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Online stores do brisk business in downturn
By Nie Xin |
April 8, 2009, Wednesday
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Print Edition
Print Edition
BUSINESS is better than ever for Shen Hao, 26, who runs two online casual wear stores on Taobao.com, one of China's most popular shopping Websites.
He has been in business for around seven years, since he was a sophomore in university. He also has a regular job as a salesman in a trading company that is beginning to feel the financial pinch.
Shen first opened a store on Eachnet.com, selling shoes and then moved to Taobao.com where he has been prospering for five and a half years.
"Now 90 percent of online shopping in China is on Taobao," says Shen.
Though many people worry about business in the global financial crisis, many Taobao store owners, including Shen, says business has never been better.
Shen's Hao Chen Fashion Room sells sportswear for both men and women. The VIP Room sells casual wear mostly for men.
When he first started seven years ago on Eachnet, he imported shoes from factories in Fujian Province and sold them online.
That business model is called "moving bricks," he says. He posted pictures of shoes online, and when customers ordered, he placed orders with factories at a lower price.
"That's better for us who don't have enough to invest," he says.
His cost for a pair of shoes was 40-60 yuan (US$5.85-8.78), then he could sell them for 100 yuan. After paying around 10 yuan in shipping, he earned 30-50 yuan a pair.
Soon Shen's business got bigger and he started selling casual wear, including T-shirts, coats and jackets.
Now that he has more money, he has shifted from "moving bricks" to importing products in large numbers and then selling them wholesale. He does more wholesale than retail now.
Now Shen earns 5,000 yuan a month on average from his Taobao stores.
"A shop with a good business can earn more than 10,000 yuan," he says. "That's quite common, but as competition heats up, profits are getting smaller."
Sometimes he only nets 10 yuan on a deal.
The competition doesn't stem directly from the financial crisis. His business has improved greatly in the past year, and earnings have increased 10 percent year on year.
Online shops selling clothes and cosmetics to young women are doing even better, he says.
"As many people are not busy as before (due to the economic downturn), they have more time to do shopping online," he says. Shopping online at home is cheaper than shopping at malls, so there's a lot more business.
Attractive online displays, good quality products and good credibility promote business for the shops on Taobao.
On the other hand, Shen is now worried more about his "real" job. A law graduate from a top university in Shanghai, he is a salesman in a city trading company. His salary is around 4,000 yuan a month.
His company is facing serious financial problems because of the global financial crisis.
"My regular job is more of a worry for me than my Taobao shop," says Shen.
"But as more and more people lose their major jobs, some will open Taobao shops online to survive, and that will bring even more competition."
He has been in business for around seven years, since he was a sophomore in university. He also has a regular job as a salesman in a trading company that is beginning to feel the financial pinch.
Shen first opened a store on Eachnet.com, selling shoes and then moved to Taobao.com where he has been prospering for five and a half years.
"Now 90 percent of online shopping in China is on Taobao," says Shen.
Though many people worry about business in the global financial crisis, many Taobao store owners, including Shen, says business has never been better.
Shen's Hao Chen Fashion Room sells sportswear for both men and women. The VIP Room sells casual wear mostly for men.
When he first started seven years ago on Eachnet, he imported shoes from factories in Fujian Province and sold them online.
That business model is called "moving bricks," he says. He posted pictures of shoes online, and when customers ordered, he placed orders with factories at a lower price.
"That's better for us who don't have enough to invest," he says.
His cost for a pair of shoes was 40-60 yuan (US$5.85-8.78), then he could sell them for 100 yuan. After paying around 10 yuan in shipping, he earned 30-50 yuan a pair.
Soon Shen's business got bigger and he started selling casual wear, including T-shirts, coats and jackets.
Now that he has more money, he has shifted from "moving bricks" to importing products in large numbers and then selling them wholesale. He does more wholesale than retail now.
Now Shen earns 5,000 yuan a month on average from his Taobao stores.
"A shop with a good business can earn more than 10,000 yuan," he says. "That's quite common, but as competition heats up, profits are getting smaller."
Sometimes he only nets 10 yuan on a deal.
The competition doesn't stem directly from the financial crisis. His business has improved greatly in the past year, and earnings have increased 10 percent year on year.
Online shops selling clothes and cosmetics to young women are doing even better, he says.
"As many people are not busy as before (due to the economic downturn), they have more time to do shopping online," he says. Shopping online at home is cheaper than shopping at malls, so there's a lot more business.
Attractive online displays, good quality products and good credibility promote business for the shops on Taobao.
On the other hand, Shen is now worried more about his "real" job. A law graduate from a top university in Shanghai, he is a salesman in a city trading company. His salary is around 4,000 yuan a month.
His company is facing serious financial problems because of the global financial crisis.
"My regular job is more of a worry for me than my Taobao shop," says Shen.
"But as more and more people lose their major jobs, some will open Taobao shops online to survive, and that will bring even more competition."
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