Dear Shareholders:
While 2019 was a year marked by profound
geopolitical trade headwinds and economic changes, I am inspired by
the tremendous hard work and dedication shown by all our employees
who remain committed to empowering our brand partners’ business
growth and enriching their e-commerce strategies in China.
We achieved a number of milestones in 2019. We
generated RMB7.3 billion in total net revenue, reflecting a
standout year-over-year growth rate of 35%, the fastest we have
posted over the past four years. In addition, we saw record high
increases in GMV, a record net addition of new brands, a new high
for incremental GMV from stores opened less than 12 months, and
first-ever positive free cash flow for the year. We believe our
progress in 2019 should set a solid foundation for future
growth.
Despite a turbulent economic environment and
challenging market conditions in 2019, China’s online retail sector
remained buoyant. According to the National Bureau of Statistics of
China, online retail sales increased by 16.5% YoY to RMB 10.6
trillion, which was 20.7% of total retail sales in China. In terms
of movement of products, according to data from the China Post
Bureau, total express parcels surpassed 60 billion in 2019,
accounting for more than half of the world’s total parcels, and
average annual parcels per person totaled 42, demonstrating how
influential and essential e-commerce has become in shaping consumer
habits in China. As the leading brand e-commerce service partner,
we are honored to be the go-to company for brand partners seeking
to refine their digital and O2O strategies in order to capture the
growing opportunities in China.
Strengthening Competitiveness in
2019
Our mission has always been to develop and
innovate in order to best facilitate our brand partners’ digital
strategies through technology empowerment. As e-commerce evolves,
and consumers demand higher quality and differentiated shopping
experiences, we are tailoring our solutions to be more engaging,
appealing and interactive.
In 2019, we launched several modules and
solutions through our Retail Operation Support System (“ROSS”) that
accelerate our automation pipeline for efficient store operations.
We upgraded our IT infrastructure to a hybrid cloud model, which we
call Baozun Cloud. We are now in the advanced stages of integrating
and migrating all of our core e-commerce systems and applications
to Baozun Cloud, which will help us better utilize cloud computing,
enhance the scalability of our business, and improve cost
efficiency.
We closed 2019 with an expanded overall
directly-operated warehouse capacity of over 500,000 square meters
and enhanced infrastructure for premium sectors. In addition, we
refined additional value-added services to enrich our warehouse and
logistics offerings, such as B2B fulfillment, O2O integrated
inventory and product return management, and large-scale expedited
delivery.
Leveraging our artificial intelligence and
big-data technologies, we continue to finetune our
technology-driven digital marketing and industry insights services
to improve ROI of marketing resources, as well as enhance user
engagement and interaction. We also closely follow industry trends
and are enhancing our initiatives in live-streaming and integrated
marketing activities. In 2019, we were certified by Alibaba Group
as one of the first group of Multi-Channel Network entities to
engage with for interactive marketing activities.
Enhancement of our infrastructure, and capacity
released through efficiency improvements driven by digitalization
and automation, have enabled us to accelerate customer acquisition
to drive growth sustainability. For 2019, we added a net 46 new
brand partners, including brands in many exciting subsectors, such
as luxury and fast-moving consumer goods. We believe that the
addition of new brand partners will contribute to growth, and our
optimized brand portfolio that covers a variety of categories will
give us more flexibility to pursue a high-quality growth
strategy.
Looking ahead to 2020
Our strategy for prioritizing high-quality
growth remains unchanged in 2020. As we begin the new year, our
focus will be strategic margin expansion, where we will continue to
optimize our brand portfolio and drive operational efficiency
through digitalization and productization in a disciplined, focused
and streamlined manner. We are on track with our strategy over the
past few years to empower a revolution in e-commerce through
innovative technologies. While progress never follows a straight
line, we are confident in the digitalization blueprint we have put
together. Our focus on innovation and productization for 2020 will
be squarely on driving the seamless integration, digitalization and
enhancing the intelligence of our services, which we believe will
drive improvements in internal operational efficiency and business
process management.
The recent outbreak of Covid-19 is casting a
long-lasting shadow over the global economy, and notably online
retail. In the near term, the wider industry will be challenged by
the pandemic, which is unpredictable both in its scope and
duration. While the pandemic is of overwhelming humanitarian
significance, it has also been a watershed moment for our business,
convincing many of our brand partners of the value and importance
of developing a greater online profile. We believe that both
digitization and innovation will continue to underpin growth in the
retail industry. Our suite of technological innovations has
positioned us to firmly remain China’s leading brand e-commerce
service partner. We believe we are well positioned to further
penetrate this market and provide best-in-class service to our
brand partners.
The health and safety of our employees, their
families, our partners, and communities remain a top priority. For
our employees, we want to offer our heartfelt thanks for their
tireless work during the recent outbreak. We ask all of them, and
all of our stakeholders and shareholders, to remain safe and
healthy as the year unfolds.
Sincerely,
Vincent Wenbin QiuChairman and Chief Executive
OfficerBaozun Inc.
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, such as the Company’s expected
growth of the online retail industry in China, the Company’s
expectations regarding demand for and market acceptance of its
products and services, the impact on the Company’s businesses as a
result of the COVID-19 pandemic, the Company’s expectations
regarding its relationships with its brand partners and e-commerce
channels, and the level of consumer economic activity in China, 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 U.S. Securities and Exchange Commission. The
Company does not undertake any obligation to update any
forward-looking statement as a result of new information, future
events or otherwise, except as required under applicable law.
About Baozun Inc.
Baozun is the leading brand e-commerce service
partner that helps brands execute their e-commerce strategies in
China by selling their goods directly to customers online or by
providing services to assist with their e-commerce operations. The
Company's integrated end-to-end brand e-commerce capabilities
encompass all aspects of the e-commerce value chain, covering IT
solutions, store operations, digital marketing, customer services,
warehousing and fulfillment.
For more information, please visit
http://ir.baozun.com
For investor and media inquiries, please
contact:
Baozun Inc.Ms. Wendy SunEmail:
ir@baozun.com
ChristensenIn ChinaMr.
Christian ArnellPhone: +86-10-5900-1548E-mail:
carnell@christensenir.com
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