Beijing time on September 8th news, incentive competition for China’s electricity supplier companies are doing more efforts to promote, but there is no doubt that the impact of the company’s profit margins. In this regard has been listed Dangdang and Mcglaughlin differences: Dangdang will continue to take low-cost promotional strategies, while Mcglaughlin chose to cut promotional efforts.
According to Mcglaughlin
yesterday released its second quarter earnings, net income was $58 million 700 thousand, compared to the same period last year did not change much, but the second quarter gross margin was $21 million 500 thousand, compared to the same period last year fell 20.1%. Dangdang second quarter earnings report showed that its revenue grew 53.3% to $120 million, but the gross margin was only 14.3%. Last year the number is 19.8%.
these two companies to reduce the gross profit margin, and the second quarter in the fierce competition in the electricity supplier, the use of large-scale promotions.
Dangdang chairman Yu Yu said in this topic, Dangdang second quarter gross margin decreased in two reasons, first, the product structure changes, the daily profit of products than books low audio. Secondly, in order to maintain competitive advantage, Dangdang decided to give up some of the profit margins and rival competition.
Dangdang to take the means of price is associated with sales, to provide discount coupons to stimulate consumers, and attract the original audio and video products to consumers in other products. The use of a large number of discount coupons have a certain impact on the overall revenue dangdang.
also has a role in promoting the promotion for revenue, Mcglaughlin and Dangdang revenue have increased, according to Mcglaughlin’s earnings, discount coupons to drive revenue growth of 11%. but Mcglaughlin intends to cut promotional efforts.
Mcglaughlin CFO Zhang pointed out that the last two or three months of competition is very intense, the industry are vigorously promoting and issuing coupons. "We think that this is detrimental to the brand, in the future is not sustainable, so we decided to significantly reduce the issuance of coupons."
Zhang Bang is expected to reduce coupons will lead to a sharp slowdown in the growth of the Internet business in the short term, is expected in the third quarter of Internet business revenue will be essentially flat over the same period last year. "It’s hard to predict the impact of the future, as we’ve just stopped issuing coupons, and maybe we can talk about the impact of the fourth quarter."
and Dangdang will talk about the low price strategy in the end. Yu Yu said that different promotional activities for customers have different attractions, preferential prices, gifts and advertising activities have their own effectiveness.
Dangdang’s low price strategy and Jingdong mall competition. Jingdong mall CEO Liu Qiangdong once said: "to play by micro-blog (price war) will be ruthless!" and boasted the Jingdong even five years does not make money to Dangdang Sike in the end. Dangdang.com Li Guoqing has also repeatedly said that by not resigned to playing second fiddle, the price war of Jingdong mall "take revenge".