Dangdang.com: The Amazon.com of China
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Case Code : BSTR099
Case Length : 8 Pages
Period : 1997 - 2004
Organization : Dangdang.com
Pub Date : 2004
Teaching Note :Not Available
Countries : China
Industry : Online Retailing
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Prior to the launch of dangdang, online bookstores such as bookmall.com, cp1897.com, 8848.net were already operational. The success of dangdang inspired the opening of few more online bookstores.
While dangdang was considered the most competitive in terms of price and variety of products; Joyo.com (joyo) offered more popular products; bol.com (bolchina) had the biggest advertising budget and store.sohu.com (store.sohu) had a good brand name and heavy traffic. In October 2002, joyo, bolchina, dangdang and store.sohu were engaged in a price war.
All these Websites sold books and audio video products online. The list price of the Chinese version of 'The Lord of the Rings' trilogy was CNY 62.6 per set whereas the Websites were selling it for CNY 45, 40 percent less than the list price. Similarly, another bestseller, 'Harry Potter' was also sold on Websites at heavy discounts...
The Dangdang Model
Low Internet penetration was a major cause of concern for Yu and Guoqing.
According to the World Bank Development report, by January 1999, there were only 0.14 Internet hosts for 10,000 people in China as compared to 1132 per 10,000 people in the United States. Most Internet Service Providers (ISPs) offered connections at 33.6 kilobytes per second.
Thus, logging onto any site with even the most simple graphics involved a considerable waiting time. Secure pay channels for online payments were not available in China. Shoppers chose their own mode of payment - online, cash-on-delivery, postal remittance or telegraphic money order.
Cash on delivery was the most preferred option. The logistics required for mailing the goods bought online were not in place. There was no nationwide express delivery service like FedEx or UPS as in the United States. The postal service was slow and unreliable. Dangdang
offered its customers the biggest collection of books, and a good search
The unique selling point of dangdang was the availability of a large number of books on various topics at a single place...
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