Can LightInTheBox Surpass Vipshop and Dangdang in China E-Tail?

LightInTheBox (LITB -0.95%) will release its quarterly report on Tuesday, and investors are looking forward to seeing how the Chinese e-commerce upstart will perform. Already, we've heard from competitors Vipshop Holdings (VIPS -1.17%) and E-Commerce China Dangdang (DANG), and with both of them confirming the size of the growth potential among Chinese e-tailers, LightInTheBox will need to work hard if it wants to find ways to outpace them.

After going public in June, LightInTheBox has quickly risen to prominence among the crowded space for Chinese e-commerce companies, with some likening its prospects to those of dominant U.S. player Amazon. Yet after getting off to a strong start, LightInTheBox disappointed investors with its first-ever quarterly report as a public company. Now, the company has a lot to prove, especially as Vipshop and Dangdang have continued to grow. Let's take an early look at what's been happening with LightInTheBox over the past quarter and what we're likely to see in its report.

Stats on LightInTheBox

Source: Yahoo! Finance.
*In one quarter since going public.

Can LightInTheBox bounce back this quarter?
Analysts have reined in their past enthusiasm about LightInTheBox earnings in recent months, cutting their third-quarter estimates by $0.02 per share and slashing full-year 2014 projections by $0.20 per share. The stock has gotten crushed, losing 45% of its value since mid-August.

All of the damage to LightInTheBox's stock came after its second-quarter earnings report, in which the company gave disappointing news about its first quarter as a public company. LightInTheBox managed to grow its sales by 53%, but that was well below the growth rate that anxious IPO investors had wanted to see. Even worse, the company's guidance for the third quarter showed expectations for sequential declines in revenue, which stands in stark contrast to the growth trajectories that Dangdang and Vipshop have shown.

The interesting twist that LightInTheBox has compared to Vipshop and Dangdang is that LightInTheBox caters largely to foreign buyers. Europe accounted for more than 60% of its sales, and the Western Hemisphere added another 20%, showing the popularity of the site away from its domestic market. Its recent expansion into Malaysia, Indonesia, and Thailand by adding their languages to its websites only heightens the extent to which LightInTheBox believes going global will enhance its growth.

So far, Vipshop seems to be winning the race among China's e-tail elite. Vipshop saw a sharp 146% increase in sales in its just-reported quarter, and it projected a near-doubling for the current quarter as well. Dangdang's growth was much more muted, however, with overall revenue rising just 19%. Given LightInTheBox's different customer demographics, its results might not resemble any of these, although many hope that improving economic conditions in Europe could help boost the e-commerce upstart's sales.

In the LightInTheBox earnings report, watch to see not only how well the company does overall but where it's finding its best results. Identifying the most successful markets could be a big key to LightInTheBox's long-term growth prospects in the years to come.

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