Dangdang: "Poor" only the money left

Wen/World Network business reporter Yang Qin

Cash becomes the most valuable chip in the game when the rules of the electrical business become no more than money, but more than the one who lasts longer.

Dangdang is "poor" because it doesn't make money, but it has a lot of money. As of June 30 this year, Dangdang account has more than 1.4 billion yuan in cash and deposits. This is really a very proud capital when the door to the capital market is closed to the electric power trader.

In stark contrast, Dangdang has experienced several consecutive quarters of serious losses.

In the long run, businesses that do not aim to make money are bullying. What is the profit path of Dangdang?

Dangdang once made money.

First of all, to recall the good time to make money. In the third quarter of 2010, Dangdang income of 607 million yuan, net profit of 32.71 million yuan, gross profit margin of 25.39%, logistics costs 12.61%, other costs 9.82%, net profit margin of 5.39%.

Two years later, in the second quarter of this year, Dangdang's logistics costs rose by two percentage points, other costs fell 1%, and the composite cost rate rose 1%. However, the company's gross margin fell to 13.07%, down a full 12%. So the net loss rate of Dangdang in this quarter is as high as 10%.

Overall, Dangdang's cost rate has been maintained at a relatively stable level. Dangdang net profit is closely related to the company's gross margin. Before 2010, Dangdang's gross margin rose rapidly, improving the company's profitability. But into the 2011, the level of gross profits plummeted, will be directly when pushed into the abyss of loss.

There are many reasons for the decline in Dangdang's margin. On the one hand, because to see the book industry ceiling, when the promotion of the department store strategy. In the initial stage, the gross margin of general merchandise products is lower than the book industry. But the more important reason is Jing dong horizontal knife to kill into the book industry, set off the book industry fierce price war. Dangdang must take their main business to block the east of Beijing's attack, and eventually ended up with a huge loss of fate.

Dangdang also in the breakout. In addition to the department store, Dangdang is also promoting the platform strategy. Dangdang and Gome, Jiuxian network and so signed a strategic cooperation agreement. When the plan of the cumulative introduction of not more than 2000 businesses, to build their own online shopping platform.

For the platform, the most important factor to attract third party merchants is traffic. But we found that the active users of Dangdang grew weaker. In the second quarter of this year, Dangdang's active users even showed a small decline in the chain, which is very bad situation.

From the absolute value, Dangdang's quarterly active users can only maintain around 6 million. Compared with nearly 200 million of China's online consumer groups, this level is still difficult to be a platform for the status of a foothold.

Back to its business itself. We find that the cost of Dangdang has remained relatively stable over the past few years. This aspect shows that Dangdang business management is relatively mature, but in turn, this also shows that Dangdang in the cost of optimization space is very small.

2011, Dangdang average total logistics cost of each order is 11.7 yuan, each single distribution fee is only 6.5 yuan. This level of cost even in the entire Chinese electric business industry is also excellent. But Dangdang's logistics cost rate is as high as 13.11%.

The root of the problem is the customer unit price of Dangdang. Dangdang started by selling books, which limits its customer price. Dangdang's customer unit price lingered for a long time below 80 yuan, directly led to the high cost of its logistics. However, with the promotion of the department store strategy, Dangdang's customer unit price has improved slightly recently.

In the short term, Dangdang's cash flow can support it to survive. Although Dangdang loss is serious, but with the continuous growth of the scale and relatively strong accounting period, Dangdang's operating cash flow can maintain a relatively balanced. Dangdang's annual income growth rate of more than 50%, its account period is up to 160 days. Any deterioration of these two indicators will put pressure on Dangdang's cash flow.

After winter, Dangdang must calculate for profit. The margin, the book can be imagined space is already small, and Dangdang's department store business can only say is just beginning, the future remains to be seen. As for operating costs, it is better to increase customer unit prices than to compress costs. Dangdang Current Customer Unit Price is unable to bear the weight of the electricity business.

The future is still confused, but Dangdang has at least money.

Source: World Network Business