B2C E-commerce’s Profit Model Analysis

With the popularity of the Internet, the development of network technology and theimprovement of people’s living standards are developing Vigorously, the size of the market isexpanding quickly, by the end of2013, China’s B2C E-commerce has become the world’ssecond. But because of the problems such as B2C E-commerce in China started late, thetechnical level is not high, lack of professional counterparts talents, quite a number of B2CE-commerce enterprise profitability is not ideal. This paper takes one ofChina’s most famous B2C e-commerce enterprises--DangDang for instance, put a detailedanalysis of the profit model, in order to put forward reasonable suggestions on thecompany’s business strategy, make reference for other similar enterprises.Firstly,,this article summarize profit model, definition, classification and origin of B2Ce-commerce which DangDang belongs to. Then analyze DangDang’s profit model andrelated financial indicators, and through selecting international B2C e-commerce giantAmazon like DangDang sold online books at the beginning and China’s most famous B2Ce-commerce company JD as competitors, through comparative analysis, finding out theDangDang’s problems and defects in the profit model, finally puts forward the improvementmeasures for DangDang network profit model and optimization proposals, as well as to theother similar enterprises’ enlightenment.Profit model including profit object, profit point, profit lever and profit source, profitbarrier five elements. In terms of DangDang, the profit object is that consumers who buy thegoods they sold; DangDang’s profit point is to provide customers value, including theprovision of diverse and cheap goods and convenient shopping environment; profit lever isthe related activities to gain profit, including network promotion, the construction ofinfrastructure, etc.; DangDang’s profit source is the income sources, including retail sales,book sales and platform sales three aspects; Ability and persistence, profit barrier isDangDang’s competitive advantage. From the results of financial analysis, and through the DangDang’s debt paying ability, operation ability, profit ability, ability and method of dupontfinancial analysis, found that the existing profit model’s income growth speed is slow,inventory of assets, such as the velocity and low efficiency, poor ability is low and operationwere a few problems, exposed the larger risks exist in the process of its transformation. In theend, the paper suggested DangDang’s management authorities should re-examine thetransformation strategy, avoid the strategic errors caused by the radical transformation, at thesame time from the business strategy, propaganda and logistics construction, improve thehardware facilities, etc.Aiming at the existing problem of DangDang’s profit model, this paper suggests otherB2C business and development should pay attention to their own basic conditions in theprocess of construction, and foster strengths and circumvent weaknesses, choose suitable fortheir own profit model.