China’s Redbaby Grows Up, Finds Growing Pains in B2C E-Commerce

A senior executive at one of China’s leading specialist B2C e-commerce sites has admitted that his site’s growth has stalled – and the market is so tough that it’s not clear how any such sites can grow further. The service in question is Redbaby.com.cn – selling exclusively children’s clothing, toys and accessories, and powdered milk – which blazed a trail for smaller, highly-focused online stores when it first shot to prominence a few years ago.

Redbaby’s senior VP and GM of marketing, Chen Shuang, concedes that the site is due to hit 1.2 to 1.3 billion RMB (US$189 to 205 million) in revenue by the end of this year – but that’s down from 1.5 billion in 2010, which is on a level with what it raked in in 2009. Its stellar growth in 2007 to 2008 can not be replicated, he says, or else the site should, in theory, be bringing in over 3 billion this year.

During the company’s early mushrooming, it has attracted investment from Northern Lights, NEA, and KPCB, and other investment institutions. In that time it grew to accept telephone or mail orders, and even opened some bricks-and-mortar stores for its own-brand children’s clothing. Furthermore, Redbaby diversified with a general B2C site, Binggo.com, selling home appliances and healthcare products.

Growing Pains, Rising Competition

And so Redbaby is facing a difficult transition period in which its founders are quite openly debating where growth can come from, and if the core mother-infant business is the right channel to stick with. In an interview with China Venture, Chen Shuang states that the management team has resolved that “the future of Redbaby is centred on ‘the female,’ as the main customer, supported by call-centres and mobile apps” with a view to being the “one-stop solution” for women in adulthood, including right through child-birth.

China’s B2C e-commerce industry is hard-fought in each and every sector, with market-leader Tmall.com – part of Alibaba Group – pushing branded official storefronts on its site (which Redbaby itself signed up to); whilst at the same time, other specialist platforms nibble away at some part of a rival’s mainstay – for example, YiHaoDian luring away your food customers, or 360Buy stealing your home-appliance buyers.

This isn’t the first time we’ve heard an e-commerce site’s executive trying to talk sense in a tough market: a few weeks ago, the CEO of LeTao.com, an online shoe retailer, said the site was cutting 80 percent of ad expenditure in a bid to quell the destructive e-commerce price wars.

[Source: China Venture – article in Chinese]