Dangdang.com: The Amazon.com of China

            
 
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Case Details:

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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"China's Internet bookstore market is large and offers high profit margins, dangdang's profit can exceed that of Amazon.com's - and provide a tangible return on investment"

- Pat McGovern, Chairman of International Data Group (IDG), August 2000.1

Introduction

By 2003, dangdang.com (dangdang) was rated as one of the most successful online bookstores in China. It featured almost 90 percent of the books published in China. Launched in November 1999, dangdang recorded sales worth China Yuan Renminbi (CNY) 1 million2 in the first two months.

In a years' time, dangdang was ranked as the number one online bookstore in China. The Website became popular with the Chinese living both in China and abroad.

Although the number of Internet users in China was increasing at a healthy rate, they were hesitant to experiment with online shopping. Online shopping was affected by infrastructure issues like low usage of credit cards and lack of a nationwide express delivery service.

However, dangdang survived all the odds, and emerged as the leader. Its success can be attributed to its large collection of books and its continuous effort to improve the user experience.

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Background Note

The credit for starting dangdang goes to Peggy Yu (Yu), and her husband Li Guoqing (Guoqing). Prior to setting up dangdang.com, Yu, an MBA from New York University, worked as a mergers and acquisitions consultant for five years (from 1992 to 1997) in New York.

Guoqing, a Chinese entrepreneur, owned Science and Culture Books, a successful publishing house of professional titles in Beijing, China. After their marriage, she shifted to Beijing.

Yu was surprised to see that there were no large bookstores in China. The bookstores were normally small and had few titles in stock which were poorly displayed (Refer Exhibit I for a note on offline book industry in China).

Realizing the potential of the market, the idea of starting an online bookstore, along the lines of Amazon.com3 struck Guoqing and Yu. Yu said, "I looked around China and I (saw), you know, there are no superstores in China.

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1] Yue Michael, China's Major Online Bookstore Dangdang Tries Hard to Beat Unfavorable Odds, e21times, August 1, 2000.

2] As on November 13, 2003, 1 CNY=0.120820 USD.

3] U.S. based Amazon.com is the biggest online bookstore with over 2.5 million books.

 

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