Dangdang CEO: Price War Won’t Last Long

The Chinese B2C warfare in this year is more ferocious than ever. And it’s not over yet; many have declared that in the next half it would be even tougher. Fortunately someone is calling for a truce. Li Guoqing said in a recent interview that, “I don’t believe my peers still want a price fight any more. The capital has been run out, and it’s dangerous to drag the merchants into this losing game. ”

 

Vicious Competition

Dangdang lost RMB 99.5 million in the first quarter of this year, yet it made a net income of RMB 3.1 million from the same period last year. The loss was mainly due to the increasing input from a flurry of price wars.

Li thought that currently the prices wars were more of a show for investors. “If you really want kick your competitors’ ass with price war, do it, not just say it”, said him.

2012 seems to be the year of price war for ecommerce industry. Though allied with Gome, Dangdang still has to fight against Amazon, 360Buy and Suning. As a listed B2C platform, the pressure is high. “If you do not follow any one of the campaigns, the sales drop rapidly at once.” the CEO revealed.

As Li predicted, this war is going to end soon. “There must be a price rise next year. Even though, I doubt if some can survive because the previous loss is too huge. Small and medium sized B2C sites will shut down first, and I think by June 2013, some of the big platforms will quit as well. By then the investors will have calmed down.”

Li obviously is not optimistic about the future of the B2C sector. Not like him, some other e-tailers still are jumping into the playground. Talking of his peers, Li said that, “I didn’t know what Liu Qiangdong (360Buy CEO) said about his capital, personally I thought he has burned it out. And I believe apart from Dangdang, most e-tailers have run out of their money.” When asked about brick-and-mortar stores like Suning’s great efforts on e-commerce recently, Li claimed that they should not panic for the e-tailers just help the sales number grow, but nothing else has changed.

Last Wednesday, partnering with FTuan and Gaopeng, Dangdang started its group-buying service in 30 cities. Li thought group-buying is a low price market, which still belongs to the B2C sector. In the future it will profit by sharing revenues with merchants. Dangdang will operate the business as an open platform, that’s why they chose four partners.

 

B2C Goes Astray

Recently on Sina Weibo Li replied about the vicious fashion among e-tailers that they overstated their traffic, and false revenue numbers. “I heard from two book suppliers of 360Buy that they can profit RMB 70,000 every week by buying books from the site and sell them to it again.” This is clearly a forge, but in China there is still blank in the administration on that front.

Li pointed out that playing numbers has been a very common phenomenon.

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