An Alibaba-led logistics network project was launched today in the Chinese city of Shenzhen, as the Chinese e-commerce leader seeks to boost the delivery of products purchased online.

According to a Sina Tech report, Alibaba has collaborated with a few industry partners to set up a company under the project, dubbed the China Smart Logistics Network.

Alibaba has teamed up with financial institutions including China Yintai Holdings, Fosun and Forchn Holdings, as well as major delivery companies to launch the new company, named “Rookie Network”. China Yintai chairman Shen Guojun will be the company’s CEO, while Alibaba founder and chairman Jack Ma will be the chairman of Rookie.

It was announced at the launch that the first stage of investment stood at 100 billion yuan (.3 billion). The company is aiming to build a network that can support an average 30 billion yuan (.9 billion) worth of daily online shopping transactions within 5-8 years. Other earlier reports also noted that the network would allow the delivery of products across China within 24 hours.

In 2012, Alibaba topped 1 trillion yuan (7 billion) in combined sales volume on its Tmall and Taobao websites during the first 11 months of the year.

Last year, the company also said transactions on Alibaba platforms, which were reorganized in July, was likely to surpass both Amazon and eBay in annual online sales.

Image Credit: Peter Parks via AFP/Getty Images

By Scott Cendrowski, writer

Not so much.

FORTUNE -- Just as cash-strapped consumers in the developing world bypassed so-called landline phones in favor of mobile devices, so China's lower-income consumers are skipping physical stores in favor of e-commerce sites.

A recent report by McKinsey & Co. shows that e-commerce sales in China reached an estimated 0 billion last year, almost equaling the U.S. market as largest in the world. China's online retail industry is expected to grow to at least 0 billion by 2020 -- which would total more than the U.S., Japanese, U.K., German, and French markets combined. China will overtake the U.S. for the top spot next year, if it hasn't already.

In an economy known for astonishing growth, e-commerce stands out. China's market has grown at a 120% annualized clip since 2003 compared to the U.S.'s 17% growth rate. It shows no signs of stopping.

What interests McKinsey isn't just the massive growth -- it's the potential for e-commerce to drive the government's goal of increasing domestic consumption and diversifying the world's No. 2 economy from a reliance on infrastructure projects. The authors of the report, titled "China's E-tail Revolution," conclude that consumers are more than replacing what they might buy at the mall. E-commerce is driving consumers to buy new stuff, especially in the so-called lower-tier, lower-income cities where physical retail stores, if they exist at all, don't have anywhere near the same selection as online marketplaces.

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"China remains an under-retailed country, and customers' needs are very strong overall," says Peggy Yu Yu, co-founder of Dangdang, a Beijing-based e-commerce site that competes with Amazon China. "I live [in] downtown Beijing, and I drive any direction, and one hour later, still within Beijing, I don't see good stores anymore, be it supermarket or clothing store."

More than 70% of China's e-commerce business is consumer to consumer. eBay-like  (EBAY) auction sites called Taobao, Tmall, and Paipai host hundreds of millions of listings. But Amazon (AMZN) wannabes such as 360Buy are setting up operations in second-tier cities, and analysts believe they'll eventually start moving into third- and fourth-tier cities.

While the ordering process on many e-commerce sites is done via mobile phones and apps, distribution is often a combination of high-tech and old-fashioned customers service -- which suits Chinese consumers just fine. 360buy, for example, offers same-day delivery (depending on when the order is placed) often via bike messenger.

Consumers in smaller cities like to pay via cash on delivery; one upside is that the customer can try on their wares before making payment, employing what's been called the "mobile fitting room" option.

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What's surprising in the McKinsey report is that consumers in China's lower-tier cities actually spend as much online as higher-tier cities even though their consumers have far less disposable income. In the small and mid-size cities dotting the countryside, e-commerce sites are proving a revelation. Many consumers can now buy books, movies, clothes, and other goods for the first time.

That means lower-income consumers who shop for newly available goods online are increasingly propelling the economy forward, even as some are skeptical that China can transition into a consumption economy. For China, as it becomes the e-commerce capital of the world, that might be the best news of all.

Ahmet Bozer, president of Coca-Cola International, poses beside a vending machine in Beijing/XINHUA

Ahmet Bozer, president of Coca-Cola International, said during an interview that he expects the business to continue to grow for many years to come.



Bozer said billion of investment will be added by 2014 in China explained that the investment is mixed with marketing assets like plants, transportation and retail outlets.

According to the Coca-Cola chief, the company will open a new plant in Shijiazhuang, capital of north China’s Hebei Province, in October.

It is also working to develop the markets in China’s second- and third- tier cities and its western areas.

Those cities may be at a different economic stage of development, Bozer said, but they are expected to have great potential.

As told by Bozer, Coca-Cola has been developing local partners and distribution systems to make the brand locally relevant.

