Return To Sale "Subtraction" Effective Vip.Com Layout Line "Add"

　　 A year after the founder Shen Ya advocated a return sale, vip.com's transformation began to bear fruit. In August 15th, vip.com announced its unaudited second quarter earnings this year. The results showed that vip.com realized net income of 22 billion 744 million yuan in the two quarter, an increase of 9.7% over the same period last year, and Mao Lida's 5 billion 100 million yuan, an increase of 25.9% over the same period last year. The net profit attributable to shareholders was 814 million yuan, which was higher than the market expected 507 million yuan, an increase of 19.3% yuan over the same period last year 682 million yuan.

Vip.com's stock price jumped 15% in August 15th, and its market value was close to the $5 billion mark because earnings data were better than investors expected. The recognition of the capital market for this financial report is mainly due to the fact that vip.com's net profit growth is much faster than expected. From the earnings data, vip.com's revenue growth is slower than its net profit growth. This shows that vip.com's profit growth is more from the throttling, including the implementation costs, marketing expenses and other expenses are controlled at a low level, plus some of the categories from self to third parties, the company's gross margin has been raised.

However, vip.com's focus is not only on the sale of electricity providers, but also the layout of the discount stores under the line will become the focus of development. Vip.com CFO Yang Donghao said that it would pay close attention to the business return on investment, including the offline stores, especially when the company had bought a huge sum of 2 billion 900 million yuan to buy the outlets under the layout of the Shanshan Group. This shows that vip.com's investment in the offline sector is increasing.

Focus on sale "subtraction"

Cost down and profits rise.

Specifically, vip.com controls expenditure in two aspects: performance cost and marketing cost. In the two quarter of this year, vip.com's performance cost accounted for 9.7% of total net income, up from 9.1% in the same period in 2018. Vip.com said that the main reason for the increase in the cost of performance is that the related assets of Zhaoqing warehouse were reduced by 275 million 500 thousand yuan, which was related to land subsidence in the course of construction. This factor was deducted, and the company's performance cost accounted for 8.5% in the two quarter.

The main reason for the reduction of vip.com's performance fees is that the company has implemented the express outsourcing JITX plan this year, and the social logistics has replaced vip.com express business, which is undertaken by some of the products logistics companies. The plan is expected to reduce operating costs on a large scale and promote further improvement of net profit.

Yang Donghao disclosed in the earnings call conference that the company had outsourced 12% of the orders in the second quarter, and the proportion of outsourcing in the third quarter will be increased to 30%.

For electricity providers, the reduction in performance costs is especially obvious for profit. The two quarterly report released by Jingdong shows that the net profit of the company under the non US general accounting standards (Non-GAAP) is 3 billion 600 million yuan, up 644% over the same period last year. Liu Qiangdong attributed this achievement to the loss of Jingdong logistics. Jingdong logistics lost 2 billion 800 million yuan in 2018, but after opening up logistics resources to third party businesses and individuals, Jingdong logistics smoothly realized breakeven.

From the point of view of marketing expenses, vip.com has little pursuit of online customers. The results showed that vip.com's marketing expenses dropped from 899 million 600 thousand yuan in the same period in 2018 to 877 million 600 thousand yuan in the second quarter of this year, which is only 100 million yuan higher than the marketing expenses in the first quarter of this year. Taking into account the factors of "6. 18" promotion in the second quarter, vip.com's control over marketing expenses should be very large. The aim is to win more profits.

In fact, vip.com was acquired by Tencent and Jingdong since 2017, and has obtained WeChat's two level entry resources and Jingdong's home page revenue resources. However, the growth of new users has not been much improved. The number of active users in vip.com in the second quarter was 33 million 100 thousand, an increase of 11% from 29 million 800 thousand in the same period in 2018, and the growth rate was slower than 14% in the first quarter of this year.

