Q3 2020 Baozun Inc Earnings Call
[music] good morning, ladies and gentlemen.
And thank you for a standing by football a tool that's caught a 2020 earnings conference call.
At this time all participants are in listen only mode. After managements prepared remarks, there will be a question and also session. That's.
As a reminder, today's conference call is being recorded I'll now turn the meeting over to your host for today's call me spend decision Investor Relations director to and.
Basically a seats Wendy.
Thank you operator, Hello, everyone and thank you for joining us today.
According to a funny I.
And he said he was pictured here late night and day, and it's about a boat and I will.
And.
Thousand Dot com and well I don't go up on is that still a day other.
On a GAAP and guys on Bowden and missed a Lincolnshire, chairman and Chief Executive Officer, Mr., Kim Chief growth Officer, and Mr. Rob and Lu Chief Financial Officer.
Sure well the views a business operations and company highlights followed by Mr., Xue, who will discuss financials and guidance and the all be available to answer your questions doing a Q and a session that follow.
It's always a gun I'd like to remind you that this conference call contains forward looking statements living that meaning a securities Exchange Act, a Nike free pool, and and you asked a private security Litigation Reform Act. A 1995. These forward looking statements are based upon a management current expectations and probably a monkey.
And operating condition and things like that and involve known and unknown risks uncertainties and other factors a staged a difficult to predict and a man if wage a beyond a companies control, which may cause a company's actual results a day from materially from those in the fall doesn't stand and.
Information regarding these and a other rex and and instead of a day. All factors included into a company is falling in the U.S. and the theme and announcement on the website of the stock exchange of Hong Kong and indeed, the company does not undertake any obligation to update any forward looking statement.
Except as required under applicable low finally, please note that unless otherwise stated all figures mentioned during this conference call a in R&D and if now my pleasure to introduce our chairman and Chief Executive Officer Mr. range, then to Miss and please go ahead.
Thank you, we'll leave it there and do all day.
And reported another solid although it's a low cost accomplishment.
This is a over first and color from public and home from your own.
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And on costs, both from a strange.
Or duly see either.
From a phone call March and that was largely milestone you anymore evolution and that's maybe a year and you can read it from almost solution.
In particular, it increases our ability to pursue synergy opportunities and alternative financing a portion of offerings to grow and.
Demonstrates over a long term a commitment to create value or go free global share holders.
You don't talk a few years, we have focused on moving over a competitive moat around technology and the Malaysia.
And pursued results for this years double 11 shop and starts to go is a great example of a program.
Well, a poodle, although growth goals by 54.8% during the extended 11 days here, so a record a hard six people and flexibility.
Well the other one studies so there's a new project alcohol and that's really what's all a solid technology infrastructure.
And other just capabilities and the robots and systematic team.
Oh, you know coordination going on and he knows and sales overall or core infrastructure actually the efficiency and a promote documents across a war for.
From ecommerce merchandising and all the way through other for a few of them most.
Most recently, we will always be and there's a one off and fortunes and a top 100 and frost is a growing companies for the second year from a role.
We right now.
A number 27 and globally and number two among Chinese companies.
We continue to strengthen brand engagement and you know sort of a quarter, which was helped by growth in consumer sentiment and that's a recurring that's pretty recover from over 90 restrictions.
And you color you need a third order, we target and no 10, Hooper and partners, including a few infertile international luxury brands as you have a corridor luxury a hope it's a marketplace. So China production store as well as a fuel domestic brands in a variety of categories.
This and everyone knows channel and the world's largest E commerce market and.
And the opportunities to grow our robust given our unique position as a leading solution here and.
We are also located there.
There are certain categories said, a credit reacting more shelf space what is true.
A true and sector is a good example, not knowing how free being able to attract a meaningful number a luxury brand this year, but a we're also seeing a trend and more luxury brand establishing a fear factor six stores is true so for the market places.
You know embrace most a recent which we are in that process, we'll be spending or a service coverage with a tier one and you will take a look for them to not only serve is officially official brand store, but to also establish a manager's marketplace flagship store.
This will be the brands a first ever move to a book already marketplace and we believe this will be a major coverage that will actually hurt the digital transformation of luxury E commerce in China.
It is a waste merger materializes, we will be well positioned and ready to capture the emerging coffee and opportunities and electric sector.
That's a new commerce continues to grow and that you bought quickly we are committed to capturing this opportunity is true continuous progress you did a globalization.
Over the past two years, we have constructed a very comprehensive if you're operating platform or give a few that integrates our IP infrastructure a on a quick.
Occasions, and a favorite intelligence capabilities.
Going forward, we will leverage our feel free to develop more innovative tools and applications that serves as a engine or a brand partners sales force.