According to Bai Changbo, vice president of public affairs and communications for Coca-Cola Greater China, Chinese people now drink an average of 39 bottle of Coke per year, which is still much fewer than the 400 bottles consumed in the United States.

“Thus, our products have broad growth space in China,” Bai said.

With that growth, Coca-Cola has to keep investing to satisfy the demand, Bai acknowledged.

“We want to make China our largest beverage market soon,” added Bozer.

The first shipment of Coca-Cola cans was shipped to China in 1978, so this year marks the brand’s 35th year in the country.

“Our business in China is a mirror of the progress of its opening-up policy,” said David Brooks, president of Coca-Cola Greater China and Korea.

Coca-Cola used to make the argument to the Chinese government that foreign tourists had to have Coke if the country wanted them to come in, disclosed Brooks.

The Chinese government approved Coca-Cola’s operation in the country in 1979.

Now, the beverage giant has established 42 plants all over China, with a total investment of billion, and 50,000 Chinese local employees.

Best Buy Co. Inc. might not be done with China just yet.

Despite widespread speculation on Wall Street that Best Buy will pull back from international retail, the Richfield-based company Thursday named a veteran retail executive in Asia to run its Five Star business in the world’s most populous country.

In a statement, Best Buy said Meng “Max” Zhou is the new CEO in China, replacing Nicolas Wang, who resigned in March. Zhou, a Cornell University graduate, previously served as CEO for China of Central Retail Group, the largest retailer in Vietnam, and executive vice president and chief operating officer for China Paradise Electrical Limited, the third-largest electronics chain in China.

“Five Star has built a strong presence in the world’s largest and rapidly growing consumer electronics market,” Zhou said in a statement. “Our business has great opportunities, and we are determined to drive our performance by meeting the changing needs of our customers.”

Zhou’s hire comes at a time when analysts expect CEO Hubert Joly to pull back from international markets to focus on Best Buy’s core business in North America. Last month, Best Buy agreed to sell its 50 percent stake in Best Buy Europe to joint venture partner Carphone Warehouse for 5 million in cash and stock.

Analysts had speculated that Joly will soon sell the Five Star business. But the arrival of Zhou suggests that Best Buy may stick around, especially as China’s smartphone market continues to boom.

“Best Buy wants to keep a foothold in China,” said Laura Kennedy, an analyst with Kantar Retail consulting firm in Boston. “It seems that the company wants more time to realize some potential there.”

The country has overtaken the United States as the world’s largest smartphone market. Global shipments of smartphones grew 48 percent in the first quarter to 216.3 million units, much of that going to China, according to a recent report by technology research firm Canalys. Of the top five smartphone vendors in the world, two — Huawei and ZTE — are Chinese firms selling into their home country.

With Five Star, Best Buy seems uniquely positioned to benefit from this growth. Although the company has shut down its big-box stores in China, Best Buy has continued to open Five Star stores and is testing a Best Buy Mobile store-within-a-store concept in some Five Star locations.

Best Buy will develop “our e-commerce capabilities and enhance the shopping experience in physical stores, with a focus on fast-growing categories like mobile phones,” Zhou said in his statement.

However, some ­observers still believe Best Buy will jettison Five Star, which has been struggling of late. A source close to Best Buy China said Zhou’s hire probably means the company wants more time to boost the value of Five Star before finding a buyer for the right price.

Since Joly joined Best Buy last September, he has launched an extensive campaign to simplify the business, removing layers of management, reducing corporate expenses and ending noncore operations like venture capital, online tech support, and outside partnerships and alliances.

He seemed particularly skeptical about Best Buy International, which never generated the returns on capital Wall Street had expected.

“Retail is not the most global of businesses by any stretch of the imagination,” Joly told investors in New York last November. “China is not a goal unto itself. If we can’t find a way to make the business successful, then we shouldn’t be in China.”

In February, Best Buy closed 15 of its 230 big-box locations in Canada. A few months later, Best Buy ended its joint venture with Carphone Warehouse, including its Global Connect initiative in which the two companies would sell their mobile store expertise to retailers around the world.

With Joly keen to focus on revitalizing Best Buy stores in the United States, pulling out of international made sense, analysts said.

“While management will be rolling out initiatives to help stabilize performance, we believe there is significant opportunity to divest or restructure noncore assets that don’t have strategic value like Europe and/or China,” Peter Keith, an analyst with Piper Jaffray, wrote in a recent research note.

China appeared to be an ideal candidate for divestment. Best Buy big-box stores never caught hold in the country and Five Star results have started to slow in recent months.

