News from First Textile Network on March 7 (reported by reporter martin): Vipshop, a clothing sales e-commerce company that has been profitable for 29 consecutive quarters, recently released its unaudited fourth quarter and full year 2019 results. Financial report, financial report data show that Vipshop’s fourth quarter net revenue increased to 29.3 billion yuan (approximately 4.2 billion U.S. dollars), a year-on-year increase of 12.4%. In accordance with generally accepted accounting principles, Vipshop’s net profit attributable to shareholders in the fourth quarter was 1.5 billion yuan (approximately US$200 million), a year-on-year increase of 111.4%, higher than market expectations.
At the same time, Vipshop’s net revenue in 2019 reached 93 billion yuan (approximately US$13.4 billion), a year-on-year increase of 13%; in accordance with generally accepted accounting principles, net profit attributable to shareholders was 4 billion yuan ( Approximately US$570 million), a year-on-year increase of 88.7%. The total number of orders was 566.3 million, a year-on-year increase of 29%; the number of active users increased to 69 million, a year-on-year increase of 14%.
Shen Ya, chairman and CEO of Vipshop, said that the substantial increase in net profit is mainly due to the fact that in November 2019, Vipshop terminated its self-operated express delivery business of Pinjun and entrusted SF Express to provide Delivery services. The termination of Pinjun Express delivery business has brought Vipshop a decrease in heavy assets and personnel expenses and an increase in profits.
In addition, in response to the current COVID-19 epidemic, Vipshop is pessimistic about its revenue forecast for the first quarter of this year. The company expects the revenue range to be 17.1 billion to 18.1 billion yuan.
Industry insiders believe that Vipshop’s strong performance is mainly due to the unique positioning of the online platform that switched back to clearing clothing inventory in early 2019. The inventory level of the clothing industry will remain high, while costs and expenses are properly controlled.
CICC analyst Wu Yue said that Vipshop’s strategic return is worth looking forward to. In 2019, Vipshop’s brand image will be clearer and its unique positioning will further alleviate competitive risks. To release potential market space, it is expected that under this strategy, Vipshop’s future revenue compound annual growth rate is expected to be maintained at 10%, while non-universal operating profit margins will reach 8-10%. It is expected that there is room for further improvement in Vipshop’s profit margin.
Observation: First, the company has stopped shipping Pinjun since December 2019, and orders are delivered by SF Express. The performance expense rate in the fourth quarter has been significantly optimized. However, given that it is not a complete quarter, we expect that the expense rate will be promising in the future. Second, as the company focuses more on the positioning and strategy of clearing out goods, it is expected that the organizational structure may be further simplified, and R&D investment will not need to be excessive. However, considering that Vipshop will take into account long-term sustainable growth and maintain a balance between revenue and profit margins, it is expected that the future reasonable level of non-universal operating profit margins will be 8-10% (rather than double digits, although it is also capable of reaching This level), the excess profit space will be invested in improving product price advantages, thereby consolidating the company’s leading position as an online brand discount retailer while reducing marketing expenses related to user acquisition costs.
Wu Yue said that although online clothing sales were temporarily weak due to the impact of the epidemic in the first quarter of this year, considering the recovery of demand after the epidemic and the further rise of industry inventory levels, it is expected that both the demand side and the supply side will . All will create favorable conditions for Vipshop’s growth rebound. Vipshop’s revenue is expected to decline by 17% year-on-year in the first quarter of 2020 (the apparel category is greatly affected), but revenue growth is expected to improve and accelerate in the second and third quarters. It is expected that after the short-term impact of the epidemic is eliminated, there will be structural benefits. As inventory in the apparel industry increases, Vipshop, as the country’s largest online brand discount retailer, is expected to benefit.
It is understood that Vipshop has once again focused on brand sales since the second half of 2018, deploying in-depth discount channels “Last Rush” and “Vip.com Quick Grab” to consolidate repeat purchase users through low-price sales. Increase the number of orders and drive GMV growth.
Lei Yu, a researcher at Changjiang Securities, previously pointed out that at present, the e-commerce landscape is stable with two strong players, and Vipshop’s clothing-based sales structure makes its growth implicit. At present, the dual-power structure of domestic e-commerce is stable. Alibaba (Tmall) and JD.com together account for nearly 80% of the domestic B2C market and nearly 90% of the mobile shopping market. Other e-commerce companies mostly enter into vertical segments, such as Suning.com in the 3C category, Maibaobao in the shoes and bags category, Jumei Youpin in the cosmetics category, Yihaodian in the department store category, and Mengbazaar in the clothing category. However, Vipshop’s product sales structure is still dominated by apparel. Under the dual e-commerce giants of JD.com and Alibaba, there are certain hidden concerns for its subsequent growth. At the same time, Vipshop’s high fulfillment fees require a larger business scale to dilute it, thereby enhancing its profitability.
Vipshop adopts category expansion and introduction of high-value traffic to cope with market competition and profit pressure. In terms of category expansion, external mergers and acquisitions are an important way for Vipshop to expand its categories. In 2014, Vipshop acquired 75% of the equity of the beauty e-commerce company Lefeng.com. In 2015, it invested in four maternal and infant e-commerce companies including Maitesco, Lamabang, Beilian Technology, and Hehua Parent-Child, and launched cross-border e-commerce business. Correspondingly, the proportion of cosmetics and maternal and infant products business has increased significantly. In terms of traffic diversion, in the context of the gradual loss of Internet traffic dividends, Vipshop’s strategic cooperation with Tencent and JD.com is conducive to introducing efficient traffic at a lower cost. According to the strategic cooperation agreement, Tencent will provide access to Vipshop on its WeChat wallet interface, and JD.com will also access Vipshop on the main interface of its mobile APP and WeChat shopping portal to assist Vipshop on the JD platform. Achieve certain transaction volume targets.
Lei Yu said frankly that as the Internet traffic dividend gradually disappears,In the context of the increasingly stable industry competition landscape, major online platforms need to enhance platform stickiness by improving consumer experience; on the other hand, in the process of seeking a new balance between efficiency and cost online and offline, they must actively invest in offline entities Channels seek more efficient conversion of customer traffic.
Public information shows that Vipshop (VIPS) was established in August 2008 and is headquartered in Guangzhou. Its website was launched in December of the same year. It was launched on May 8th. In the early days, Vipshop focused on luxury discounts, but on the one hand, the audience for luxury goods was small, on the other hand, top luxury products were cautious in authorizing online channels, and online channels were flooded with counterfeit luxury goods. It was difficult for the luxury goods business to improve in the early days; later, Vipshop The brand will adjust its product positioning, shifting from luxury sales to second- and third-tier brand sales</p
