Dangdang.com: The Amazon.com of China
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Case Code: BSTR099 Case Length: 8 Pages Period: 1997 - 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization: Dangdang.com Industry: Online Retailing Countries : China Themes: Business Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
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.
Most stores are so poorly stocked.... And I felt readers in China were so poorly served, and I wanted to do something about it.... And I think the Internet is the best thing." After studying the model of Amazon.com, Guoqing and Yu, realized that the Website owed its success largely to its vast database of titles. As there was no nationwide database of titles available in China, in 1997, the couple started a company called 'Science and Culture Book Infotech.' Guoqing and Yu became the Co-president of the company. The company created a database 'China Books in Print' (CNBIP) along the lines of the databases available in England and America. Guoqing and Yu contacted publishers in China and maintained good relations with them to get updated information on recently published books (During the late 1990s, the Internet was not very popular in China, so the duo thought that if Internet did not become popular in the future, then they could start a professional database company).
It took the couple almost two years to make a comprehensive database of 200,000 book titles published in China. In November 1999, the couple started a Website. They wanted to name it in such a way that it could be easily pronounced, remembered, and typed. They named the Website dangdang which is derived from the Chinese adjective xiangdangdang, meaning resounding and worthy. Commented Yu, "It's also the sound of a cash register opening and closing: dang-dang!"5 Dangdang got a good initial response from Internet users. In the first two months of its operations, it received 30,000 orders, which generated sales above CNY 1 million. By 2000, dangdang became the largest online as well as offline bookstore in China with 200,000 titles. It received orders from major Chinese cities such as Beijing, Shanghai and Guangzhou and also from remote villages in Tibet and Xinjiang......
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