This will not only to other fulfillment and the merchandise and efficiency, but we will also stimulate demand a generation and ultimately lead to cash management.
Yeah addition to developing innovative technology solutions business innovation is also critical for executing on a high gross a quality growth strategy.
You may recall from recent earning calls and we have launched to a strategic initiatives to drive further innovation.
First.
We launched a business operating center or do you hope you will see that drive operational efficiency share and resources per allocation and a promotion more standard this vision.
Second we announced the opening offer a ghost and operating center, a TV low to capture increasing opportunities among local and a emerging brands.
This quarter, we were able to advance a variety of efficiency and a quality enhancements within our B and C based.
Based on the early trial programs for over a 32 and honors and our view a c.. We believe that we will achieve a meaningful increase efficiency from.
Our JV low we intend to use in relation to the spend or service scope always emerging brands as we support their entire journey from starting off the year goes and marketing strategy. So you'll see a high level integration through our intelligence and insight solutions.
Our co branding and a co marketing initiatives and health brand partners.
And you are trying to position and a U.S.K. youre planning as well as a manufacturing and thats relates to be a supply chain.
Another understated, but a very important benefit will be in reaching their touch points with a wider range of omni channel market places.
We have strong prospects in the pipeline and a we'll be able to share more progress about them early next year.
Following our successful secondary listing on the Hong Kong stock exchange, we have started a.
A new Jersey, we believe it is and opportune time to accelerate our growth further by using a strategic channels to capture a high potential pipeline affinities flow.
And then as we May have also a multi as you may have also noticed a early today, we announced a few leadership and some changes to push for these initiatives.
We are happy to announce that Robin Lu who are off you know as our CFO is moving forward to take a neural.
To lead the Companys devotion to a strategic business development and the investment and initiatives.
Also a nationally and operationally we.
We plan to leverage and these initiatives to promote exposure to emerging brands, new ecommerce trends and other business development opportunities.
Also from pre law from emerging opportunities in China, you Commerce Arena.
Taking his place a CFO this operating income.
Our current VP of finance, who came on board with substantial experience in global finance acquire as large a most multinational organizations such as Jaguar land Rover and a PD growth.
We couldn't be happier to have him with us and we are confident that our deep and branch growth sharpening our focus and help drive long term growth.
I will now pass a call for robbing a go.
Over a financial products on expense.
Our cash Vincent.
This will be my last earnings call I'll say, Apple about a and I want you a sense of how will you lapped various other friends for your support over the past two years.
Brian E Commerce, and a dehydration is becoming a more significant and part of every day alive a COVID-19.
And the way I played such a say that our initiatives and high quality growth strategy a bearing fruits.
And that our balance sheet is a start with our thing.
They believe they are uniquely pervasive and to compete and other green and Chinese and commerce evolve other they are accelerating our cross that from class utilizing our industry, leading sites and the know how to identify and a secure news and commerce trends.
I'm sure that's a great well be the exciting journey for a hot going forward and.
And I'm honored to be handing over the say I spoke a great into a hotter so that at a time focused more on this in this case and a picture there class tendering opportunities.
Before we go into details on our financials, let me update you on the class acts and complaint filed last December.
As a day noted in our 2019 annual report.
Earlier this November that need a console has filed a notice of a luxury gets me so against the all defendants.
And a constantly the curb standard a notice of voluntary dismissal, thereby adopting good and all the other Kirk and I will face a day this need with a consolidated action.
One last thing.
And our 15 other Hong Kong stock exchange they will follow the common practice for a company a distributor in Hong Kong and allowed for a while guidance on net revenues, while net revenue growth going forward.
Let's now go over the third quarter 2000, Twentys financial results and retail.
As always we believe a year over year coverage and there's a pathway to reveal our performance.
As a percentage change and it goes again, there will be on that basis.
Once again, please note that all figures that had nation there'll be a and b unless otherwise stated.
As a day mentioned our per recall value and progress with optimizing our capital needs.
Which may and active may impact year over year Corporation.
Despite the day, our total again this quarter increased by 19 from 4% to a 10.8 period.
Our fifth wheels, and yet they rose by 17.4%. So 160, 58.3 game and our largest building can rate increased 19.6% through a time period.
During the quarter. They continue to say multis a growth momentum in this a both were luxury and a high.
The two categories.
Yeah, and determine the men's and women's clothing categories, we've turned into a double digit growth.
I will give a quick summary of the cap rate that accounts for over a 10% of our total cash outlays.
The apparel category, which includes both where a lot sure as a man's and abatements growth and go by approximately 35% year over year.
You'll actually declined by double digits, which was mainly due to our optimization of a smartphone sector.
I plan to do for the fourth time contributed over a 10% of our total again day become a by our Pops free catalyst for a hot.
