360buy, which raised $1.5 bln in latest financing round from diverse funds including Russian venture capital fund Digital Sky Technologies, came under attack by Leyou COO Gong Dingyu for its low-price strategy. Founded in 1999, Leyou is the biggest Chinese franchiser of maternity-baby-children supplies. Gong accused 360buy of using such strategy to squeeze out the competitors, calling for a boycott of 360buy and Dangdang‘s market-at-expense-of-revenue mode in an effort to contain unfair competition.
As for fellow customers, I find 360buy’s pricing more attractive than Newegg China and Joyo most of the time. 360buy caters to customers’ need with transition from online 3C store (like Newegg US) to online department store (like Amazon US), supplying a wide range of categories, from 3C products, personal care stuff, home supplies, household appliances to maternity baby products, shoes and books audio & video products. Such move would put 360buy under direct competition with vertical entities such as Leyou, Letao (online shoestore like Zappos) and Dangdang (still impressed many people as online bookstore).
I personally knew a lot of people from IT industry who turned their back to Joyo and Dangdang because 360buy lured them away with abundant products choices and reasonable price. You might still remember the book price war between 360buy and Dangdang that happend late last year, when both knocking down their price in an attempt to win over customers, since both of which were well funded. Liu Qiangdong, the founder and CEO of 360buy said on SinaWeibo on 17 March that “I’ll fire the whole books audio and video products department if you ever gain a penny of gross margin in 3 yrs or a penny of net income in 5 yrs.”
Dangdang listed in NYSE late last year, 360buy had just raised US$1.5 billion. Both with sufficient money in hand, we have reasons to believe there would be a second and even third price war, which would extend to other catalogue.
360Buy enjoys high ARPU historically
According to a research by BOCOM International, 360buy enjoys the highest ARPU (RMB 294 yuan in 4Q10) among B2C sites in China, though its average daily visitors (12 million) lacks behind Taobao Mall‘s (17 million). High ARPU reflects not only on that 360buy’s profound profitability, while also that 360buy historically focuses more on white goods and 3C products, which are higher priced than TMall’s personal care products or clothing, which accounts for large amount of TMall’s sales.
Rosy side of the picture… Leyou’s chief competitor Redbaby rumored to IPO in 2011
Although Leyou aiming at 360buy, now the biggest Chinese B2C online store, I personally believe the direct competitor they should pay close attention to is Redbaby actually. Founded in 2004, in Beijing with three rounds of financing from KPCB, NEA and Northern Light Venture Capital, Redbaby shared the same idea and business model of Leyou: selling maternity and baby products through web. Redbaby has been rumored to go IPO sometime in 2011.
The less rosy… Is TianTianLe’s failure an alarm for maternity-baby products B2C sites?
Not all is rosy on the e-commerce party. TianTianLe, an online store for maternity and baby products which based in Shanghai, was complained by customers about inaccessible hotlines and diminishing inventory. Ms. Chen, a Shanghai citizen who had been a customer of TianTianLe for almost a year, lately found that the online store had failed, while the store value card of TianTianLe she held worth RMB 2,000 yuan. According to TianTianLe, the deadline for refunding ended by 15, April. Ms. Chen had no idea about how to refund the cards, and she’s not the only one with such problem.
According to the information by Shanghai Administration for Industry & Commerce, TianTianLe was set up in April 17, 2007 with 5 million dollars. Its Business License shows the scope of business for TianTianLe includes wholesale and retail of baby products, stationary goods, clothing and knitting textile and computer software developing.
Ecommerce is the focus of attention since couple years ago here in China, consumer loves it for the sake of price, media for hype and VC funds for profit. But like in every feast, there always is someone who make a departure in advance.