Dangdang posts 210% sales growth

The “Amazon.com of China” ended 2011 with a bang, based on quarterly earnings results announced February 23. Dangdang’s (DANGquote) general merchandise revenue was $76 million for the quarter, up 210% year-over-year, while total net revenues were $195 million for a 73% increase.

Dangdang gets most of its money from selling books and other media products, which increased 33% for the quarter.

The company also reported that it had sold 500,000 e-books since December, confirming that its new e-books strategy is on track. Dangdang offers iOS and Android reading apps, and plans to introduce its own e-book reader later in 2012. 

CFO Conor Yang said the company increased its marketing spending and emphasized branding. CEO Guoqing Li focused on improved customer experience, citing the establishment of new fulfilment centers and a near-doubling of warehouse capacity in 2011.

“Our well-paced and strategic expansion of warehouse locations not only meets the need of fulfilling the rapidly growing number of orders, but also allows us to provide better services to our customers,” Li said.

While the company’s growth is eye-popping, the increase in marketing spend and aggressive couponing has narrowed margins. That’s a strategy that could backfire on Dangdang if growth slows down. 

Dangdang trades well in the United States, but investors looking for exposure through an ETF are mostly out of luck. However, the First Trust ISE Chindia Index Fund (FNI, quote) does have a small helping of DANG.