Our Cogs and be total net revenue increased by a 20% to 1.7% to a 182 day.
Breaking this down a product sales revenue increased by a single bond funds three per se.
803.4 million.
And the service revenue increased by 52% to 1 billion during the quarter.
Total cost and operating expenses were 1.7 billion compared with 1.4 bidding in the same quarter last year.
In particular.
Cost of a product increased to 673.7 meeting from 579 moving last year it.
It was mainly due to a higher costs associated with a increase in price sales revenue.
Product sales growth and margin declined slightly by 30 bps to a 16.1 per cent from the previous quarter.
This was mainly due to the change moving category and me and a continued this punkin initiative.
Our blended gross margin was 62, a upon two per cent a decrease of 1.6% from last year, mainly due to lower product sales growth and margin.
Partially offset by stronger revenue contribution from service revenue.
Fulfillment expenses increased to 419.8, moving from $233.4 million in the same quarter of last year.
Mainly due to a rise in key and the contribution from our disputes and and a consignment model and the increase in warehouse rental expenses associated with a standard the data hub capacity growth.
Net additional growth opportunities.
Our fulfillment expenses as a percentage up here and they increased to a 3.9% from 2.7% a year ago.
This was mainly due to a higher proportion of the concept and model in our non disturbing you hadn't weighted.
This was partially offset by our income will be taken sales enhancement.
Sales and a marketing expenses increased to $501.1 million from 443.1 million from the same quarter last year.
This was mainly due to the t. and make though a lot of growth in digital marketing through it.
As a percentage of the and laid out our sales and a marketing expense ratio improved to a 4.6% from 4.9% a year ago weighted.
This was mainly due to the effectiveness and efficiency improvement of our marketing services and our continued cost control and listings.
Technology, and a concept expenses increased by 7.9% year over year to a $101.6 million.
And our investment in sales innovation, and a prototype and basin totaled $23.4 million compared with 21 moving in the same period of last year.
Technology, and a conference with relative as a percentage up and made important to railcars and 9% from one per cent last year, a day inspiring greater operating the average.
Yeah, a expenses totaled 51.1 million a slight decrease from 51.7 moving in the same quarter last year.
Which reflected our display and a cop Concordia listed and the leverage again, while we scaled our business.
All in all the income from operations increased by 50.9% year over year to $84.6 million.
And a non-GAAP basis net income from operations was $111.7 million up 47.1 per cent from the same quarter last year.
Operating margin, a 4.6 per cent well and non-GAAP operating margin reached 6.1%. They too are both new third quarter record high for hot.
Outside the interest income interest expense totaled $8 million compared with 9 million a quarter ago.
As we get completed our Hong Kong secondary listing.
They plan to further optimize our capital structure and expect to have further savings in our net interest expense going forward.
Net income attributable to ordinary shareholder from faltered, both on a $64.6 million and an increase of 64.2%.
Basic and diluted net income contributable to ordinary shareholders a volume per 80 at war, one part and the all night and a 1.07, respectively for the quarter.
Non-GAAP net income attributable to ordinary shareholders about a total of 91.5 million and an increase of 55.1%.
Basic and diluted non-GAAP net income attributable to a shareholder ordinary shareholders about and if you add 155, and a one point to be true respectively for the quarter.
As a out sometime berserk, a tucson predicate, we had a $4.5 billion in cash and the cash and equivalents and a short term investments.
Comparing to past repeated as of June Thirtyth true sometimes it.
The significant and increasing cash cash equivalents and a short term the lesson.
Was mainly attributable to the operating proceeds received in connection with our technical and their team and the Hong Kong Docket channel.
Gross profit from the global operating including partial exercise of the over adamant option before other writing sales and the either on a.
Operating expenses were approximately Hong Kong dollar a 3.6 day.
Lastly, I want to over some clarity on how to gauge back patients for the fourth quarter, but.
A growth rate of this years, doubling that and shopping festival should not be taken as a proxy for a full quarter growth rate is actually due to a pure pure rate a peak and promotional initiatives and.
And extended timeframe and it had damage from here.
Overall, we believe the Saudis results still reasonably bad and the big skewed a hell of the economic recovery in China and.
And in fact, the fourth quarter will review, our sequential improvement in growth momentum video.
We remain committed to delivering sustainable growth a steady improvements in profitability over the long term as low as creating long term value for our shareholders.
Now before we turn the call to the operator for class a I want to welcome and introduce a passive two years. After let's go ahead.
Okay, Hello, everyone and thank you.
Ravi, it's a pleasure to try and the call and taking over a recognized a new CFO.
And I try and bolstering the hotel faced in price is growth story is a fast growing Chinese E commerce industry.
So after working for both from a nice to finally, we've seen some comeback.
