China’s Yaodian100 Gone, But Not Bankrupt, Leaving Suppliers Out of Pocket

Yaodian100's frontpage, before it vanished offline.

At the end of last month we reported on how one long-standing Chinese e-commerce site, Yaodian100, had vanished off the face of the earth. And now comes the sad and messy aftermath as suppliers find themselves unable to recover millions of RMB in unpaid orders for the B2C e-tailer.

Yaodian100 still hasn’t filed for bankruptcy; its Shanghai offices are locked but not yet fully cleared out; but the site is now totally offline, and its official Weibo account is untouched since July 17th. The Beijing Business Today paper estimates that there are just over 50 suppliers of the B2C e-commerce site who are owed money, with the amount totaling over RMB 10 million ($1.58 million).

Digging deeper, the paper found warning signs way before the Yaodian100 site put up a mis-leading notice on its site at the end of July saying it was suspending orders for a few days as the company “relocated” its offices. It turns out that senior staff had gone unpaid for three months prior to that, with the rest of the staff unpaid for two months, causing widespread internal worry and disarray. There had been rumors as early as March of this year that the site was in trouble and angling for an acquisition.

One company in Zhejiang province, south of Shanghai, says that it sold RMB 40,000 to 50,000 worth of items via the clothing retailer, but now it is left owed RMB 20,000 ($3,160) by the AWOL Yaodian100 execs.

Aside from the issue of debt collection – and where’s the CEO in all this? – it also raises the broader question of how a young but fairly established site got into so much trouble, apparently bereft of cash for months before its ignominious collapse. Is the B2C online model of retailing broken, involving far too great an amount of overheads – warehouses and inventories; marketing; some rivals are even preparing to do their own express deliveries – to be sustainable on such slim profit margins. Just last week, the specialist e-tailer VCotton suspended operations amidst news that local authorities had seized its warehouse over unpaid debts. It’s going to make some suppliers wary of working with some smaller B2C sites, especially ones which pay as late as 60 days after sales are made.

Who else might stumble and fall so spectacularly?

[Source: Beijing Business Today; via QQ Tech – article in Chinese]