Home >

Vipshop, With Its Inventory Tag Since Its Birth, Is Trying To Tear Itself Apart

2020/10/13 15:31:00 85

Vipshop

Vipshop, with its inventory clearance label since its birth, is trying to tear down its "inventory scavenger" label.

The core point of this paper

1. High core business profits and shrinking business control costs are the main reasons why vipshop continues to make profits.

2. It will be a major test for vipshop to realize market increment through the new retail mode of olai.

3. The inventory problem of the industry is difficult to solve in the short term, and the special sale mode still has great development opportunities.

If it was not for advertising, many consumers would have forgotten that vipshop was once the "third pole of e-commerce".

In 2012, vipshop was listed in the U.S. with a special e-commerce story of "online outlets", and its market value soared from US $200 million to US $10 billion in two years.

But in 2015, vipshop's demon stock "came into being", and then its market value fell sharply for many years, falling into silence. When the outside world thought that it would become the next VANCL and Jumei products, it reversed the trend and returned to the $10 billion club. When other e-commerce companies suffered large losses, it realized sustained profits.

It is not easy to find a suitable living space in the gap between big e-commerce platforms. However, living space is not equal to growth space. Can we still do the special sale business? After a close study of vipshop, many people have obvious doubts about its business model.

The truth of sustainable profitability

In the field of e-commerce, apart from Ali, there are few that can maintain long-term profits: Jingdong has been established for 12 years, and has only begun to make profits this year; pinduoduo has been heavily subsidized, and it is still losing money.

Vipshop is an exception.

According to its financial report in the second quarter of 2020, the company has been profitable for 31 consecutive quarters. In the second quarter, the net income reached 24.1 billion yuan, a year-on-year increase of 6.0%, which was higher than the market expectation; the net profit attributable to the parent company was 1.5 billion yuan, with a year-on-year increase of 88.9%, and the number of active users was 38.8 million, with a year-on-year increase of 17%.

"The special sale mode is naturally profitable, and vipshop has established its advantages in the supply chain and the competition of limited tail goods, and has always maintained its core position." Zhuang Shuai, founder of Bailian consulting, analyzes this.

At present, vipshop's revenue mainly comes from three parts: self owned products with high gross profit such as clothing and wear, third-party brands with low gross profit such as facial mask and lipstick, and offline Shanshan ole.

Among them, the revenue of self operated products accounts for about 90% for a long time, and the total proportion of the third brand and Shanshan Aolai is around 10%.

It also focuses on self-management. Vipshop's cashing method is a little similar to that of Jingdong. However, the fundamental reason for the gap lies in the category difference

With 3C as the core, Jingdong's products have expanded to the whole categories of department stores, supermarkets and medicine, while vipshop focuses on the field of clothing, wearing and beauty. For vipshop users, cosmetics, home furnishings and other categories only need to supplement, and the vertical e-commerce attribute is obvious.

Yang Donghao, the CFO of vipshop, has said that its core business is extremely profitable, mainly driven by the clothing category.

According to the financial report, clothing and other related products contribute more than 70% of the company's Gmv. The gross profit margin of clothing categories is high, and the platform does not weigh goods. Therefore, the gross profit is maintained at about 20% throughout the year, far higher than that of peers.

This is one of the key reasons why vipshop continues to make profits.

In addition, cost control is also one of the reasons for its sustainable profitability.

Different from other platforms which are keen on throwing money into subsidies, vipshop's cost control has almost reached an amazing level: over the years, vipshop's market, R & D and administrative expenses have accounted for less than 10% of its revenue for a long time.

This is almost unimaginable data on other platforms. Take pinduoduo as an example. In 2019 alone, its marketing expenses will reach 27.17 billion yuan, accounting for 90.14% of the revenue.

In terms of cost control, vipshop has also achieved initial success.

In the past two years, the high investment and high performance cost of pinjun express have affected the net profit growth of vipshop. In the third quarter of last year, vipshop sold pinjun to SF, and its logistics cost per unit decreased from 17.12 yuan to 12.92 yuan, which increased the proportion of gross profit in Gmv from 7.3% to 9%.

Due to the decrease of performance cost per order, the growth rate of vipshop's customer repurchase has become 19%, which is higher than the growth rate of single user by 14%.

Corresponding to the sustained profit is vipshop's monthly growth rate, which has been declining in recent years, and the corresponding single digit revenue growth rate. On the day of the second quarter financial report, the company's share price fell by more than 20% and lost nearly 20 billion yuan.

In the fierce competition environment of the e-commerce industry, only focusing on making money can not completely capture the hearts of investors. The feasibility of long-term development and the future growth space may be more valued by investors.

Make up the sales map offline

Like Jumei Youpin, vipshop has been trying to "go out of the circle" in the past few years, acquiring lefeng.com, opening fresh community store "pinjun life", etc., and has stopped at many e-commerce outlets.

On the contrary, the growth rate of its diversified business is close to 20%, but the growth rate of new business is not reduced from 24% to below.

Until July 2018, vipshop had to admit the fact that the transformation failed and announced its return to the special track.

With the focus returning to arrival, vipshop believes that "future users will purchase online and offline multiple times". Therefore, in early 2018, the company launched the layout of offline channels, trying to further strengthen the online and offline special sale ecosystem.

The offline matrix includes vipshop offline stores and vipshop warehouses. The former is opened in the shopping center, while the latter is opened in the community. The categories sold are consistent with the online core categories.

Such stores have been opened in succession from the fourth quarter of 2018, with layout from first tier cities to fifth tier cities. By the end of 2019, the company has about 300 offline stores and 200 vipshop warehouses.

The next step is to invest in Aopin.