And now has mostly in Belgium.
Because he has a great sign off and that including three thing number one a high and a unit price a customer base or are you a 260 globally pretty much the price.
Number two it has a while Japan, a technology and innovation capabilities.
And number three more than six out and engaged and AMETEK and people.
So I companies, new Seattle, and look forward to a worthwhile support and executive management team to take both sales success to the next level and I hope to meet all of you impress and someone on the call to guide to your view on both in future.
And.
Dr. Only a 100 by free.
Okay second class or operator were now ready to begin to kill a second great. Thank you very much ladies and gentlemen, and we will now begin a question and answer session. So I asked a question on the phone you made a press star one and with from a name to be announced.
Cancer a request you can also pressed upon a full hash key.
First question comes from the line of Alicia Yap of Citigroup. Please go ahead.
Hi, Thank you and good evening management, Thanks for taking my questions and congratulation to Robyn try a new routes and also welcome and congratulations to after a.
And your CFO Matt.
My questions. It's a related to how we should think about income from <unk>.
And so a teacher finish and not a record EPS for things that day. So it was a why do we saw a true.
And like a half xcede that management expectations, just wondering what a and leaders that you hope that your team orderly south could be even better.
And the brand's E a under performing a how do you feel the a helping the brand standard Stevens lack class star performer and a and B.
And as we head into 2021 a wheel.
By doing the team no initial T. A like what you see for true Twentytwenty income to a balancing act a topline growth Westchester matching true.
So if you can give us some color on that would be great. Thank you.
Sure a hard each other it's Robbie and I think I can take a a part of your class a has been a few wasn't really a more details about the abbey life and a trend up that business.
And I'll add a basically I think a you know a while you'll recall a the per risk how a they do know taste. A you know or you know a discussed with you about you know the theory is a virus that year, especially a year because of the a pandemic and a you know the and for both brand and a consumer.
There's a.
They are more focused on the promotional event that's a the in that 618. So I think a with let's say late late Useight, a similar path and in a double 11 and specialty not a this year. So happy to have a is a you know extended beyond a timeframe, which is a you know.
Had a buyback and 11 days so a we do say a they have a big promotion and a they kept longer time hard to day inventory and a is by surety. A you know there is some like a rising hopper about a pandemic and a colby nitin globally and is a people always have a summer cancers.
About a third share for the for the next year or so thats really a have some negative impact and also a pattern is more focused on the a promotional event and that a going forward in the next year. We think you know a weight per package you know, even though a there was a real late have a.
A the previous year restarted our a new business develop and get a prayer more and a more braskem when they do have a very strong pipeline a using the car and the business and Additionally, a you know because there are more like a traffic traffic diversified into other in a market places and the other high there.
Like a mini program and a though.
Yeah, Hi show a way how a more a focus on this a new business you know and I'm very happy to say a weighted a second as you know a sequential quarter. They make profit in the media program and they have a very high growth in a new program business really demonstrate our capability to expand our business.
A from car into you know arena to their new Aggregators sector.
Thank you for a while okay. Thank you, Rob and so Alicia let me share with us and kind of how the double 11. So we do have a lot of learnings from the past a bullet and consider that this double 11 had a very special gameplay and including should big waves of everything to wake up a world class pre order and moving period.
So everything doubled including sales opportunities and also a potential operations mix. So a and this is a new to everybody. So a we need to help the brand to relocate or the merchandising for two weeks a first away how do we just you know and make sure that as a brand has a right and a a the right assortment with a right price.
Hi to attract a first wave of consumers in terms of a consumer engagement, we need to prepare how do we drive a second way for the repeat purchase rate for a for the consumers and including all those kind of the traffic management and D. A consumer experience management, we do to learn a lot of sales from the also including out a film and warehousing.
Consider and between the two big moving faces, we had engaged a new ways off return a.
Between a two building share it so a great heart is our system and our field and team had a great and did a great job. So they are definitely a few brands are underperforming doing a double 11 and of course because of the post carbonite King good effect and some of the brands, including the our merchandising and assortment a parade.
And and also a some of them are lacking there and marketing spending for the a to waste a very hard to relocate or a fly resources to online and.
Not a year. So there's a lot of things we are reviewing with our brand partners. After the double 11, and we believe that we can do a lot of in a new initiatives by helping them and an extra day to a great a job. Thank you.
Thank you thank.
Thank you for the questions in the interest of time I would like to remind participants a hard limits to one or two questions. At this time. Thank you very much.
Next question comes from a line of Binnie.
Binnie Wong of HSBC. Please go ahead.
Hello, Good evening management.
Congrats on a very very strong quarter from both top and bottom line and my question here is on the competition side and also a one on the take rate. So one other competition a do you see that as we see more often.
