Growing online businesses on wobbly management grounds
July 23, 2013 Leave a comment
Growing online businesses on wobbly management grounds
Staff Reporter
2013-07-23
Several stores, which became famous on Taobao, are facing a crisis as traditional brands have also opened their stores on other online shopping platforms, according to QQ.com. Only brands such as Handuyishe, Liebo and Afu have remained strong. Spanish clothing retailer Zara and British fashion chain Topshop are expected to open their official flagship online stores on Tmall. Clothing chains such as Gap, Uniqlo and Forever 21 have already started selling their products on the online platform. Handuyishe CEO Zhou Yingguang told QQ.com that the competition on Taobao.com would intensify during the next decade, especially in the clothing industry.
Tmall launched several favorable deals to attract brands that grabbed the spotlight through Taobao to set up stores on the platform. These brands have become successful because of the opportunity provided by Tmall.
For example, Mbaobao’s operations expanded after shifting its store to Tmall. Its sales soared to 30 million yuan (US$4.9 million) during the 2008 to 2009 period, from an initial 3 million yuan (US$490,000), and surpassed 100 million (US$16.3 million) in 2010.
The company faced operational difficulties during 2010 to 2011. During the next year, it began laying off some of its employees.
In addition to Mbaobao, other brands that reported 100 million in annual sales, such as Green Box, are also facing a crisis in terms of revenue growth, according to the report.
Their downfall could also be attributed to their mounting operational costs and mismanagement.
Huang Re, a senior e-commerce expert, said sales of such companies have skyrocketed to over 100 million yuan and their employee count has grown from dozens to hundreds. If these companies want to expand their operations further, they need systematic management, which most of them presently lack.
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