Monthly Archives: July 2009

A Chinese Woman Plots an American Revolution

Note: This is a feature that was written about us back in April. We wanted to share this with you because we think it captures how we approach our mission here at DHgate.

In a nondescript concrete building on a quiet, tree-lined street in the heart of Beijing’s university district, Diane Wang and 300 of her followers are plotting a revolution. Working elbow-to-elbow in Spartan conditions with an unmistakable air of urgency, the team, forged into a focused, disciplined unit after four years of preparation and initial effort, almost radiates anticipation.

But this intense band of young people is not planning the overthrow of any mere government. They are targeting what the diminutive Wang sees as a more insidious tyranny: the oligarchy of Wal-Mart and its clique of massive retailers who have decimated America’s main streets, seeking to return small mom-and-pop businesses to their rightful place at the heart of a better shopping experience.

“Over the last three decades, big-box retailers have convinced Americans that we have a choice: either we can have everyday low prices, or we can have vibrant, personalized, attentive, caring, and unique retail experiences,” said Wang, President and CEO of DHgate.com. “They lied. That’s a false choice, and our goal is to help Americans take back their street from the retail oligarchs.”

The petite Beijing native seems an unlikely revolutionary. A veteran of executive positions at technology giants Microsoft and Cisco and a graduate of one of the nations top universities, Wang is a member of a small class of young Chinese who blend the skills, experience, and charisma that will make them China’s first generation of global business leaders. Any of a hundred multinationals would hire her on her own terms, and having already built and sold an e-commerce company, Joyo.com, to Amazon, she could afford to sit on a beach for the rest of her life.

So why this quest?

Sitting down with her in a tiny, quiet coffee house not far from her frenetic headquarters, Diane Wang comes across as warm and self-assured, her gestures, her tone, and her modest demeanor radiate an air of quiet gentility. But when the conversation turns to the world economy, she becomes impassioned.

As a part of the first generation in China to come of age after the country began opening to the outside world in 1978, Wang gained a perspective on the world denied to her elders. “As I grew, I learned that what makes America unique and powerful is not bombers, tanks, or aircraft carriers,” she said, stirring the ice in her Diet Coke. “It is not even the New York Stock Exchange. What makes America unique in the world and what keeps it a beacon today is that a man or a woman, fed up with having to work for a living wage, can start a business with his or her own two hands and make a better life.”

“At the heart of that is small retailing, selling something you are passionate about to others who are passionate about it. The technology start-ups may get all of the media coverage, but most small businesses find success buying with care and selling with passion.”

Inspired by America as a nation of mom-and-pop shops and excited about the promise of technology, Wang created Joyo.com to put fun back into bookselling in a country where the passion and the excitement had been drained out of the bookstore.

After she sold Joyo to Amazon.com in 2003 she started to travel more, and she was stunned to find that the warm, quaint shopping streets of America – and the idea that retail could be a path to independence – were dying, victims of what others had begun to call “The Wal-Mart Effect.”

“I woke up one day struck by the realization that I understood not only how the big-box retailers and the category had done it, but also how I could help the little guy fight back.”

So Diane Wang went into business again. But this time it was different.

***

Wang started DHgate to help revive and rejuvenate small retailers and wholesalers in the U.S., Canada, and Europe, armed with the understanding that, done right, e-commerce could level the playing field between the smallest businesses and the largest. With a perspective that covered both the sourcing side and the selling side, she knew that what turned the big boys from large retailers that could share the mall with their smaller cousins into the massive mom-and-pop killers that they are today was the supply chain.

“Wal-Mart created this mystique around being frugal, and the message was that because they didn’t have fancy offices or perks or stores, they were able to pass the savings onto the customer,” Wang said. “Today, we know that was not the whole truth.”

The real difference, Wang says, is that the world’s larger retailers had the resources to send people on worldwide product hunts, buy the goods from the lowest cost provider, and import them. The little store had to depend on middlemen and long supply chains of distributors, limiting their section and raising their costs.

Equally frustrating for small businesses was the web of arcane practices, documents, and jargon that have grown up around international business that made buying from overseas complex, time-consuming, and costly. “The more you look at it [the international trade system], the more you start to think that globalization might have been specifically designed to keep small businesses out,” she said. “That was the problem that needed fixing.”

Armed with her knowledge of China and her experience with e-Commerce, Wang pulled together a team to build a website that would give every small business – no matter how small – access to the power of a global supply chain. But she knew that in order to be successful, she had to drag the entire system of international commerce into the 21st century, making it more user-friendly in the process.

Her goal with DHgate is simple: make it as easy for a small business to buy products overseas as it is for a consumer to buy a book from Amazon. Executing, of course, is not so simple. It means creating a platform that acts like a causeway over the muck-filled swamp of outdated international business practices that are so old Marco Polo would probably recognize them.

The platform is coming together faster than she expected, Wang says. There are over 300,000 suppliers signed up, listing 11,000,000 products across 4,000 different categories. The company has put together agreements with shipping companies to aggregate business and drive down the cost of getting the product to the buyers in the United States, and has worked with PayPal and other partners to build a proprietary escrow payment system that protects both buyer and seller.

Buyers and sellers are required to rate each other on the completion of each transaction, ensuring that everyone can find the most service-oriented suppliers. And for those rare occasions that disputes arise, DHgate even built an easy-to-use, multilayer dispute resolution system designed to protect everyone’s interests.