Ecommerce like you know service provider a mention in various verticals. So long ago, we have a median PPV and each arm and then also we saw a make one change each have a work out a competitive advantage and if you can remind us and as to how we can set a like a streams and ourselves against some of this is my third a close to it.
Become a partner of choice right from off this frames and then how do you see that a in terms of you know if we look back and our take rate and just looking at a nine nine month a quarter well it was a quarter to a nine month to date a.
The take rate actually increased by 50% in terms of a total service revenue. So can you remind us that's true you know it sounds as though what are some of the things that we have been improving to try and this increase in a take rate and then how do we think about like balance a in terms of a you know.
Monetization and the take rate. So just in terms of putting a GMB does he think that there's a value added services. We can interest you know interest in terms of the take rate or is it that we still aiming for a you know the coal going.
A key me procuring more price on point a thank.
Thank you so much.
A thank you Barry.
Americans this and that will take your first question a little according to a robbing a later on.
Above a completions at least three years, we would rather use a word active I mean, the the whole industry right now is getting more and more active not only the players are getting a you know a.
More and more covered for a different categories and also a unit a service that is so different kinds of service a snowy emerging in a market to help the brands to do a better business. So that is a RPM.
Our appealing or we could actually be some more accurate and work for this or a competition horizons and.
And I think the run coverage is quite clear a number one I think both of these in a leading position with a very good run in a in serving especially the global brands in a market secondly, a in.
No. We think we are continuously investing into the technology side and when are we have a.
You know a very completed a.
A service and solution offerings true brand based on good technologies and Theres a acknowledges that is from a.
Gary a important long term strength from us a.
Certainly a cause we're covering the omni channel so mostly to help the brands not only on a major a market goes is that also emerging in the channel. It's too soon to help them to achieve sales go and also engage customers.
Lastly, I think cost we're doing this multi channel and also a multi category business. So we are noisy a because consumers much other than the others. So that gives us a chance in delivering a low.
Consumer insights and also CRM related a paid a base a you know marketing a.
In the future so relative of competition and above advantage now about the strength.
Sure a it's Robin you know basically reacting to a a numerically a our take rate was you know a heavily decide and decided by the a product or a category mix as a way it may seem to be for us in a way that's why we did a lot about optimization.
Our categories.
I think that's part of that and the second a factor is a in a way continuously as the value added services to our a zimbra and that a new brand. For example, a will provide more services in a marketing a high tea services, a integrate them together on a day.
And they provide a supply chain and.
So it is you know a.
Yeah addition, true the operations.
And that a third factor I think a way our task and this now and a we made some progress like a so called keep corporations, which means they a coal we hear a lot of a coal market and a cult brand gain from worry a top height weight or with a a brand partners and then weighted share some other.
Cost per to based on our data a.
A a cumulative beta and the pace of our a worry a highlight will know how all of our operations and a technology based as a marketing a you know we are very top and then to be working day, some breast and do the deep cooperation had the chair and it has a landscape of a structure in that.
Okay, great. So they choose a swing factors really a contribute a true the take rates improve and I think a especially for the second one and there's certain class they will contribute more in the later years. Thank you.
Thank you for the questions from next question comes from the line of John Choice of Taiwan. Please go ahead.
And thank you manage or is it takes them and question and a congratulations robin on your new role and walk from Arthur and congratulations to your do Ross a CFO and I have two questions first of all have a quick follow up to 10. It's a question on the trigger I think if you will.
I look at your you know this quarters per Se I think a service revenue growth has been more or less in line. We did experience I guess, you mentioned a slight improvement on a take rate, but how should we think about this you know in a going for it and Robin you just mentioned that hey, we're going to see a good momentum, but considering that we have been investing quite a lot on the past you know a couple of.
A years in terms of film and also logistics and also we've also been a a you know to have done some brand optimization to improve our take rate and and a business. So I'm. Just wondering a you know a should we be expecting a further acceleration of take rate net service revenue actually outpaced. The overall revenue growth. That's my first question and the second part.
And is that something related to your new role, Rob and I was wondering imagine a could kind of from your share with us in a longer term I'm. You know there have been a lot of new business and players in this field that are providing more a software as a service and a you know kind of alternative.
To Biogen and a for some of these smaller brands or a smaller merchants. So one could management and let us know or per share and what are the key priorities or areas that you won't have to further strength and I'm not going forward. Thank you.
A sure I think a.
For the first class and I think there is some cincinnati.
It's an advocate issues in Q3 and.
So you May say, you know our sales our take rate as a service revenue grew a you know a quarter by quarter, but it's not a you know a house a lot of improvement and for some seven quarters due to the Cincinnati I think a ajay the a is not a part of our service is about a year.