In Ali, Jingdong and other old business electric providers to sink the market to increase the occasion, vip.com's attention to the crowd outside the rings is not high. Shen Ya revealed in the earnings call conference that the new contribution of the fourth, fifth tier cities is about 30%, which is a very important part of the company's business. He said vip.com had tried to expand and sell in the sinking market in the past, but did not find it more effective than the company's investment elsewhere.

"Add" under the layout line

Acquisition of Shanshan Group, expansion of outlets business

If the "refocus sale" is in "subtraction", then "under the layout line shop" is vip.com's initiative to "add". Yang Donghao said vip.com will continue to pay close attention to the return on investment of all businesses, especially the return on investment in online stores.

Since opening the first offline store in Beijing Rui city in October 2018, vip.com has opened stores in Guangzhou, Hangzhou and other places, moving the sale from the online to offline, and the price is even lower than that on the line. An insider from vip.com told the Beijing News reporter that this year vip.com has a very strong layout for the offline stores. The school enrollment quota has almost been put into the offline business. "No mistakes can be made."

The Beijing News reporters visited vip.com's offline stores and found that they were not much different from the general clothing stores. Most of the products belonged to the tail of the brand dealers, which was equivalent to vip.com moving the online business to offline. However, the insiders told reporters that vip.com's offline stores will increase the category of products. Some cosmetic brands will enter the offline stores in the near future.

Shen said at a conference call that vip.com sees many market opportunities in the store, and that its current line business is growing at a rate of 20%. "Online and offline, we see the synergy between the two, especially in terms of suppliers, and we will expand our negotiating capacity with key suppliers, because the brand overlap is quite large, and we are working hard to remove supplies from our suppliers more effectively from more channels."

He disclosed that in the past year, vip.com has opened two kinds of physical stores, of which Vipshop has more than 100, and Vipmaxx has only a few dozen, but these offline businesses have limited contribution to the overall revenue of the company.

In addition to setting up offline stores, in early July of this year, vip.com announced the price of 2 billion 900 million acquisition of Shanshan commercial group, the layout of the line under the ole business. Public information shows that Ningbo Shanshan Commercial Group Co., Ltd. is located in Ningbo, is a domestic market ranked the forefront of the otter Les chain group. The company has opened and operated 5 outlets, located in Ningbo, Taiyuan, Harbin, Zhengzhou and Nanchang, and 5 other Oteri J squares are being planned and constructed. According to open market data, in 2018, in the top 20 list of domestic sales of oris, Shanshan Orai monopolized four seats.

Yang Donghao said that on average, Shanshan Group can make a square profitable every 18 months. After buying vip.com, it will retain its management team and study the expansion plan of outlets. However, Shen Ya stressed that vip.com should pay more attention to the light asset model, focusing on the management of outlets and businesses, rather than holding land and assets.

In addition, Shen Ya said in a conference call that in 2019, vip.com's total capital expenditure was about 3 billion yuan, which was mainly used for headquarters building and warehouse construction, and the company had no repurchase stock plan. But he noted that Tencent and Jingdong are interested in increasing vip.com holdings to 12% and 8% respectively.

In December 2017, Tencent, Jingdong and vip.com reached three party cooperation. Tencent and Jingdong will invest about $863 million in vip.com in cash. After the completion of the transaction, the company will hold 7% and 5.5% of vip.com's issued shares respectively.

According to the agreement at that time, the shares subscribed by Tencent and Jingdong have two years of lock up period. During the lockup period, Tencent has the right to appoint a member of the board of directors of vip.com, and Jingdong can appoint an observer of the board. After the expiration of the lock up period, Tencent and Jingdong can continue to retain the right to appoint their directors and observers, provided that Tencent and Jingdong each hold 12% and 8% of vip.com's shares or, in accordance with the common agreement with vip.com.

In March 2019, Tencent's company increased its holdings of vip.com, now holding about 9.9% of A-share shares of vip.com, accounting for about 8.7% of the total issued share capital, and Jingdong has increased the shareholding ratio of vip.com to 6.8% in June 2018.