Suning turns to loss; online business revenue climbs 51%

A resident of Yichang, Hubei province passes by a logo of Suning Commerce Co Ltd. Suning's online operations saw first-half revenue increase 51 percent to 8.3 billion yuan. Zhou Jianping / For China Daily

Suning Commerce Co Ltd reported a first-half net loss of 749 million yuan ($121.4 million), the first interim loss for the appliance retailer in a decade.

A year earlier, the company reported a net first-half profit of 734 million yuan.

Its second-quarter net loss narrowed to 315 million yuan from 434 million yuan in the previous quarter.

First-half revenue stood at 51.1 billion yuan, down more than 7 percent year-on-year.

But Suning's online operations posted a first-half revenue increase of 51 percent to 8.3 billion yuan, driven by efforts to upgrade its lineup of products and improve customers' experience online

The company opened 62 new stores, of which 84 percent are in second- and third-tier markets.

Meanwhile, 64 stores were closed. The retailer operates 1,583 stores on the Chinese mainland, 27 in Hong Kong and 13 stores in Japan.

According to Tian Zheng, a senior researcher at Analysys International, Suning made the right move by prioritizing its online sales as its brick-and-mortar stores began to decline.

But, he said, it will take years to train consumption habits for Suning's customers as it tries to catch up with e-commerce giants Taobao.com and JD.com.

The next three years will be vital for Suning as it fights for third place in the sector.

Suning Chairman Zhang Jindong said that in the Internet era, the days when the market was driven by production and sales by sourcing are over.

Only by understanding and capturing consumer demand can retailers and suppliers succeed.

A previous price war between Suning and JD.com did not kill JD but hurt Suning, prompting the company to return to its core value by providing more services than e-commerce players based on its long-term relationships with suppliers, according to Huang Hongyi, an e-commerce analyst.

Its physical stores have offered free protective screens for electronic devices and free trials for its wearable devices to lure more customers, Huang said.

Another leading home appliance retailer, Gome Electrical Appliances Holding Ltd, saw continued improvement in its operational capabilities and profitability.

Its e-commerce business recorded substantial year-on-year growth in revenue.

Gome's revenue increased by more than 7 percent.

Total e-commerce transactions are expected to grow by more than 50 percent as compared with the corresponding period last year, and consolidated gross profit margin for e-commence is expected to exceed 7 percent.