Vancl, the fast follower excels

Chen Nian, the founder and CEO of Vancl

Yesterday, I watched a TV program interviewing Chen Nian (陈年), the founder and CEO of Vancl.com. His name isn't unfamiliar. He is also the co-founder of Joyo.com (Amazon China). When Amazon acquired Joyo, he continued to work as an executive VP. However, things went sour when heated argument between him and the newly appointed top American executives began. In the end, he was not happy and left Joyo. Now, here comes Vancl, a leading online shirt retailer and a brand of men's apparel. Actually, Vancl isn't the first to explore the B2C business online. It's PPG who made a buzz first. PPG's advertising campaign almost made PPG a household name in China in 2007 and early 2008. PPG's ads were everywhere on TV and on many newspapers. However, PPG's advertising campaign backfired. It was too EXPENSIVE, which cost PPG the first mover advantage. News came out last year that PPG was in trouble and short of cash. The entrepreneurial Chen Nian was amazed by PPG's business model: selling shirt online, self-owned brand, outsourced logistics & production, and no factories needed. According to himself, he studied PPG for several months before coming up with the idea of Vancl. The business model is not much different, but Chen Nian put his advertising campaign ONLINE. That's why whenever I browse the internet, I see Vancl. Vancl was established in Oct. 2007 and later in mid 2008 received a total of USD 30 million venture capital investment. Vancl sells more than 10,000 shirts per day. According to the TV program, Vancl's sales revenue reached RMB 300 million in 2008, which was a miracle for a newly established company.

Two months ago, I bought a shirt, a pair of trousers and shoes on Vancl. Honestly, I'm very satisfied. It's inexpensive and the quality is very good. I remember Chen Nian boast that Vancl's products, moderately priced, are made of well selected high-quality fabrics, and the quality is not inferior to many big name brands. I am not an apparel expert, but I assume he lives up to what he's promised. What makes Vancl an instant success? Here are some of my thoughts,

• Being a fast follower. PPG, the first mover, found the niche
  market. Vancl followed with improved business model and is more capable of executing the business plan.
• Knowing clearly who the customers are. Vancl targets male professionals aged between 25 to 40. Well, I'm one of those customers who's reluctant to spend time walking around shopping malls to buy clothes for work use.
• Knowing how to reach target customers at a reasonable cost. Vancl's ads have been on a lot of well selected websites (e.g. Tianya.com, 51job.com, yeeyan.com, etc.). I've heard from a friend who has some contact with the marketing officer of Vancl that over 80% of their advertisement is online. There seems to be a profit-sharing agreement with various websites. That's exactly where PPG did wrong. I watched PPG's ads on TV and newspaper. All that I knew was I could dial a telephone number to order PPG's shirts, but I wasn't aware of PPG's website even though it was vaguely mentioned in the ads. Also, it's too expensive to advertise on TV and newspaper.
  

I think the above three points are the keys that led to Vancl's success. Also, there are other reasons behind Vancl's success. For example, Vancl knows customers needs very well and keeps improving their products; and Vancl's other marketing activities (e.g. customer loyalty program, giveaway electronic coupons) help foster a large number of loyal customers; good logistics ...

As I know, the orders made via Vancl.com are still on the rise. But, wait! Where is PPG now? Can Vancl take a breath now? I am afraid not. Masamaso and Bono are coming to get you!

Related reading:
VCs in China: Kleiner’s shirt factory, Sequoia’s farm
Vancl Secures Series C VC Financing