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Vips post 4 q12  presentation Vips post 4 q12 presentation Presentation Transcript

  • February 2013Vipshop Holdings LimitedInvestor Presentation
  • 1DisclaimerThis presentation contains forward-looking statements. These statements are made under the “safeharbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-lookingstatements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,”“plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook andquotations from management in this announcement, as well as Vipshop’s strategic and operational plans,contain forward-looking statements. Vipshop may also make written or oral forward-looking statements inits periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report toshareholders, in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts, including statements aboutVipshop’s beliefs and expectations, are forward-looking statements. Forward-looking statements involveinherent risks and uncertainties. A number of factors could cause actual results to differ materially fromthose contained in any forward-looking statement, including but not limited to the following: Vipshop’s goalsand strategies; Vipshop’s future business development, results of operations and financial condition; theexpected growth of the online discount retail market in China; Vipshop’s ability to attract customers andbrand partners and further enhance its brand recognition; Vipshop’s expectations regarding demand forand market acceptance of flash sales products and services; competition in the discount retail industry;fluctuations in general economic and business conditions in China and assumptions underlying or relatedto any of the foregoing. Further information regarding these and other risks is included in Vipshop’sregistration statement on Form F-1, as amended, filed with the SEC. All information provided in thispresentation is as of the date of this presentation, and Vipshop does not undertake any obligation toupdate any forward-looking statement, except as required under applicable law.
  • 2Chinas Leading Online DiscountRetailer for BrandsVipshop
  • No large discount retail chains or branded outletsMassive retail opportunities in China3Massivediscount retailopportunitiesImmatureofflinediscount retailinfrastructureConstantsupply ofexcessinventoryTotal estimated retail sales of US$3.8 trillion in 2013(1)Total apparel retail sales were US$151.9bn in 2011(1) ;apparel inventory accounts for approximately 50% oftotal apparel market(2)Total discount retail was US$23.6bn in 2012 with a56.2% 12-15E CAGR(1)Note:(1) Data from Frost & Sullivan report; assuming 1 US$ = 6.2301 RMB.(2) Data from BCG report “The World’s Next E-Commerce Superpower”.Hugeconsumerdemand
  • Consumers in China are skipping outlet model andgoing directly online for discounted branded productsOnline: the future of discount retailing in China4Note:(1) As 2012 year end, including 1,867 Marmaxx stores and 374 HomeGoods stores in the US, from 2012 Company Presentation(2) As of February 2013, including 1,091 dress-for-less stores and 108 dd’s DISCOUNTS stores in the US, from February 2013 Company Investor Overview(3) As of February 2013, from Company Website(4) As of February 2013, from Company factsheet2,241stores(1)1,199 stores(2)67 outlets(3)38 outlets(4)Chinas offline discount retail are extremely underdevelopedChinaU.S.LargeOff-priceretailerOutletsNone
  • 5China: A more attractive market opportunityBroad universe of popular brandsfor mass marketLimited upfront depositMost products can be returned tosuppliersNeed to pay for inventory upfrontProducts can not be returned tosuppliersWell established online presenceand capabilitiesLargely rely on third partyplatforms to build online presenceMarketpositioningMostly focused on high-end andluxury marketsChina U.S.Discount / outlet retail channelssaturated for mass marketmerchandiseLack of well-developed discount /outlet retail channelCompetition fromoffline channelBrands’ own onlinepresenceWorking capitalrequirementBroader addressable marketBetter business modelResult