“We are making buying direct from manufacturers overseas safe, efficient, and even easier than ordering from a local distributor,” Wang says. “And we are making this happen at a time when America is turning to small businesses to put the economy back on track.”

And that, says Wang, is what keeps her team energized. “The world needs the American Dream,” Wang says. “Our job is to bring that dream to life, one small business at a time.”

Get In the Zone

While there is a lot that is cool about e-commerce, there are a few disadvantages as well. Having a standard set of rules and practices in place is what makes it possible to do business with people thousands of miles away; but at the same time, it somehow makes it all a little less personal. And in the end, business is about more than systems and prices: business is about people, and about relationships.

So when a couple of our sellers mentioned to us a few months back that they wanted to be able to offer their higher-volume customers business terms that matched the quality of their relationship, we started thinking. And what we came up with was FactoryZone.

As an entrepreneur, I like to keep my ears open, and I’m always keen to give new ideas a chance. FactoryZone is a good example of a time when I have done just that – and so far, so good.

FactoryZone is a part of our site where buyers can come to find the best possible prices from a group of our best small- and medium-sized manufacturers. Unlike most other items in our marketplace, all items in the FactoryZone are verified by DHgate’s own professional merchandise team before they are listed. In the Zone (located at the top right of our homepage), buyers will find a wide range of quality, original products at the best prices available.

But after listening to our customers, I realized that competitive prices are just one of the considerations for an international trade.

FactoryZone sellers are our most reliable, dependable producers, and most of them offer warranties on the products they are selling. Live, personalized, online help is available 24 hours a day, letting customers conduct business with these factories when it is convenient to them.

Finally, when a customer becomes a regular buyer from FactoryZone sellers, they have an opportunity to start offering pricing, terms, and even products that are available to that customer only, based on the buying relationship.

In short, FactoryZone is another way for me to deliver on my promise to provide small businesses with the kind of competitive advantage that comes from developing a closer relationship with your suppliers. Usually, that’s something that is only possible if you spend a lot of time in China working with your factories.

And being able to deliver what you say you can deliver is the most efficient way to small business growth.

Blog Announcement

I did a fun little announcement in PR newswire about this blog as a way of letting people know I’m blogging. It seemed a little strange to be doing a press release about a blog, but I did want everyone to know now that I genuinely do have a personal passion for helping small businesses. The release can be found at CNBC here.

It’s Beginning to Look A Lot Like Christmas

This morning when I sat down at my desk, I looked over at my calendar and had one of those sharp jolts to the system that make you sit back and think: I can’t believe it is July already.

With everything that is happening at DHgate – all the new people coming on board, all of the cool stuff we’ve been adding to the service, and just the sheer growth in the number of buyers and sellers worldwide – the first half of the year felt like about three weeks.

July makes me think about a lot of things: picnics, fireworks, beaches, and Christmas.

That’s right: Christmas.

I know what you’re probably thinking: “please, Diane, the stores already start putting up decorations and playing Christmas music in September: can’t we have our summer before we start thinking about all of that?”

The answer to that of course, is “no.” And the reason is because this Christmas is probably going to be your biggest holiday season ever.

There are a couple of reasons for that, so let me explain.

The first reason is inventory – not yours, but the inventory of the big retailers. Most of the retailers need to place their orders for the Christmas season in February or March in order to ensure that the merchandise would be ready to ship on time, that they could use the least expensive (i.e., slowest) shipping options available, and that they could have the goods in the stores in time for a long selling season starting in around October.

I’ve spent a lot of time over the last few months talking to factory owners, and while I can’t claim to have definitive data, it is clear that when the big stores were placing their orders in late winter/early spring, they didn’t have much confidence in the economy. Orders are way, way down, and most stores have clearly committed themselves to a conservative Christmas in order to conserve cash and avoid getting stuck with inventory at the end.

I can tell you right away what this means: with all of that excess capacity, YOU will have access this year to an unprecedented range of products at prices that a year ago would have been too low to imagine.

Which brings us to the second reason: price. Or, more exactly, a consumer who is more price sensitive this year than he or she has been for decades. You don’t need to be an economist to know that people are really going to be bargain hunting this year. That means not only will they be scouring the ads of the “everyday low price” retailers, but also looking for special deals in places they might not ordinarily go for their Christmas shopping. With more time and money, consumers are more likely to not only be shopping around for a better deal, but for a new kind of shopping experience, one that is more appropriate to our times.

In other words, this Christmas is our chance to get people out to start coming to YOU, and make buying from you a part of their Christmas tradition and their normal buying habits.

You put it all together, and it adds up to the single best opportunity for small retailers and wholesalers since the invention of the Internet.

Keep me posted and let me know how this is working.

Stay in touch,

Diane

Don’t Be Afraid to Experiment

I was recently asked to contribute a suggestion for the “Ten Great New Ecommerce Ideas for July 2009” article on Practical Ecommerce. I actually submitted several – there are so many idea’s out there! This is the item they selected; I’ll share the others with you in my posts to come:

Don’t Be Afraid to Experiment

“Diversifying your product range is an excellent way to expand your existing business and reach new customers. You can add value to your online store and increase your margins by introducing new complementary products. This will also allow you to test new suppliers for quality and reliability.”

Diane Wang
CEO
DHgate.com

Read the full article, with all 10 Tips, here.