China’s biggest online drinks retailer 1919.cn has reportedly closed 20 offline stores in Shanghai and is planning more closures nationwide amid the country’s slowing economy, according to Chinese media.
The news was first reported by Chinese website Digog, a retail trade news website. It said 20 of 1919.cn’s offline stores officially ended their business on December 11 in Shanghai, and the company is expected to close more stores across China.
The Chengdu-based drinks giant however downplayed the store closing in Shanghai as “store adjustment”. Its spokesperson told Chinese media 21st Century Business Herald that “partial store adjustment is a normal phenomenon” and the previous report was “erroneous”.
When reached by Vino-joy.com, the company refused to elaborate further on the news but assured that “the company’s operation in Shanghai at the moment is business as usual”.
The news of 1919.cn store closing came this week on the heel of its successful Singles’ Day campaign, a mammoth online shopping extravaganza on November 11. Its total sales of alcoholic beverages including wine and spirits amounted to RMB 529 million (US$75.8 million), topping alcoholic beverage sales chart on the country’s major e-commerce platforms such as Tmall.com, Alibaba Auction and Ele.
Despite glowing sales figure from Singles’ Day, 1919.cn has been losing money this year. The company’s latest financial report shows despite its turnover of RMB 385 million (US$55.2 million) in first three quarters of the year, it is still at a loss of RMB 36.23 million (US$5.2 million).
Its growth strategy of combining online platform with offline stores and app sales nonetheless attracted attention from the country’s e-commerce giant Alibaba Group. Last October, the company received RMB 2 billion (US$290 million) investment from Alibaba. Its sales network has quickly expanded from its home base in Chengdu to a network of 1,800 shops across China today.
At the time of the investment injection, the company was planning to open 2,000 new stores by the end of 2019. The recent closing in Shanghai would signal a scale-back of operation at least at a time when consumer sentiment in mainland China is affected by the country’s slowing economy.
Founded in 1998 in China’s southwestern Sichuan province, the company’s rise to become the biggest drinks supplier to a country with 1.4 billion people is hailed by Wine Spectator as a “Chinese wine success story”.
Different from drinks merchants, which anchored their growth in first-tier cities like Shanghai or Beijing, its rise is attributed to its focus on lower tier cities in lesser developed regions of China before it circles back to cities like Shanghai.
The company’s sales are mainly generated through three channels, online platform, offline stores and app sales.
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