  • A unique player in China’s e-Commerce landscape6Market placeGeneral B2CCosmeticsBroad basedPlatformsVertical focused players and online retailersGroceryOnline discountShoes/bags3C Apparel• Partner with leading brands by selling their excess inventory at discount prices• Unique business model partnering with brands has no direct competition
  • 7Rapid increase of new activecustomersRapid increase of repeatcustomersHigh and stable rate of orders fromrepeat customers( in thousands) ( in thousands)( in thousands)Highly engaged and loyal customer base2551,3303,3125381,2962010 2011 2012 4Q11 4Q12New active customers8046,68120,4572,7718,0269277,26921,9193,0058,75286.7%91.9% 93.3% 92.2% 91.7%2010 2011 2012 4Q11 4Q12Orders placed by repeat customersTotal ordersOrders placed by repeat customers1559032,6256441,8612761,4914,1109342,58656.2%60.6%63.9%69.0%72.0%2010 2011 2012 4Q11 4Q12Repeat customersTotal active customersRepeat customer as % of total customer
  • Preferred discount channel for popular brands8One-stop solution for brandsProfessional team with deep brandknowledgeFast inventory monetizationMinimal brand dilutionClear industry leader(2)Note:(1) Number of our brand partners is a cumulative number since 2009, which includes primarily brand owners, and to a lesser extent, brand distributors and resellers.(2) As measured by total revenues in 2011, the number of registered members as of June 30, 2012 and the number of monthly unique visitors in December 2012, according to the Frost & Sullivan Report.Brand partners growth over time(1)Product categoriesTravelAccessoriesHome goodsSportswearCosmeticsChildrenHandbagsFootwearApparelShoppers are not loyal, but our brand partners are.4111,0752,7592010 2011 20122010 –2012growth by 6.7x
  • 9Operational expertise
  • Relationshipwith brandsUnderstandingof consumersBusinessintelligencesystemOver 250merchandising staffExcellent merchandising10BrandselectionSalesmanagementcapabilityConsumerinsightsCustomizedmarketingSales eventsoptimizationOver 5,800brandsDeepeningbrandpartnership123
  • 11Differentiated logistics systemExtra process on top of traditional B2C e-Commerce (1)Sales cycle Short LongTraditional B2C e-CommerceVolume of throughput Large SmallNote:(1) Comparison on per same-size warehouse basis.Customized and more complicated logistics and warehousing systemSales processNo. of SKUs handledRelatively fastMuch moreRelatively slowRelatively few
  • Highly customized and seamlessly integratedIT system for flash sales12Support huge traffic spikesCustomized ERP systemWarehouse managementsystemCRM systemTimeTraffic12am 10am 12pm 12am
  • High entry barriers13First Mover AdvantageBusiness modelOperational expertiseEconomies of scale1234Vipshop is wellpositioned inChina’s onlinediscount retailmarket
  • 14Visionary management team with strongexecutionDonghao YangChief Financial Officer12+ years experience in financePreviously CFO of SynutraInternational Inc (NASDAQ:SYUT) and Tyson Foods (NYSE:TSN) Greater ChinaMBA from the Harvard BusinessSchoolMaggie HungSenior VP, Merchandising20+ years experience inmerchandise retailPreviously VP of Grand PacificMall and GM of Grand OceanDepartment Store in NanjingBachelor’s degree from Ling TungUniversityYizhi TangSenior VP, Logistics10+ years experience in logisticsindustryPreviously logistics departmenthead of Tesco in northern China,and Senior Director of logisticsdepartment of DANG)Master’s degree from Sun Yat-SenUniversityEric Ya ShenCo-Founder, Chairman, CEO18+ years experience in consumerelectronic products distributionPreviously Chairman of GuangzhouNEM Import and Export Co., Ltd.EMBA from Cheung Kong GraduateSchool of BusinessXian Feng CaiVP & GM, Shanghai Branch19+ years experience in retailindustryPreviously GM of IGA DistributionPTY LTDBachelor’s degree from Universityof MelbourneMr. Daniel KaoChief Technology Officer16 + years experience with leadinge-commerce and Internetcompanies in the US and ChinaPreviously director of site