Growing online businesses on wobbly management grounds

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.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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