Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
With a former executive of Amazon and eBay as its new chief operating officer, the China-based e-marketplace company is primed to expand in North America its business of connecting retailers of all sizes with more than a million Chinese suppliers of consumer products.
DHgate.com’s e-commerce home page shouts a clear message to the retailers who are its targeted buyers: “Relax . . . You’re Not Paying Retail!” it says in bold letters at the top center of the page.
That greeting is just one of several steps DHgate is taking to build its brand across North America, Europe and other markets as a place where small as well as large retailers can find and purchase a broad range of consumer products at wholesale prices directly from some 1.2 million suppliers across China.
It’s not that DHgate still needs to dip its toes in the waters of business-to-business e-commerce: the company says it already has more than 5.5 million buyers across 227 countries, with about 50% of its online transactions generated by buyers in North America. But the company, which is headquartered in Beijing, wants to keep building its customer base in markets where it is already established—including the United States, Canada and Europe—while also preparing to expand into markets like Brazil and Russia.
“We do well in developed countries, where buyers are smarter than ever before,” says Noah Herschman, who was recently named chief operating officer after spending some 30 years in the retail industry at companies including Amazon.com Inc. and eBay Inc., and most recently as managing director of Hong Kong-based Groupon Goods Asia. “But we’re also looking to expand in emerging markets.”
DHgate.com, which the company built in-house, carries between 25 million and 30 million items, including consumer electronics, apparel, jewelry, car and motorcycle parts, sports equipment, and home and garden supplies. The site may also expand into some industrial supplies, Herschman says.
It provides assistance to suppliers, many of whom don’t have their own Internet access, to load images and descriptions of the products onto DHgate.com.
DHgate was founded in 2004 by its CEO, Diane Wang, who had previously co-founded and served as CEO of Joyo.com, a mass merchandise consumer e-commerce site that was acquired in 2004 by Amazon.com and relaunched as Amazon China.
Earlier this month, DHgate appointed Herschman as chief operating officer to oversee a new executive team and business strategy to provide upgraded customer services, including more assistance in sourcing and shipping products from China, managing online payment transactions and handling product returns and warranties.
“Our main goal is to relentlessly improve buyer satisfaction,” Herschman says. Among its biggest efforts to serve customers, he adds, is using its online and field staff to check on the product quality and service reputation of suppliers, allowing customers to purchase directly from suppliers and cut out what can otherwise be four or five middlemen, including wholesalers and distributors, Herschman says.
DHgate.com offers its web content in 10 languages—Russian, Portuguese, Arabic, Italian, Spanish, French, German, Japanese, Korean and English—and accepts more than 30 forms of online payments, including several credit cards, online bank transfer services and “e-wallets” such as Skrill and WebMoney.
Merchandise on DHgate is available for purchase by consumers as well as retailers. When looking for, say, a Brazil World Cup soccer team jersey, a consumer from the United States could purchase a single item today for $23.40. A retailer looking to buy at wholesale would click on the same product page and product image, but choose among several options for bulk orders with prices as low as $14.40 per item for an order of 50 or more.
DHgate earns its revenue in commissions charged to sellers. Commissions can vary by product category, but generally sellers pay a commission of 4.5% on sales of $300 of more and 8% to 12% on sales of under $300, Herschman says. DHgate collects the payment from buyers, then forwards the proceeds minus its commission to sellers.
Shipping to the United States typically takes from three to 15 working days, depending on product category and availability, and is often free, even for single items. DHgate and its suppliers work with several shipping carriers, including ChinaPost, Hongkong Post, the U.S. Postal Service and DHL. Through an ePacket service available through China Post and the USPS, the USPS handles the local delivery to U.S. addresses.
Others executives and manager on the new team at DHgate include:
• Jimmy Lau, vice president, international marketing, who joins DHGate from affiliate marketing services firm Commission Junction and formerly worked in marketing at Alibaba.com Inc., the China-based e-marketplace, and eBay Inc.;
• Carolyn Scott, senior director, brand marketing, who formerly worked in marketing at Texas Instruments and Starbucks Corp.;
• Tony Li, senior director, site marketing, who formerly worked at Google Inc. and YouTube.
• Jenny Chen, head of search, who formerly worked in marketing at online retailer CafePress.
DHgate is backed financially by investment firms Kleiner, Perkins Caulfied and Byers; Jafco Ventures and Warburg Pincus.
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