Dangdang: Past the Worst? 当当：渡过最坏时期？
A couple of interesting news bits are coming from the e-commerce space, led by the latest quarterly data from Dangdang (NYSE: DANG) that shows the worst may be past for this fast-fading sector pioneer. Meantime, we’re also getting new sales figures for the November 11 Singles Day holiday from Jingdong Mall, showing just how distant a second-place player the company is to sector-leader Alibaba.
Let’s start off with Dangdang, which has finally reported some good news after more than a year of deepening losses due to cutthroat competition in China’s e-commerce space. Dangdang was still heavily in the red in the third quarter, reporting a loss of 100 million yuan or about $15.9 million. (results announcement) While that may sound bad, it’s actually an improvement over the previous quarter, when the company posted a $19.2 million loss, its worst-ever loss since going public. The latest loss was roughly comparable to the first quarter of this year, when Dangdang reported a $15.8 billion loss.
Sales continued to post strong growth, with overall revenue up 42 percent led by a 56 percent jump in general merchandise sales, showing China’s e-commerce market is still growing quickly. The figures appear to show that Dangdang’s losses may have peaked in the second quarter, and perhaps they will continue to shrink in the quarters ahead as the company starts down the long road back to profitability.
Investors certainly seemed to hold that view, bidding up Dangdang’s battered shares by 14 percent in Thursday trade after the results came out. But even with that gain, Dangdang shares have still lost about 60 percent of their value from a peak level back in April, meaning the company still has some distance to go. I should also add a minor disclaimer by pointing out that the company just installed a new CFO late last month (previous post), and I suspect that one of his first major mandates was to take steps to “beautify” the company’s bloody financial statements.
Meantime, let’s take a quick look at Jingdong Mall’s new sales report from Singles Day, which is fast becoming a major shopping event for Chinese retailers. Jingdong, which also goes by the name of 360Buy, is reporting its sales for the 3 day period from November 10-12 clocked in at an impressive 2.5 billion yuan, or about $400 million, with around 4.5 million orders placed during that time. (Chinese article)
That figure was well ahead of Dangdang, whose sales totaled a more modest figure “above 100 million yuan”; but it was also well behind Alibaba’s hugely popular TMall, which notched sales of 19.1 billion yuan for the single day of November 11. (previous post) If one assumes that Jingdong logged about two-thirds of its sales figure on November 11, the actual Singles Day, then its total sales for the day would have been about 1.7 billion, or less than one-tenth of Alibaba’s.
All this goes to show that despite the aggressive tactics by Jingdong and others like Suning.com (Shenzhen: 002024), Alibaba remains the decisively dominant player in China’s e-commerce market and is unlikely to lose its leading position anytime soon.
Bottom line: Dangdang’s latest results show that its losses may have peaked in the second quarter, as the company focuses on profitability rather than gaining market share.
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