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Dangdang slashes prices

By Zhang Ye (Global Times)

08:22, March 13, 2013, the leading Chinese B2C e-commerce bookstore, on Tuesday launched a big sale on all its books in hopes of soliciting more customers as domestic rival offers similar promotions.

Dangdang has pledged to offer 400,000 titles at 50 percent off from Tuesday to Friday, while is offering cash coupons to online shoppers who buy books or audiovisual products from Monday to Wednesday.

Analysts said the price war may help Dangdang maintain its leadership in the domestic book market, but will worsen its performance in the stock market, as the company's share prices have been degraded by some US investment banks due to increased losses over two consecutive years.

The NYSE-listed Dangdang recorded a loss of 443.9 million yuan ($71.2 million) for the 2012 fiscal year, larger than 228.5 million yuan loss in 2011.

Piper Jaffray Co on Monday announced it was downgrading Dangdang's target stock price from $10 to $4.50.

A large-scale promotion means losing money, which overseas investors are unwilling to accept, Wang Tingting, an analyst from iResearch, told the Global Times Tuesday.

But Dangdang has launched one - even though the price war will further weaken its profitability - in response to, which has set its sights on shaking Dangdang's leadership in the domestic book sector, Lu Zhenwang, an independent e-commerce analyst, told the Global Times Tuesday.

"We intend to attract more customers with lower prices when other players have no big promotions," a Dangdang public relations representative told the Global Times Tuesday. He added that the company received more than 200,000 book orders on Tuesday by noon, twice Monday's sales.

With such discounts, Dangdang will continue to lead the country's book market, but can't compete in the overall B2C e-commerce industry since the company performs well only in books, which recorded just 3 percent of total online transaction volumes in 2012, said Wang.

Data from iResearch indicated that accounted for 49 percent of the total sales volume created by domestic B2C e-commerce operators in 2012, ranking first. Suning Appliance Co's e-commerce site ranked second with 13.6 percent. Amazon China was listed third with 6.8 percent, followed by Dangdang with 4.8 percent.

Meanwhile, Hong Kong-listed brick-and-mortar bookstore operator Xinhua Winshare Publishing and Media Co said in its annual report Friday that in order to cope with the impact of digital publications and online bookstores, the company has actively introduced diversified businesses into its offline stores.

Xinhua Winshare recorded revenues of 807 million yuan in 2012, slightly higher than 800 million yuan in 2011.

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