Scale expansion and price wars have become the price of growth for China's electricity dealers

Silicon Valley Web March 18 The paradox of the Chinese-style: "The rapid development of online retailing has led investors to invest heavily in scale expansion and price wars." ”

In the experience of market operators, Jingdong is providing the sellers with the competition of logistics services, and they are building a domestic logistics network which is different from the international logistics services such as UPS and FedEx. Beijing East last November announced that its logistics channels to ensure delivery in 23 cities on the same day, 150 cities on the next delivery.

The Beijing-East Service system includes a collection of research on delivery payments when credit cards are not widespread, a 80% of the Chinese in the transaction. Alibaba Group announced in January that it will work with major financial institutions, logistics companies and retailers to invest 16 billion yuan to build a nationwide logistics network.

Many investment and price wars are eroding their profits, with Alibaba, the privately held company, ranked first in the latest Internet retailer's top 500 Asia rankings. Yahoo also owns some of its shares. As of June 30, 2012, the company's 9-month income of 2.9 billion yuan, of which the network income of 782 million yuan-this number, most Internet companies are difficult to see.

Vipshop, ranked third in the top 500 Asian rankings of internet retailers, gained 197% per cent of sales growth in the third quarter of 2012, but reported that the company is still losing 3.3 million yuan. Jingdong Mall plans to make a profit in the fourth quarter of 2013, with new eggs, an e-commerce company headquartered in the United States and operating in China, that is expected to make a profit in the coming years.

Losses would calm investors in the hyperactive Chinese electricity business. One of the signs is that the group buying site, the handle network, delayed the IPO in 2012 after a third round of funding of $155 million trillion. The rise and fall for Groupon's imitators in China (Groupon is considered to be the originator of group buying) illustrates the fact that hot money inflows have created a bubble of false prosperity in China's e-commerce. In the 18 months after Groupon's success, the Chinese market was flooded with 5,200 group-buying sites in 2012, and in 2011, the figure fell to 3,000. Macquarie said.

"A large number of Chinese Internet merchants, under the reliance of venture capital, are willing to take profits for market share in this way to dabble in the field of business." Dangdang's executive chairman told analysts last fall that Dangdang was on the market in December 2010.

Before and after the Dangdang market, is a large number of capital injection into the business stage. Selling at or below cost is an easy way for some companies to improve their sales, Yu said. Dangdang ranked tenth in the top 500 Asian rankings of internet retailers.

Since China joined the WTO in 2004, the foreign retailing industry has been encouraged to enter China. The brutal price war has not deterred international brands and retail giants from landing in China's electricity market. And many such as "R", Lauder, coach and other brands in China to open its own official website, direct sales to Chinese consumers.

"This is a huge opportunity for China's online retail market," he said. "Andrew Stockwil, vice president of research and consultancy, Asia/Pacific region, said.

"The strategy now is that the next 6 months of planning cannot be equated with planning for the next 18 months." "he said.

China's online retailing will reach $258 billion trillion in 2013. The Macquarie Securities Institute predicts that it will grow by 35% per cent a year from 2011 to 2015. This is lower than the annual growth rate of 94% from 2007 to 2011. If US online retail sales rose 15.8% in 2012 to $225.5 billion trillion. If the same ratio, then 2013 years will reach 261 billion dollars. The Chinese market may be slightly ahead of Macquarie's forecasts this year, but even if China is given the same rate of growth, it will take 2014 years to catch up with the US.

(This article is selected from the Internet retailer magazine, the author is the editor-in-chief of the magazine.) Translator: Spychris)