particular, the firm accepts far more types of payment cards, Yu says.
Apart from cash-on-delivery, banking cards, credit cards or remittances are the usual methods of payment.
When asked about the firm's business growth this year, Yu says she expects a "100-per-cent increase in revenues."
"We achieved a 70-per-cent growth last year, and the sales revenues hit 240 million yuan (US$28.9 million) as scheduled," she says.
"Books and CDs will remain our major sources of revenues."
Joyo's sales revenues in 2003 reached 160 million yuan (US$19.3 million), twice as much as Dangdang.
Joyo's figures for last year are not available, but the company reportedly raised its annual sales targets for 2008, from the previously set 1 billion yuan (US$120 million) to 4 billion yuan (US$481 million).
Insiders suggest Joyo's senior company officials are quite optimistic about their business prospects, and they are reportedly satisfied with the firm's excellent performance last year.
The executives reportedly are pinning great hopes on the firm's newly launched grocery services.
And in grocery, products provided on Dangdang.com are more fashion-styled, more suitable for youngsters, he added.
Commenting on news that Dangdang is seeking an overseas IPO (initial public offering), Yu says "it depends more on the stock market."
She explains the company's executives care more about better business performance, and that "we would like to take that move when China's e-commerce dotcoms are better accepted by NASDAQ."
(China Daily 05/09/2005 page8)
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