View from the top: Interview with Chen Nian, CEO of Vancl.com

Deloitte: How did your company leverage technology to achieve the rapid growth of 29,577 percent in the past three years?

Chen Nian: The initial ideas for our technology system referenced the architecture of Amazon's old technology systems. However, after a period of practical operation, we recognized the technology requirements of online clothing sales were vastly different from the simple requirements of Internet B2C and more complicated than B2C marketing. And we saw how, for Vancl, technology influenced processes on and off the Internet. We’ve since adapted our technology model to better fit our operations and our customer experience goals.

Deloitte: What are the three most important factors for your company to realize rapid growth?

Chen Nian: First, we expect our products to be cost-effective to manufacture, and offer customers world-class quality and reasonable prices. Second, our marketing and sales must take advantage of the efficiency of the Internet, and create an online garment market in China, where none existed before.

The third and most important factor is excellent customer experience. As a brand established on the Internet in a traditional bricks and mortar market, the online customer experience is more important than it is for a typical retail store where, for example, customers try on clothing. To meet customer’s needs to test our products, we launched a "live try-on" service. This means our deliveries can take more than half an hour, significantly more than the standard five minute delivery of other types of products.

Deloitte: How do you motivate employees and management to realize company rapid growth?

Chen Nian: Many people may view Vancl as a mature company. But Vancl is far from completing the start-up journey. During this time, all employees have enjoyed a lot of space to operate in, which has been motivational in its own right. This will need to change to a more structured environment as we continue to develop. I also expect to put in place incentive mechanisms, such as stock options. But moreover I hope to instill a sense of self-accomplishment and the belief in the value of life long benefits among my colleagues, rather than only temporary benefits.

Deloitte: How do you manage the customer relationship?

Chen Nian: We’ve changed the relationship between the traditional garment company and its customer. We’ve abandoned the standard policies that serve the company, rather than the customer, such as not providing refunds for laundered or label-removed clothing.

We seek to develop the customer relationship and, by doing so, realize higher returns over the long term. We introduced a “free carriage” promotion for five months, earlier this year, which imposed enormous pressures on our distribution system, increased operating costs by seven percent on average, and our return ratio rose from three to eight percent. Customers submitted smaller orders – some just bought a pair of socks. Still, if we can convince a customer who buys a pair of socks at 10 yuan to experience the Vancl brand, the actual increased cost is insignificant compared to the increased brand recognition.

“Some may puzzle about Vancl’s success, but I can tell you that what’s behind our growth is our strong team.”

Deloitte: What's the biggest operational challenge Vancl is currently experiencing?

Chen Nian: People. We are short of talent in all sectors. Fortunately, I have a team with a long term view of our potential and a good understanding of our brand and operations. Team is the reason we were able to launch Vancl in 2007; it’s the reason for our healthy growth in 2008; and it’s why we became publicly recognized. Similar companies with similar brands have tried and failed. Some may puzzle about Vancl’s success but I can tell you that what’s behind our growth is our strong team. 

Deloitte: How do you manage innovation in Vancl?

Chen Nian: We manage innovation according to requirements. At Vancl we attempt a lot of things that have not been tried by others. Take the fitting system as an example. We looked at existing 3D products and considered how we could use advanced technologies to show a human body from various angles with unlimited matches. But in the end, we found the application old-fashioned and simply not relevant. Now we are attempting an interactive experiment where users enter data such as height and arm length to dress a human body. Essentially, if we can implement general B2C technologies in these aspects, we will do some very great things.

 “Essentially, if we can implement general B2C technology in these aspects, we will do some very great things.”

 Deloitte: Will Vancl continue to record such impressive growth rates over the next three years? What are the key drivers?

Chen Nian: So far, we’ve only touched the tip of the iceberg in China with two to three million buyers out of a total of 300 million netizens. In today's market in China, even if you sit still with your arms crossed, you’ll realize growth. That’s one reason I am confident that with our persistent efforts and talented team, growth is a definite for Vancl.

The other reason is that I expect, within the next three years, there will be a sudden growth surge that is not driven by the company or its advertising, but by the market.

The longer a brand name exists, the more credible it becomes. At some point, say in three to five years, the growth will suddenly boom as customers accept your brand Today, if there are 10 million items of Vancl-branded clothing worn by two to three million consumers, you can expect an immense multiplication for the future. In truth, it’s difficult to project growth, it’s beyond any sensible calculation.

Deloitte: As CEO, what are the three main objectives you have for the next 1 to 3 years?

Chen Nian: My objectives are quite substantive and real and they all focus on boosting the customer experience. There is always more you can do to bring joyful surprises to your customers when they receive your products, like integrating your customer’s personality into your designs.