Dangdang.com: The Amazon.com of China
|
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
Excerpts
Competition
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 facility. The unique selling point of dangdang was the availability of a large number of books on various topics at a single place...
Promotions
When the Website was launched, minimal advertising was done. However, dangdang took care to keep interest alive among its visitors. In March 2000, a 'Lucky Time Activity' was started for a fortnight. A lucky hour was chosen randomly each day, and books ordered during that hour were given free to the buyers. In June 2000, a contest was started to promote the Web site. The users of the Website were jointly working on the book 'An E-Love Story.' The visitors wrote stories about a fictitious character, Mei. At the end of the day, three professional editors would select the three best stories and add them to the novel. In 2003, a new membership system was established, to reward the repeat customers. The registered users were divided into Ordinary, Gold, and Platinum members on the basis of points earned. The members were awarded points depending on the money spent...
Future Outlook
Dangdang featured books published only in China as distributors were not allowed to circulate foreign books. However, in the future, it aimed at selling books published outside China. It also planned to create a B2B business platform on which publishers, retailers, and even paper manufacturers could do business with each other. By 2000, only 8.9 million people in China used the Internet. According to statistics provided by CNNIC (China Internet Network Information Centre), by the end of 2001 there were 33 million cyber-surfers with over 6 million of them having purchased either books or AV products online. About 34 per cent of the total visitors made online purchases in 2002. Slowly the number of Chinese using the Internet for shopping was increasing. The Chinese government was spending millions of dollars to improve the nation's telecommunications infrastructure. Online access rates were also improving. Telecom infrastructure was being converted to fiber optic and ISDN, DSL and ADSL connections were gaining popularity in major cities...
Exhibits
Exhibit I: Offline Book Industry
Buy this case study (Please select any one of the payment options)
| Price: Rs.300 |
Price: Rs.300 | PayPal (7 USD) |