On July 10 this year, vipshop purchased 100% equity of Shanshan commercial with 2.9 billion RMB of cash. The main business of Shanshan commercial is to operate outlets. At present, five outlets squares are in operation, and five are under planning and construction.

Wang Jun, an analyst in the retail e-commerce industry, believes that if offline Aolai gets through the online and offline membership system, it will undoubtedly reshape the current shopping experience in the special sales field.

"From the perspective of development trend, it is an action that has already been prepared by going offline or vipshop after considering and noticing the long-term effect of special sale." Wang Jun thinks that.

However, the market is also full of doubts about vipshop's acquisition of OLE.

At least, the volume of accounting can only affect the sales volume of stores in the second quarter, which can only be considered as a small part of the total revenue. But Yang Donghao, chief financial officer of vipshop, explained that the existing Shanshan olai was profitable.

According to iResearch consulting data, since 2016, the scale of domestic clothing e-commerce market has grown rapidly. Although the track is crowded, there is still room for market growth.

Wang Jun believes that for vipshop, there is market space, and there are also basic channels for offline layout. The future development direction has been clear. It will be a major test for the management team of vipshop to realize market increment and find a new way out through the omni channel integrated new retail model.

Is special sale a good business?

Tail goods are undoubtedly a unique commodity category.

For manufacturers and channels, there is a strong demand for clearance of clothing, shoes and hats with fashion characteristics. China has a large population base, and different groups have different demand for commodities.

Mo Han, an analyst in the retail e-commerce industry, believes that compared with offline stores, e-commerce can relatively "long tail" to meet the different demands of different regions and different groups for commodity trends.

Vipshop connects these two needs and sells high cost-effective brand goods at low prices, forming a strong platform in the tail goods category, and its business model is established.

Ali and Jingdong noticed that vipshop quickened its pace to enter the tail goods market after the success of the tail goods category. New e-commerce companies, such as Aiku and haoyiku, which mainly focus on distribution mode, also joined in.

However, the special sale business of integrated e-commerce is only a small branch of its system, and will not become the mainstream mode of the platform. For vipshop, a vertical e-commerce specializing in special sales, its impact is limited.

With the first mover advantage, vipshop first occupied a certain scale of users' minds, leaving few opportunities for later comers to sell vertical e-commerce.

This is also the main reason for Jingdong's strategic investment in vipshop.

Some people in the industry believe that with the progress of technology and more use of data for management, the data at both ends of production and marketing will tend to be synchronized, and the major brands have more and more control over inventory, and the inventory risk will be lower and lower. The more well-known big brand is, the higher the inventory management efficiency is, and the less unsalable tail goods are finally produced.

This trend is very disadvantageous to vipshop, which digests inventory.

But Zhuang Shuai said that it is the ideal goal of the future society to determine production by sales. However, to change the back-end production mode and connect the demand of the front-end, the process is longer than we thought. In the next 10 or 20 years, the inventory will still exist for a long time.

In the short term, affected by the epidemic situation, the clothing industry has obvious de stocking pressure, and the demand of brands to accelerate de stocking sales is also stronger. Vipshop has disclosed to the media that many brands have found the inventory they want to sell for more than two years, and open a channel to clear goods on the platform to help them solve the inventory problem.

In the long run, China's economic development and per capita GDP level have reached the stage of "there should be large-scale special sellers".

"The proportion of China's social consumption in GDP has been rising year by year, and has become an important engine for economic growth. When the GDP and consumption are higher, the more things will be produced, and when the supply exceeds the demand, there will be opportunities for tail goods and special sales mode. " Zhuang Shuai said.

It is estimated that the sales volume of iResearch will exceed 1.5 trillion yuan in 2029, which will exceed 1.6 trillion yuan in China.

Under the comprehensive interlacing of various factors, the demand of current clothing brands for special sales channels has become vigorous. Many brands even regard vipshop's special sale mode as the second growth curve.

Some well-known sports brands at home and abroad regard vipshop's special sale as an important spot export. Some brands have begun to provide vipshop with customized or special commodities, including some well-known cosmetics, which will sell more customized clothes at vipshop.

This is obviously good news for vipshop, which specializes in special sales.

The end

At the beginning of September this year, vipshop officially upgraded slogan to "brand special sale, that is, super value", and introduced customized brand styles, which are limited to vipshop channels. And expand their target customers to women, men, the elderly, children and other gender and age groups.

In the face of the changing e-commerce market, even if vipshop does what it is "good at", it still needs to solve the problems such as the difficulty of bringing in new products, the slow growth of revenue, the big fluctuation of performance cycle and so on.

Vipshop, with its inventory clearance label since its birth, is trying to tear down its "inventory scavenger" label.


  • Related reading

Yintai Department Store'S National Day Sales Increased By Nearly 20%, And Passenger Flow Recovered By 90% Year On Year

Mall Express
|
2020/10/10 10:34:00
49

Attention Of E-Commerce: Investment Rules Of Tmall'S Double 11 In 2020 Officially Announced

Mall Express
|
2020/10/3 15:28:00
59

Hot Spot: Haining Leather City Taobao Cloud Market Officially Launched

Mall Express
|
2020/9/30 11:23:00
2

Meituan'S "Boundless" Expansion: Marching Into Beauty And Pet Industry And Grabbing For Food E-Commerce Giants?

Mall Express
|
2020/9/29 16:57:00
977

Jingdong Enterprise Purchase Launched "Enterprise Welfare Month In September"

Mall Express
|
2020/9/27 10:23:00
84
Read the next article

Reebok'S New International Peace Day Theme Series Shoes Exposed

Reebok's brand-new international peace day theme series shoes have been exposed. The two types of shoes are about the trend brand information of Reebok shoes on sale,