And all the other macro economic issues and I know some a certain quarters and the way do be day, where they'll how a passive sends a no improvement in the take rate and a a service revenue and also a you know we are in a experiencing some optimization a you know a continuously a ugly.
Mentioning that a in the past a quarters and the way thinking and all they are ready to a more contribution for the next year I think that's a force class and the second pressing a button my personal a personal a task.
I guess I, you know a day E commerce, a landscape value. Okay that is there a lot of channel just a in a most recently, especially after Colgate Nike and I think the approach and he is a more and more emerging brands coming up a hidden chemo and the other platforms and the second one and that have a cash.
Moving from lots of other you know a market a places and they you know a a you.
You may recall about like a two years ago without a our BD program and we made a you know a significant improvement and the progress you know a up to a today and I think we can replicate this success is the other you know a marketplace and places, especially in their lives.
I mean, a grab and you know a market a places and also for the emerging brands and they will do something a trial and a they focus more on ways that our a you know the inc. Tween incubated a smaller price all emerging brands, a working with our existing.
And partner is rising and to do the investment in the a and a not related to you know the emerging brands. So it's kind of our strategy to do based on our a strong data a sub pop in the past. So I think a way how work free air picture in a how we can expand our book.
It is true there are other platforms and how they can you incubate all be working with the emerging brands and also hobby tanks and our categories in some a certain kind of like a half I'd say Gee as you know Thats My a part of my go to a no to try lapped a new business for the company. Thank you.
Sure.
Thank you for the questions next question comes from a light on T. and home Health Th capital. Please go ahead.
Hi, Thanks management, and kind of regulation and a good quarter, and so that kind of black relations and a new routes to assist you.
Two questions one is share related to the co operation, which a alibaba and so what you use to a co operate maybe equivalents Alibaba and also and net support here and now a I'd pop a team of free stuff Fox.
Hi, cash we're investing a fact, how that's going to impact your force you know your future cooperation with Alibaba and maybe a quick so that's number one question. The second question is related to let the channel and so what your stock from operating.
A shop and the team a platform and growth.
Actually you know a expanded a out she was a other sites. So I wonder a two day, what's the ratio of the shops that you upgrade and T mobile platform and share whats the show for a 90 miles class warmer and so from a different.
Channel, what's the cost and a operational expense structure looks like a well, which one makes more money for you. Thank you that's a true Oh a question.
Okay. So a this is Jim and let me answer your first question. So regarding the a may dot Com, you said, a pertain and farfetched. So a let me address this question from two to financials, a number one and you need to understand at a difference between made a comp and why not and and Farfetch may Dot Com is a first party platform running.
A lot from a.
A product focused and a part of a lifecycle set a speed a long tail. So basically on a may dotcom other products are off seen a products and that they provide a first and purchased by Alibaba and a you know they focus only focus on the a a that's a lot a circle off the part a lots and sort of status like off season and.
Clarity et cetera, and a you set up a 10, a farfetched are kind of a similar to each other so all of them are lifting your arrival in fees and product and the most of them a Saudi cross either either within a bridge loan book also a cross another luxury categories. So we don't think there are a head to head competitions.
Wasn't a lot repeatedly and our team a luxury and.
You know from Becky potash are getting open eightyml flagship store because consider the a consumer engagement and the traffic source. There is a huge sales opportunity for both off a platform to share with you a product across different kind of be a portfolio was in a ready to wear and a bags and accessories and jurist doctor a lot of opportunities that's a first.
I mentioned a set a dimension is I cannot mention a details, but you know a thousand as running all of those three platforms. As we just mentioned, including made a call why not and Farfetch on JV for now so as low as long as far as cash is opening a day or a flagship store on timolol. So it doesn't affect the cool and thousands.
Service, GAAP and health and fitness and all the other Hana. We believe that we are very very confident and helping all of those luxury a platform to do a better job on T mall with their consumer engagement. Thank you.
Hi, Robbie and let me take the second question and I think that a right now the chemo business is about like a 70 to 75 per cent of our business and the way our drug and have a more from the other market places a right now and a I think for the other marketplaces and it'll be caught up and nature of the.
A different sop and nature a year.
Business you know both a revenue model at a cost structure a different for example, we can utilize more SaaS based a system. They already developed a internally just a part of our median program as well as our other though in a store you know and also a ways and have more marketing oriented.
And a business coming up from the other you know a a platforms. So thats really a in okay was more in a a color for the for the new a platforms.
Platforms I I want to say you know, what a car and seasonal a.
You know a cost structure you saw a you know our cash al for example, we already have committed snowfall for basic structure to be ready for the a busy and other platforms. We don't need to just a you know we do the you know a our infrastructure again, India other platform and so we can create and.
More efficiency and effectiveness by me a.
Grow this business centric.
