E-Commerce China Dangdang Management Discusses Q2 2012 Results - Earnings Call Transcript

I’d now like to turn the call over to our Executive Chairwoman, Peggy Yu Yu.

Peggy Yu Yu

Thank you, Maria. Good morning and good evening everyone. I’m pleased to report that during the second quarter, Dangdang delivered a solid performance. Our growth momentum is good.

Net revenue growth of 53% was better than our guidance issued last quarter. Books and media grow 32%, general merchandise grow over 110% year-over-year and contributed one-third of revenue compared to one-fourth of revenue in the same period last year. Our gross margin of 13.1% in the second quarter was better than the second half of last year.

Competition in this segment was also very intense. We benefit from the fast growth in marketplace, gross merchandise value transacted on our marketplace grow at much higher rate than Dangdang’s own general merchandise.

At Dangdang, in the first half of 2012, we continue to progress in giving our customers the best possible shopping experience. As planned, we made our efforts in fulfillment, product selection and the pricing to optimize the shopping experience of our customers.

In fulfillment, we enhanced service in both Dangdang merchandized products as well as that by marketplace vendors during the quarter. First, for procurement products we increased our monitoring levels in core cities and managed courier companies more closely to improve delivery speed and services.

As a result, the customer satisfaction rate went up. We are now providing same day delivery in 20 cities. Furthermore, we increased our next-day-delivery by 10 cites to 150 cities to reach out to more customer in offering our next-day-delivery service.

On the other level in marketplace we improved the services we offer our third-party merchants. The lower costs fulfillment capacities at Dangdang help our third party merchants have the long-term ability to serve our customers.

Let me turn to product selection. In Sale Procurement, we improved the supply chain management. Dangdang’s merchandising department walked very closely with our suppliers during the past quarter. We came out with many joint promotions and a joint product launchings.

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