Vipshop soars past Dangdang

Vipshop could be an e-commerce company to watch due to its niche focus.

PUBLISHED : Thursday, 11 October, 2012, 11:32am
UPDATED : Friday, 12 October, 2012, 12:45pm

Correction: Since writing this post, Baidu has informed me that the announcement with Charm Communications on which the original post was based is simply a reselling deal for Europe and that it has no immediate plans to expand its search business into any European markets at this time. References to any potential expansion in Europe have been removed.


Vipshop soars past Dangdang

After an IPO earlier this year that was a major flop, discount e-commerce company Vipshop's (NYSE: VIPS) have quietly jumped in the last few months despite many obstacle it has faced this year. This otherwise low-key company, which has been out of the headlines since its disastrous IPO in March, caught my attention after I read a report saying its market cap has passed that of Dangdang (NYSE: DANG), previously China's largest publicly listed e-commerce firm. 

Vipshop's current market cap has risen steadily in the last few months to reach nearly US$400 million, as Dangdang's has moved in the opposite direction and is now at around US$350 million.

The move marks a big turnaround for Vipshop, which is the only major Chinese web company to make a US listing this year due to a chilly investor climate. Vipshop's shares initially sold for US$6.50 each and fell to almost US$4 afterwards, but have come roaring back recently and now trade at around US$8. The company is also inching towards profitability, unlike Dangdang, which is sinking further into the red due to cutthroat competition in the general merchandise e-commerce space.

Perhaps Vipshop's key to success lies in its relatively niche focus in the bargain shopping space, which helps protect it somewhat from the rampant competition in the more mainstream e-commerce market. Regardless of the reason, this company and other niche retailers certainly seem like ones to watch as the cutthroat competition in the more mainstream e-commerce space is likely to continue through the end of this year and well into 2013.

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