Online clothing retailer plans US listing
Updated: 2008-03-07 09:37
Online clothing retailer PPG said yesterday it plans to list in the US toward the end of this year or in early 2009, either on the New York Stock Exchange or the NASDAQ.
PPG said it has received US$80 million in investment from TDF, JAFCO Asia, KPCB and San Shan Capital Partners since it launched in October 2005.
It uses an e-commerce and traditional retail business model that relies on the Internet and call centers.
That's helped PPG to save the cost of maintaining retail outlets, David Lee, its chairman, said. "We never need to keep a large inventory," he said.
Like Dell in the computer industry, direct sales are PPG's strength, he said, and 80 percent of its orders are over 250 yuan (US$35).
"PPG's business model challenges the traditional clothing industry," Wen Zhimin, vice-president of San Shan Capital, a Hong Kong fund manager, said. PPG's model and management team are the main reason San Shan invested in the firm, he said.
PPG's biggest expense is advertising, Lee said.
The retailer spent 230 million yuan on advertising last year - about a third of its 700 million yuan in sales revenue.
It advertises through almost every channel - from newspapers, TV and magazines to direct mail.
But it scaled down its ad budget last October when management deemed market recognition was satisfactory.
"Now, we're focusing our marketing strategy on branding," Lee said. "We want to be another Gap."
"We won't be opening any retail outlets as long as I'm still in charge," Lee said. Instead, PPG will focus on expanding its business to second- and third-tier cities through an intensive ad campaign in those markets. "We want to reach most cities across the nation in the next two years," he said.
PPG plans to open a US subsidiary in late March to tap the market there. The next stop will be Europe and beyond.
"We intend to expand geographically to Europe and other regions," Lee said.
He said the company's expansion should resemble an "octopus" - with China as the head. "It's our 'octopus' strategy."
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