Thank you for the question. So next question so a come from the line haul choice true.
From America. Please go ahead.
I see it means they intend to file a robbing and after and congrats on the very solid quarter and a the Hong Kong and and thanks for taking my question I have two questions. My first question actually it's a follow up on a single day performance and it's quite a a way for the first time like company display like net outward and she came from.
Growth for the quarter, just price and the standard for our a remarkable like you know a five point, a 55% year over year growth of a single agent and the without a.
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Could you provide and I think on a breakdown in terms of that paid a way like you know growth like it's a powerful new at a faster growing category or lighting and electronics and they didn't I think it's really a really high.
And try and just wanted to get more color, Inc, and how these different categories and together could be a true our thing a say I'm getting a south right.
My second question was related to that and our imago and that.
And we see a company like restructured the organization to a.
[laughter] more accurate and kind of like launching a initiative and this year. We also a right a lot of capital and.
Just wanted to and that's down like what the Air Railway and.
And that's a satisfactory and relative and Bakken and actually affect our Mike and probably for the fourth quarter or maybe when and where what's the outlook for the margin well be look like thanks.
Sure a true, it's Rob and I think a.
You're not a line not clear, but I try to answer your a catch up and the answer a class I think that that a downturn and a electronics and many from as I a.
As mentioned in the prepared remarks, and that's because of the adjustment a and optimization of our smartphone a you'll remember we have a.
As a a smartphone Brad a you know which has a something like you had a contribution for the last year and a day or wait just a a you know and the a corporation you know a by the a last last a third quarter and also you know, we did and some of them and they seem to have a smaller.
Brian the in a smartphone in general our value.
Other go into a a co ops is a type of a low quality growth they called a low quality growth business in this category and that's why you see the a you know the a that double digit decrease is this a sector, which really negatively impact our order book you have made.
For the for this quarter and a about a you know the margin impact because the way there is a a financing rates and everything you know in a passively continuously and masking a technology and also the a you know a strength in our supply channel and a a.
As a meantime weight you know a that utilize some money to a to do our new builds is like a mini program a you.
You know in a in the last questions I expect and you know what we will do but I want to a reiterate we are not going to do a drastic you know a investment in our new business and a a.
You know we have with a very strong support for our technology already and also we have a strong part of our data. It's a combination and the way we know what we can do you know a to expand our business and a cash and the capture the opportunities, which without you know always a the both a.
Cost other I don't think that that will affect too much about our margin and you can see the way how a continues on a consistent investment teams a different behaviors and you can see just as a basis point in the future and nobody has out there and you have a a big investment true affect our margin. Thank you.
Thank you for the questions next question comes from the line and Ashley Free of Credit Suisse. Please go ahead.
Thanks management for taking my questions a two questions from me from.
Why is that a.
And then you have a preneed a.
Nice third quarter and for quite a momentum has been quite a strong oh.
The price is our previous outlook. That's next year should be able to post around 30% revenue growth remain unchanged.
And my second question is about our and fulfillment side and even the Onboarding more luxury brands do we have any investment plan and they found and how should we see that kind of a fulfillment expense ratio. Thank you.
A sure actually it's a it's robin a you know a widely provided a 2020 guidance you know a wait wait wait did you know a I have some a precondition about just up a you know the a pasta COVID-19, a you know a beta in a part a situation.
We don't think the way how it might change about our CAD and today. They are very cautious about what happened and for the next year in a co and Nike and a globally and a you know a just the most recently a one is a saving going into the winter there some change and a reduced a a.
No a feel about the Brad.
Yeah, most of brand a borrowing capacity right now for the for the next year. So we are cautiously you know a working out that now and a if you'll know and there is no big a change in a in the macro a way a rapid two candidates a a outlook other.
Other fulfillment you know I want to see a fulfillment evolve they are very important to eyewear and we wanted to give that a I think a a should be the continued all consistent and investment in a way a you know a expand our from at a in the warehouse.
Operator, our warehouse, what a luxury and a I think that's a that's a a while the two hour a to go out from our basis and a into next year.
We think they do have some of the investment team and a in the warehouse by the way I did a budgeting process right now and we haven't decided yet you know a the exact number and we have the number and we will share with you matters and kit.
Thank you for the questions next question comes from from like Thomas Chong of Jefferies. Please go ahead.
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Okay sorry.
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Yeah, Hi, operator is not clear.
We cannot a split verity a here so Kevin just scale this was and a half.
Okay, and adjusted a speaker such a.
And Mr., Tom a low.
Just to take a question. They tell you can dial back again.
Next question well go to Charlie Chen of China remains a song. Please go ahead.
Yeah and management thank.
Thank you for taking my question I have a two questions here a first one is about the a strategy of the luxury brands and a.
