In my last article, I mentioned the overwhelming popularity and high brand recognition of Dangdang.com (DANG). Many online articles and discussions in forums cover these topics. For example, an online consumer behavior and attitude survey (survey is in Chinese) for third quarter of 2011 backed up what I said.
Although Dangdang only has 0.5% share of online shopping market and about 2.3% share of online B2C market in China, it is recognized by about 70% of people in China. In terms of brand recognition, Dangdang is ranked only after Taobao. It is ranked higher than Joyo.com [now Amazon.cn (AMZN)] and Alibaba.com (ALBCF.PK), the top C2C e-commerce website that many Americans investors know well due to Yahoo's (YHOO) relationship with the company.
DangDang is so well known in China because it is a pioneer in bringing many popular categories of goods such as books, cosmetics, baby/kids goods, furniture, appliances to online shoppers in China and because the company does exceptionally well in these categories in terms of completeness and novelty in product selections, price, delivery speed, ease of return/refund, etc. The company is known for leading the industry in new products offerings, new ways of doing business, and new online-shopping experiences for customers.
Because it has high brand recognition and online shoppers are enthusiastic about shopping on Dangdang.com, the company enjoys enviable privilege of being able to attract huge attention when it introduce a new product line or new feature and being able to grow sales of new product lines fast. The last example of the company's keen sense and savvy to adopt critical new technology and improvements to customers was the introduction of its branded E-book and mobile shopping applications. True, Dangdang was not the first one to do this in the world; the honor belongs to Amazon. Nonetheless Dangdang was still the first B2C site in China to implement this and thus seized first-mover advantage. The company's unbeatable relationships with publishers make it best positioned among all B2C sites to rapidly ramp up productions of e-books and transform the way people read in China. Needless to say, profit margins for selling e-books are much higher than profit margins for selling traditional books. The move might not bring immediate impact to the bottom line for last quarter (Q4 2011) and this quarter (Q1 2012), but the contribution to bottom line should start to manifest in Q2 2012.
While currently Taobao is the leading mass factor of online shopping in China, DangDang is the "cool factor" in China. Thus, while most people view DangDang as the next Amazon in China, maybe it is actually closer to the next Apple Inc. (AAPL) in China. Motorola (MMI) and Nokia (NOK) were leading players in mobile electronics 10 years ago and enjoyed more than 10 times of Apple's market share at that time were surpassed by Apple in a swift? So, who is the leading online shopping site in China today is really not important because the industry is so young. Just one major mistake or event can change the competition landscape overnight and transfer a huge chunk of market shares from Taobao or 360buy.com to Dangdang. Actually, Taobao just suffered the first blow to its reputation and sales when it raised fees it charges independent sellers, who rent virtual stores on Taobao.com to sell their own products. Taobao's mistake was almost identical to the one Netflix made when it raised subscription charges last summer. Soon after Taobao announced the increase in fees, tons of outraged big sellers moved their businesses to DangDang.com.