BEIJING, May 17, 2013 /PRNewswire/ -- E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights

• Gross Margin in the first quarter of 2013 was 17.2%, the highest level since the second quarter of 2011, compared to 14.2% in the first quarter of 2012 and 13.4% in the fourth quarter of 2012.
• Net Loss for the first quarter of 2013 was RMB72.7 million (.7 million), representing 5.5% of total revenues, as compared with a net loss of RMB99.5 million in the first quarter of 2012 representing 9.2% of total revenues and a net loss of RMB122.1 million representing 7.6% of revenues in the fourth quarter of 2012.
• Gross Merchants Value ("GMV") of the marketplace in the first quarter of 2013 were RMB584.1million (.0 million), a 193% increase from the corresponding period in 2012.

"We are pleased to report another quarter of solid financial and operational results with better than expected sales, highest gross margin since the second quarter of 2011, and better operating efficiency," said Ms. Peggy Yu Yu, Dangdang's Executive Chairwoman. "Books and media sales grew by 24% in this quarter, which allows us to maintain dominant market share in online media sector. Dangdang's marketplace program once again demonstrated outstanding growth momentum, as marketplace GMV grew at 193% year-over-year in the first quarter. Sales from general merchandise, which include both self-procurement and marketplace, exceeded sales from books and media for the second consecutive quarter."

"We are confident that Dangdang's transition from online bookstore to an integrated online shopping mall is well under way. Our strategy of placing more emphasis on third party marketplace continues in 2013. Going forward, we will undertake more business initiatives to drive marketplace growth, bringing in more merchants and providing more fulfilment support to them, and to ensure that Dangdang customers enjoy rich selections, competitive pricing and seamless shopping experience," Ms. Yu continued.

"We are pleased with the strengthening financial results in the first quarter, making it a robust start of the fiscal year. As we continued to grow sales and drive operational efficiencies, our gross margin increased to 17.2%, an improvement of 300 basispoints over the same period last year. Our net loss narrowed to RMB72.7 million, or negative 5.5% of total net revenues, representing improving margin for the third quarter in row," said Mr. Jun Zou, Dangdang's Chief Financial Officer. "Likewise, cash flow from operations increased by 51% year-over-year, mainly due to better working capital management."

First Quarter 2013 Results

Dangdang's total net revenues in the first quarter of 2013 were RMB1,333.8 million (4.7 million), a 23% increase from the corresponding period in 2012.

Media product revenue for the first quarter of 2013 was RMB863.9 million (9.1 million), representing a 24% increase from the corresponding period in 2012. General merchandise revenue for the first quarter of 2013 was RMB411.7 million (.3 million), a 12% increase from the corresponding period in 2012, representing 31% of total net revenues, as compared to 34% in the corresponding period in 2012. Other revenue including revenue from third-party merchants for the first quarter of 2013 was RMB58.1 million (.4 million), representing a 194% increase from the corresponding period in 2012.

Dangdang had approximately 7.4 million active customers including approximately 2.4 million new customers in the first quarter of 2013, representing a 21% and 24% increase from the corresponding period in 2012. Total orders for the first quarter 2013 were approximately 14.8 million, a 21% increase from the corresponding period in 2012.

Cost of revenues was RMB1,104.9 million (7.9 million), representing 82.8% of total revenues, as compared to 85.8% in the corresponding period in 2012. The decreased cost of revenues as a percentage of total revenues was primarily due to the execution on the strategic category mapping to move certain categories to the marketplace and economies-of-scale in some of Dangdang's self-procurement categories. Gross margin in the first quarter of 2013 was 17.2%, as compared to 14.2% in the corresponding period in 2012 and 13.4% in the fourth quarter of 2012. The year-over-year increase was primarily due to the increase of other revenue, representing the sustained scaling of the marketplace, as well as improved self-procurement margin due to economies of scale. The quarter-over-quarter margin improvement was primarily due to increased margin of self-procurement business as a result of better category selection and commercial terms with suppliers.

Fulfillment expenses which include warehousing and shipping expenses, were RMB184.6 million (.7 million), representing 13.8% of total revenues, compared to 16.2% in the corresponding period in 2012 and 12.0% in the fourth quarter of 2012. The year-over-year decrease was primarily due to consistent operating leverage and improved warehousing management systems.

Marketing expenses were RMB43.2 million (.0million), representing 3.2% of total revenues, compared to 2.7% in the corresponding period in 2012. The increase was primarily due to increased spending in navigation website and other targeted marketing campaigns related to our membership program.

Technology and content expenses were RMB49.3 million (.9 million), representing 3.7% of total revenues, compared to 3.0% in the corresponding period in 2012. The increase was primarily due to increased engineering headcount and investment in IT facilities.

General and administrative expenses were RMB32.4 million (.2 million), representing 2.4% of total revenues, compared to 2.5% in the corresponding period in 2012. General and administrative expenses remained in line with the expansion of the business year-over-year.

