Baozun Releases 2016 Chairman Letter
As 2016 ended, we had a great deal to celebrate. It’s been less than two years since our Initial Public Offering of American Depository Shares (ADSs) on Nasdaq in
We were delighted to finish off the year on a strong note, with another quarter of solid financial and operational results. Our strong performance was driven both by sales growth of our existing online stores, as well as the expansion of our portfolio of brand partners. 2016 marked our third straight year of profitability on a non-GAAP basis. I believe this was a direct result of our improving operational capabilities, the sustainability and quality of our topline growth and the steady improvement in our margins due to both increasing economies of scale and enhanced execution. Looking ahead, we plan to continue to strengthen our leading position in the market by continuously providing best in class e-commerce solutions to our brand partners.
As China’s leading brand e-commerce player, we are not only riding the digital commerce wave but also shaping it. As the digital retail market transitions from the “first-round” transactional phase of e-commerce to a more holistic model, involving omni-channel sales, digital marketing, Customer Relationship Management (CRM), data warehousing and analytics, we are leading the market by integrating all these services and providing holistic solutions to our brand partners.
As such, we believe that we are well-positioned as a leader in one of the largest e-commerce market in the world. China’s total online shopping market represents 14.8% of China’s retail sales of consumer goods and grew by 30.7% from 2015 to
Let me share with you some of the key highlights from 2016, which was also our 10th anniversary since we started operation.
This year, we generated
Over the course of 2016, Baozun’s portfolio of e-commerce brand partners grew to 133, up from 113 as of
- Logistics: We set up a wholly-owned warehouse and logistics subsidiary, Baotong E-logistics, to expand the scale of our diversified range of logistics services. As a partner of Cainiao, a leading logistics data platform operator associated with
Alibaba Group, Baotong has strengthened and expanded the scale of our warehousing and fulfillment services and improved our ability to serve a larger number of brand partners and other merchants.
- Information Technology (IT): On top of our core brand e-commerce system, we expanded our e-store system, comprising Nebula+, Business Intelligence (BI), and Omni-Channel.
- Digital Marketing: We upgraded the digital marketing team to a business group in 2016, and have made major improvements through hiring more skilled team members in Customer Relationship Management (CRM) and Customer Experience Management (CEM), as well as winning a number of marketing project awards along the way.
- Restructuring for Greater Focus: We expanded the number of business groups from four to six, supporting greater mission focus on the part of each business group as well as greater professionalism in management and operations.
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We started offering our brand partners end-to-end solutions in
Corporate Governance Improvements
2016 was the first year we were audited based on Sarbanes-Oxley Act requirements. We obtained an “Unqualified Opinion Report” with respect to our disclosure controls and procedures and internal controls over financial reporting, which was reflected in our annual report filed with the
We believe that an essential part of building our brand is to foster a creative, collaborative, and enthusiastic corporate culture. Working in teams is one of our strengths, and we try to give our employees the opportunity to develop themselves as well as work with each other. The benchmarks we use for our Employee Net Promoter System, eNPS, increased by 206% this year. This system tracks the introduction of friends and family members to
We endeavor to create a seamless workflow and experience for our brand e-commerce partners. We are cognizant of the need to anticipate the requirements of potential clients as well as support our existing clients for services ranging from “transactional” to “integrated”, from single channel to omni-channel, and from
- Existing brand partners: Our objectives are to improve brand satisfaction, realize GMV growth, reduce operational costs, and provide value-added services including digital marketing tools and solutions, BI, CRM, CEM and Artificial Intelligence (AI). We believe our professional management and customized brand e-commerce strategies will help us to achieve these goals.
- Potential clients: We rely on our best-of-kind premium service capability to attract new brand partners. As we strengthen our capabilities and expand the array of our services, we expect to see our brand customer base grow.
- Asset-light business model: We are transitioning towards an asset-light model to further decrease inventory risk and increase margin profile.
Omni-channel solutions: In addition to the continuous investment into software development, we are increasingly investing in omni-channel solutions by allocating more resources as we provide services to more brands.
The Next Three Years
Over the next three years we plan to underpin our growth in four key ways, which are:
For our existing e-commerce brand partners, we plan to extend our value proposition both upstream and downstream. On the upstream side, we will use longer-term contracts, strategic alliances, joint ventures and investments to develop a closer relationship with our brand partners. On the downstream side, we will work more closely with e-commerce platforms and develop solutions based on our insight into consumer markets, to build a new generation of brand e-commerce value chains and ecosystems.
As the China brand e-commerce universe expands, we are facing new demands to take our brand partners beyond
As our business grows, we expect to become ever more dependent on our ability to recruit and train talent for our business development and operations. We plan to continually strengthen our talent pool by using incentive programs, programs for professional development and management trainee programs. We are also constantly looking for ways to recruit talent from the off-line retail market and train them in e-commerce.
Building a Creative and Entrepreneurial Culture
Our core values are based on integrity, ownership, collaboration, initiative, and innovation, and maintaining a creative, entrepreneurial, and innovative spirit is critically important to us. Every year, we hold a
Chairman and Chief Executive Officer
Safe Harbor Statements
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the
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CONTACT: For investor and media inquiries, please contact:
Baozun Inc.Ms. Caroline Dongir@baozun.com Christensen In ChinaMr. Christian ArnellPhone: +86-10-5900-1548 E-mail: email@example.com In US Ms. Linda BergkampPhone: +1-480-614-3004 Email: lbergkamp@ChristensenIR.com