From after a local brands I would imagine those chou brands are actually operating a quite differently in the marketplace. So based from your previous a express I can see a you from a has done a very well for the international Big consumer Brad. So how would you do differently to do business with.
International luxury brands and also how do you do a different treaty a handle this a domestic a smaller brands and how would that impact your overall business structure like March and take rate. So can come in and that's the first question and a second question, there's a yes.
You have to take this new and.
Initiatives to a.
A acquired new international luxury brands and also a domestic brands and I guess it this year the quality growth spread has been carried out very well so next year a.
What's that new initiative change your focus on the growth from terms of top line growth versus a quality a gross or margins. How do you think about that and next year. Thank you.
Okay. Thank you for your question, let me a quick questions and maybe a a readiness and more yeah for four of its true.
Well, firstly a hobby.
A luxury brands and local brands, a yeah I think a.
Actually.
They are not new to us first and luxury brands, we are working with them for several years early although mostly we are helping them on your official brand side a today. According to the marketplace stores I think you know a cause and we have from the from students and so on the market places and demos. So there's not a big GAAP.
First alone would come from luxury brands on the other places so in general will come from Peter was a luxury and international in a luxury brands and from a local growth.
We generally already working is important for many years and a.
A popping up all the a a strategy I think for a luxury brands were more focused on people from inside a lever trying to deliver a very a a premier a customer experience and also a we.
With some of these technologies and a CRM system to help you a brent to acquire a new users and also a fuel so the a.
The demands from existing customers.
Customers as well from the local brands I think a more a you know a value and she'll be from a a a pretty well and side and also due to the marketing side. So we have been in this kind of a initiatives a four years. So we are ready for a lot of them a fall from this.
Please.
Nobody margin.
You know a structure a revenues from this true.
Yeah, I think maybe running a free more about his other dynamics of luxury and local branch and sure Hi, It's Robin I think a.
Just back to a youre crashing and you know about a high quality growth I think that's a co pay level a strategy. That's really you know a go into a average categories average factors I is not a bifurcated between day international and a dramatic you know a regarding a dramatic you know a jeff.
Are they a vincent a no information and.
They are a lot more in a technology, they're much more in the automation, which you know we invest a lot and this is there and the way they do how a very strong top 10 sales, especially compared with our competitors in a while they compete in the in a market as it that's watch and a dramatic Brad.
And like and also a you know we are trying to figure out a a day.
To something like a brand new approach to be working with a you know a the price a user in the international automatic for example, just all I mentioned, it's a late may so called a deep cooperation and laser and and to try to optimize the that's a to be working with this Brad I think that's a really a you know a.
A spread across the international and a dramatically there is a much different between a dramatic had international and also a what I want to see a if you're asking me about a take rate or a a as a as a number a way to see a much difference between.
Damascus International a lazlo provides a surveys what do they do need thank you.
Also a okay. Bobby a strategy I think your quality growth a high quality growth strategy will remain the same range.
I'll be changed and next year.
Thank you and once again, how well it takes a next question is from Thomas Chong of Jefferies. Please go ahead.
Hi mechanism and thank you for taking my question I'm, sorry about the financing problem area and I was asking on behalf of Hum.
Hmm shares from upstate and hope and Tennessee and.
And the competition between decentralized and to centralize a coffee and tea 21st Inc.
Oh, sorry, I can't see that again, a mini book and what I Didnt hear that are clearly.
And your share some updates on the mini program status.
Okay. Thank you.
You know a positive.
Art, a blend or and is even Pos. So we actually served a grounds for a different channels and also a different service is not only about E commerce transactions, but also a.
You know digital marketing needs I mean, a demand generation.
So maybe program one of a practice and we are serving the UBS.
And for Omni channel methodologies are so a minute shouldn't really from program a versus the other a form is it's very our interest.
Interest income was where you can cover not only in a transaction part, but also that you see from marketing Park and integrate this true efforts take a while.
So we think the a wifi.
And we think the a path even.
In the meaningful growth.
E Commerce will be shorter than the other platforms. So our strategy is that a is that we are serving a brand.
Only all the transaction, but also a but also with a serving only a you know already very soft plus customers customer vision based news and we will deliver a lot of common micro services to other brands and also we can customize a.
You know a for a car.
And in the solution for them to fit the are you know tens and ecosystem.
So that is a soft class operations strength. Thank you.
Thank you for the questions and then source a tiny that concludes the Q and a session I would now like to hand, the call back to Mr., Randy Sims a closing.
Thank you operator and growth on behalf of their not thousand managements, who will like to thank you all from your participation in today's call you require any further information feel free to reach out to us and you gotten us today that concludes the call.
Ladies and gentlemen, you may now disconnect your lines. Thank you for your participation.
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