Share-based compensation expenses, which were allocated to related expense line items, were RMB2.6 million (

BEIJING, May 17, 2013 /PRNewswire/ — E-Commerce China Dangdang Inc. (“Dangdang” or the “Company”) (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the first quarter ended March 31, 2013. First Quarter 2013 Highlights Gross Margin in the first quarter of 2013 was 17.2%, the highest level since the second quarter of 2011, compared to 14.2% in the first quarter of 2012 and 13.4% in the fourth quarter of 2012. Net Loss for the first quarter of 2013 was RMB72.7 million ($11.7 million), representing 5.5% of total revenues, as compared with a [...]

Dangdang recorded an operating loss of RMB80.4 million (.9 million) in the first quarter of 2013, as compared with an operating loss of RMB107.2 million in the corresponding period in 2012, primarily due to increase of gross margin and consistent operating leverage.

Operating loss excluding share-based compensation expenses (non-GAAP) was RMB77.8 million (.5 million), as compared with an operating loss excluding share-based compensation expenses (non-GAAP) of RMB104.4 million in the corresponding period in 2012.

Net loss was RMB72.7 million (.7 million), as compared with a loss of RMB99.5 million and RMB 122.1 million in the first and fourth quarters of 2012 respectively, primarily due to our efforts to increase gross profit and operating leverage.

Net margin was negative 5.5%, as compared with a negative net margin of 9.2% in the corresponding period in 2012.

Net loss excluding share-based compensation expenses (non-GAAP) was RMB70.1 million (.3 million), as compared with a net loss excluding share-based compensation expenses (non-GAAP) of RMB96.7 million in the corresponding period in 2012.

As of March 31, 2013, Dangdang had cash and cash equivalents, restricted cash, and short-term time deposits of RMB1,584.7 million (5.1 million), as compared to RMB1,634.6 million as of December 31, 2012.

Capital expenditures for the first quarter of 2013 were RMB24.3 million (.9 million), including RMB11.8 million spending on the construction of Tianjin warehouse.

Adjusted EBITDA loss (non-GAAP) in the first quarter of 2013 was RMB65.1 million (.5 million), as compared with an adjusted EBITDA loss of RMB94.8 million in the corresponding period in 2012.

Outlook for Second Quarter 2013

Dangdang expects total net revenue in the second quarter of 2013 to be around RMB1,486 million representing year-over-year growth of around 23%. We also expect GMV from our marketplace to grow at a rate of 175% year-over-year in the second quarter of 2013. This forecast reflects Dangdang's current and preliminary view, which is subject to change.

Filing of Annual Report on Form 20-F

On April 10, 2013, the Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2012 that includes its audited financial statements with the Securities and Exchange Commission. The annual report is available on the Company's investor relations website at http://ir.dangdang.com. Holders of the Company's securities may request a hard copy of the Company's annual report free of charge.  

Conference Call Information

Dangdang's management will host an earnings conference call at 8:00 AM on May 16, 2013 U.S. Eastern Time (or 8:00 PM on May 16, 2013 Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

Please dial-in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "Dangdang earnings call."

A replay of the conference call may be accessed by phone at the following number until May 23, 2013:

Additionally, a live and archived webcast of this conference call will be available at http://ir.dangdang.com/ until November 30, 2013.

About Dangdang

E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG) is a leading business-to-consumer e-commerce company in China. On its website dangdang.com, the Company offers more than 900,000 books and other media products as well as selected general merchandise products including beauty and personal care products, home and lifestyle products, baby, children and maternity products, apparel, digital and electronics products. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang's nationwide fulfillment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the second quarter 2013 and quotations from management in this announcement, as well as Dangdang's strategic and operational plans, contain forward-looking statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Dangdang's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Dangdang's growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of our products and services; trends and competition in China's business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang's industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Dangdang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), we use the following measures as the non-GAAP financial measures defined by the SEC: non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss and adjusted EBITDA loss (collectively referred to as the "Non-GAAP Financial Measures" thereafter). We define non-GAAP operating loss, non-GAAP operating margin and non-GAAP net loss as operating loss, operating margin and net loss excluding the impact of share-based compensation expenses respectively; we define adjusted EBITDA loss as loss before interest, taxes, depreciation, amortization, other non-operating income, and share-based compensation expenses. We review the Non-GAAP Financial Measures together with net loss or income to obtain a better understanding of our operating performance. We believe that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company's performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact our net loss for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to net income/loss prepared in accordance with U.S. GAAP.

For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the table captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures" at the end of this release.

For investor and media inquiries, please contact:

Allie Du

Investor Relations Department

E-commerce China Dangdang Inc.

+86-10-5799-2257

duwenwen@dangdang.com

Caroline Straathof

IR Inside

+31-6-54624301

info@irinside.com

SOURCE E-commerce China Dangdang Inc.