(Chinese Version)

“We will achieve a sales volume of billions in 2017, do you have the confidence to pull that off?” Chen Lijun, Dangdang’s vice president and general manager of the publication business, asked book suppliers in a passionate tone on the recent 2017 Publication Supplier Conference.

Dangdang has finished its delisting process with controversy a few months ago. Dangdang went public in 2010 and at that time it was still the top leader in the e-commerce industry holding 40% of the market share. But now, the former giant only possesses 1.4%. It’s no doubt a major twist. “Dangdang has been in the market for 17 years,” Dangdang’s CEO Li Guoqing said. “I have been doing this for 17 years. My hair has turned gray.”

As the pressure from the stock market has been lifted, Dangdang is putting all its energy back to its original business

Dangdang underwent quite a few transitions in the past 17 years but it failed to find a sound positioning. After going into comprehensive e-commerce in 2010, Li Guoqing stated: “Comprehensive e-commerce is Dangdang’s future strategy. Dangdang will continue on in this path even if we have to pour in the revenue from our book business to support this strategy.” However, no matter how hard Dangdang had tried, Dangdang’s image didn’t change much from the perspective of the consumers. Most people still thought Dangdang was merely a book selling site.

Statistics from Analysys show Dangdang is still the largest book retail platform in China with 45% of the market share in its hands, a percentage far more than that of the second and third largest’s combined. In addition to that, Dangdang’s book sales account for over 60% of the platform’s total sales.

That said, the book business is still the most competitive business Dangdang has on the table, which Dangdang realized. That’s why Dangdang decides to go back to its original business.

Dangdnag’s management support assistant president and VC partner Zhang Wei admitted such fact in an interview.

He stated that before the delisting Dangdang expanded its business with daily merchandise and clothing etc. to build its scale. “After the delisting, we will gradually get rid of losing non-book businesses. We will still offer daily merchandise, clothing and such on our platform, but we will put more energy and money on building our book business.”

However, as reading becomes more fragmented and mobile, the book sector is getting tougher as well for businesses. Even though the book market is still growing, but the growing speed has been slowing. The growth rate of the sales volume of online bookstores is also dropping.

The 2015 book retail market report shows in 2011 online retail market had a year-on-year growth of 80%. And in contrast to that, the figure had dropped to 33.21% in 2015.

Li Guoqing described the current book market as “full of risks”. For that, Dangdang will be doing refined operation and undergoing transformation.

“Ten years ago I went to Cambridge University Press. And I recently went there too. I asked a taxi driver to take me there. He knew the way well. And I asked him why he knew exactly where it is. He told me that he used to work there as a publisher, but now the agency doesn’t see book as its main business. So he lost his job and became a taxi driver. This tells us when facing a disruptive revolution, if Dangdang and everybody present here don’t catch our chances, then we might end up as Uber and Didi drivers as well.”

In the recent two years, Dangdang has been expanding businesses related to the book industry, opening up new businesses such as digital books, online literature, Dangdang Pictures etc.

Zhang Wei revealed that Dangdang acquired the copyrights of 500 online literatures and have sold several of them that bring a profit of over a million. Dangdang Pictures, founded in September last years, focuses on incubating IP. It’s reported that Dangdang will invest to produce 20 films in the next three years.

As for the digital book business, Dangdang’s statistics show that the digital book user base in 2016 had hit over 40 million, a year-on-year growth of 55%, and that 64% of readers would choose to read digital books and 35% of readers read digital books everyday for more than one hour.

Last year, Dangdang sold about 600 million digital books last year with a download volume of over one hundred million. However, previously many of the books were free to download. “After three years of market education, we will begin to charge the digital book customers this year,” Li Guoqing said.

Physical bookstores and knowledge portal will be Dangdang’s focus

In 2017, Dangdang will put its focus on expanding its physical bookstore business and building a knowledge portal.

At present, Dangdang has books stores of three types of scale:

Dangdang currently owns 140 bookstores that cover less than an area of 300 square meters, which are mainly set in supermarkets. Zhang Wei revealed that before the bookstore business took place, some supermarkets’ book areas were already supplied by Dangdang, but the supermarkets didn’t allow us to show our label. Starting from last year Dangdang has been acquiring many bookstores in the supermarkets and gradually upgrade them.

Three big bookstores covering 1000 – 2000 square meters. These big bookstores are comprehensive book stores that include book, catering and creative and cultural businesses. Dangdang is planning to build mall-like comprehensive bookstore that will cover over 5000 square meters in 2017, according to Zhang Wei. The site selection is still in process, he said.

Dangdang estimates that they will open around 1000 physical bookstores in the upcoming years and the offline book price will be the same as those online (Dangdang offers an average discount of 38% off currently). From Zhang’s view, the online and offline business will form a health supplementary relationship in the future.

On one hand, big data from online sales can be of great guidance to offline merchandise selection. On the other, Dangdang’s online platform has full book stock, which can supply the offline. Besides that, the online platform can also direct customers to the offline stores. For instance, when there is a booking-signing activity, Dangdang’s site can push notification to online customers.

The offline stores provide an actual space for cultural dialogue and activities, enriching the reading experience.

“We are hoping to bring up the reading environment because the book sales basically take up half of our online sales. If the reading environment can grow better due to our brick-and-mortar bookstores, with every growth of 1% we get 0.45%.”

When asked about the profit and loss of the bookstore business, Zhang Wei said it’s slight losing or a break even. He added that the supplement businesses like the catering business etc. can make up the potential loss. Besides that, the government and commercial real estate companies take up part of the rent and decoration cost.

For instance, the government is aiming to enhance the reading environment and therefore will provide some subsidy for physical bookstores. As for commercial real estates, they have been having customer loss due to the rise of e-commerce, and physical bookstores can bring quite some customers to the malls. Therefore, the commercial real estates pay for the rent, utilities, decoration, and even provide some operation subsidy.

“Dangdang’s past community was labeled with tags like product, and book. Every day the customer comments generated from one book can be about 80,000. This is a mass amount of volume. In the past we didn’t break such data into specific categories,” Chen Lijun said, saying that Dangdang had been a book seller in the past 17 years instead of a reading platform.

In this case, Dangdang will focus more on building a knowledge portal, integrating Dangdang Read and Dangdang Shop’s APP to make Dangdang a social community similar to Douban and Zhihu.

From Chen Lijun’s perspective, many reviews and comments on the books are from writers and editors, a professional resource that Dangdang can utilize to make a Q&A platform.

However, since the establishment of interest-based social networking can only form small groups and has less retention rate compared with friends networking, even Douban and Zhihu are still far from becoming the WeChat Moment in book reading. How Dangdang will manage to pull that off and connect professionals with the general public remains an interesting story to follow. Douban and Zhihu are no doubt watching the process as well.

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[The article is published and edited with authorization from the author @Xie Kangyu, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.