Vancl, the leading online retailer for clothing in China, plans to go for IPO in the U.S. by the end of this year or early next year, said an investment banking source.

Founded by former Joyo executive, Chen Nian, in 2007, Beijing based Vancl specialized in selling clothes online.  It started from men’s shirts and expanded to categories like suits, pants, causal wear, shoes, etc.  It also offers women’s casual wear and children’s clothing.

When I wrote my book, Red Wired: China’s Internet Revolution, Chen told me why he chose to specialized in selling clothes is that the margins are much higher.

“When I was at Joyo, our gross margin [for selling books] was only 5-10%.  And we need about 30% to cover cost of marketing, logistic and administration overhead.  So, it was very hard for us to break even, although we were already the largest online book retailer in China,” said Chen Nian.

“For clothes, as we sell our own brand, our gross margin can get as high as 50%.  Deducting 30% for marketing, logistics and administration, we still have a health net margin of 20%,” said Chen Nian.