The Vancl downsizing rumors has been a constant topic ever since the company’s blind expansion to areas like electronic and household supplies. The latest one in a string of such rumors is that the Beijing-based online apparel service would be cutting its headcount by 25%.
Vancl confirmed the rumor with local media National Business Daily, but denied the 25% and said the layoff was just the subsequent move of its restructure from earlier this year on.
The Reason for Shedding Headcount
The reason contributed to the layoff is twofold. Firstly, after the Double-11 shopping carnival, Chinese B2C market landscape is quite clear: the top 7 B2C platforms dominated the market. Chen Nian, the founder of Vancl once said that Vancl would quit competing with other big guys and transform to a vertical apparel retailer brand. Downsizing is part of the transition. Secondly. After the investment bubble, now capitals tend to value companies in a more reasonable way, giving more points to profitability. B2C sites such as Vancl and 360buy are now shifting their focus and aiming at generating revenue. Vancl’s restructure was targeting at relocating the human resources of every department in a way to achieve better productivity and efficiency, a move to optimize profitability eventually.
Vancl’s Platform Strategy
Vancl is now gradually transforming itself from a platform-oriented company to a product-oriented one, endeavoring to revamp Vancl as a fast-fashion apparel brand. The company was restructured into 6 departments and 19 product lines, highlighting on product planning, sales and marketing in an effort to gear up for IPO. Based on the strategy, the logistics arm of Vancl (RuFengDa Delivery) was the first to be rectified: it suspended operation in 20 cities with business in only 6 major cities remained.
Chen Nian once said that, Vancl’s sales figures increased by 30% yoy in the first three quarters of this year and would break even in the fourth quarter.
One catch to Chen’s brand-instead-of-platform strategy, though, would be that, if Vancl is just a fashion brand, how much would capitals value the company?