operationand quality engineering at eBay IncBachelor’s degree in computerscience from Iowa State UniversityArthur Xiaobo HongCo-Founder, Vice Chairman, COO12+ years experience inconsumer electronic productsdistributionPreviously Chairman of SocieteEurope Pacifique DistributionAlex JiangSenior VP, Business Intelligence andCustomer Relationship Management(CRM)20+ years of experience in China’sretail sectorPreviously VP of DANG) and Founder / Directorof E-elephant Consulting CompanyLimitedBachelor’s degree from ChongqingBusiness SchoolXiaohui MaVP , Online Marketing10+ years experience in marketingand mediaPreviously editor-in-chief of SINABachelor’s degree fromCommunication University of China
  • 15Financial highlights
  • Phenomenal growth16Net revenues(US$ in millions)Total orders(in thousands)9277,26921,9193,0058,7522010 2011 2012 4Q11 4Q12684.1%201.5%191.2%32.6227.1692.1105.2299.62010 2011 2012 4Q11 4Q12597.1%204.7%184.8%
  • 17Steady margin expansionQuarterly gross profit and gross margin(US$ in millions )Strong and defensible margins:• Brands often sign exclusive deals to minimize brand dilution (>730 exclusive brands)• Brands only liquidating excess inventory (limited quantity = inability to price shop)• Brands want to efficiently monetize excess inventory and have little price sensitivity4.9 7.4 10.021.0 21.429.634.868.717.0%18.3% 19.0%20.0%21.2% 21.8% 22.3% 22.9%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Gross profit Gross margin
  • Continuous investment in logisticsinfrastructure to drive long term growth18(US$ in millions)Fulfilment expenses (Non-GAAP) 1Note:(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses6.08.411.419.416.820.5 21.637.320.9% 20.7% 21.7%18.4%16.6%15.1%13.9% 12.5%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Fulfilment expenses (non-GAAP) Fulfilment as % of net revenue
  • Tremendous operating leverage andhistorically low marketing expenses19Note:(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses(US$ in millions)General and administrative expenses (Non-GAAP) (1)(US$ in millions)Marketing expenses (Non-GAAP) (1) 5.7%8.7%6.2% 5.8%4.9% 4.7% 4.1%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Marketing expenses (non-GAAP)Marketing as % of net revenue1.02.9 3.74.2 3.9 4.3 4.6 5.03.6%7.2% 7.1%4.0% 3.9% 3.2% 2.9%1.7%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12G&A expenses (non-GAAP)G&A as % net revenue
  • 20Note:(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses(4.2)(7.1)(10.8) (11.2)(6.5)(4.2)0.68.1-14.6%-17.6%-20.6%-10.6%-6.4%-3.1%0.4%2.7%1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Net income/loss (non-GAAP) Net margin (non-GAAP)Net margin (Non-GAAP) (1)(US$ in millions)Net margin improvement
  • 21(in $ thousands)December 31, 2011 December 31, 2012Cash and cash equivalents and held-to-maturitysecurities44,955 210,570Current Assets 158,278 381,952Total Assets 167,435 398,917Current Liabilities 149,146 316,334Total Liabilities 149,146 316,334Total Stockholder’s Equity 18,289 82,583Current Ratio 1.1 1.2Balance Sheet Highlights
  • 22Growth strategies
  • Our future growth strategy23Expand warehouse capacities to accommodate increasingcustomer demandGreater penetration in additional citiesGreater penetration in Northern, Eastern, Southwestern andCentral ChinaIncrease brand partners and sales per brandExpand product categoryExclusivity with brand partnersFurther expand into mobile and connected devicesExtend partnership with social networking platforms such asWeibo and RenrenGeographical expansionProduct expansionChannel expansion
  • Major profitability drivers24Word-of-mouth ROI maximizationCost controlIncreasedOperating leverageStronger negotiationpowerBetter pricingGross marginFulfillmentexpenseMarketingexpenseG&AexpenseDistribution centersbuild out Capacity utilization ramp upProfitability1234
  • 25Key investment highlightsMarket leadership positionStrong industry growth fundamentals1Highly engaged and loyal customer baseSuperior operational expertise234Strong management team5
  • 26Thank you!