"Dangdang comes from the Chinese adjective ‘xiangdangdang’ (the clanging sound for fame). We wanted a name that would be easy for Chinese living here and overseas to pronounce." — Peggy Yu.

When Peggy Yu and her husband founded the online bookstore Dangdang.com in 1999, China only had four million Internet users and scores of retailers competed for the few dollars they spent online.

Eight years later, the number of Chinese netizens has mushroomed to over 120 million, and Dangdang is still thriving. Ms. Yu and her husband now are co-presidents of a company that calls itself China's largest online retailer according to revenue. In addition to books, Dangdang now sells everything from mobile phones to popcorn makers to cosmetics and fashion.

Dangdang and its competition have attracted growing interest from foreign investors. In 2006, Dangdang announced the completion of its third round of financing, a $27 million infusion from a quartet of investors led by U.S. venture-capital firm DCM-Doll Capital Management, in return for a minority stake in Dangdang. Ms. Yu says the company might go public, possibly next year, although there are no firm plans at this time.

Consumer’s Need and Investment Returns

Ms. Yu said, before I decided to start the online bookstore, I thought a lot about what I could do and what I should do. I used to be frustrated buying books in traditional bookstores, where I had to run up and down a few times to find the books that I wanted and spend a long time waiting in line. In my eyes, consumers should spend money and get what they want in a pleasant way instead being subject to inconvenience and frustration.

So the consumer’s need is what Ms Yu pays the most attention to. The other important factor in her success as a businesswoman is “the return on investment”.

“The return on investment is always what I think about. Whenever I spend money, I always think of value. If I invest this much here and I invest that much there, what's the return I derive from each investment?”

Mouse and Concrete E-commerce Theory

Peggy Yu's theory, "Mouse plus Concrete", impresses many people. "Mouse" can be simply understood as the colorful and exciting opportunities provided by the Internet; "Concrete" is the necessary facilities or infrastructure for entrepreneurs to start an e-business in the New Economy. How to combine the two in the environment of traditional economics is vital for e-commerce to deal with.

The "Concrete", which was the comprehensive database of information on books in print in China, took three years to complete. At the very beginning, dangdang.com had very clear plans and laid a solid foundation for further development.

Peggy Yu thinks that a showy web page to attract customers is not really the way to do e-business. The key in expanding e-commerce is to be able to guarantee the best service to customers. They built a large warehouse facility in Beijing to meet the needs of increasing orders from both home and abroad.

Never Try to Change the Consumer’s Preference

Ms Yu said that identifying customer needs is very important. “Every single company says that they are customer oriented. But most really don't pay that much attention to customers. To me, everybody is a customer. When I talk to you, you are a customer to me at this moment. I need to use language and examples that make my point clear to you. When I talk to my secretary, my secretary's my customer. I need to make things clear and easy for her to understand, and easy to give me feedback.”

Credit-card use in China is still low, and many consumers are still concerned about security issues. China is a cash-based society. In the beginning, the company didn't offer cash-on-delivery. They only offered credit-card payment and money-order payment, and they didn't get much business. So they began to offer cash-on-delivery in Beijing and that helped a lot.

Although several banks, notably China Merchants Bank and China Construction Bank, are taking steps to make online commerce easier. "Their problem is that the front-end is online--they have a website with a window where you can ask for this and that--but the back-end operation is still manual! That's what holds up a lot of the transactions," Yu says with visible frustration.

"But it's an interactive process. I'm not going to sit here and complain about banks. Unless the banks see a lot of online companies like Dangdang.com utilizing online banking services, it's not going to be worthwhile for them to innovate."

Interview with Ms. Peggy Yu

On talking about the creativity of the Internet industry, Ms. Yu thinks her ideal process of creativity is “copy”, “imitation” and “creation”.

Q: What do you think is your company’s creation?

A: Stick to localization strategy and find a suitable e-business road with Chinese characteristics.

Q: What’s your understanding of “creation?”

A: Creation is first a kind of attitude and a kind of culture thing.

Q: How do you feel about creation in product, management and making profit?

A: Creation doesn’t come from nothing, and people need to notice every detail and be sensitive in observing and reacting. Like when customers don’t want to use credit cards to pay the bill, we then have the option of COD payment. Or for the convenience of the clients, we use Flash Model Operation to tell them how to buy online goods.

Q: What’s the difference between the Internet industry and other industries?

A: The pattern is different. Dangdang followed the pattern of "Mouse plus Concrete", while Sina was based on Internet ads and other telecom operations. Customers are the leading force for renovation and creation, which can be captured by the Internet.

Q: What’s the significance of creativity in the development of theInternet industry?

A: Creation is always the theme of the Internet, and only when there is creation is there development of that industry.

Personal Background

1986 Bachelor degree in English literature, Beijing Foreign Studies Univ.;

1992 MBA from New York University;

1992~1997 Founder of Tripod, a consulting firm specializing in mergers and acquisitions;

1997 Science and Culture’s publishing group;

1999 Co-founder of dangdang.com, the biggest bookstore online in China and the largest online store of books, movies and music of Chinese language;

2000 Met with the U.S. Secretary of State Ms Madeline Albright, who showed great interest in Yu's dangdang.com.