Q1 2024 111 Inc Earnings Call
Hello, everyone and thank you for joining 111 conference call today on the call today from the company adopt a gang Yu co founder and executive Chairman, Mr. Joe Mcnealy, co founder Chairman and CEO and Mr. Luke Chen CFO of Omans major subsidiary and Mr. Harvey Wang C. R.
Operator: Hello everyone, and thank you for joining 111's conference call today. On the call today from the company are Dr. Gang Yu, Co-Founder and Executive Chairman, Mr. Junling Liu, Co-Founder, Chairman, and CEO, Mr. Luke Chen, CFO of 111's major subsidiary, and Mr. Harvey Wang, COO.
Hi.
Operator: As a reminder, the company's earnings press release was distributed earlier today and, together with the earnings presentation, is available on the company's website. Before the conference call gets started, let me remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1994 and relate to events that involve known and unknown risks, uncertainties, and other factors. All of which would cause actual results to differ materially.
Speaker Change: As a reminder, today's conference call is being broadcast live via webcast. The company's earnings press release was distributed earlier today and together with the earnings presentation are available on the company's IR website.
Speaker Change: Before the conference call will get started let me remind you that this call may contain forward looking statements made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995, such statements are based upon management's current expectations and current market and operating conditions.
Speaker Change: Relate to events that involve known and unknown risks uncertainties and other factors.
Speaker Change: All of which could cause actual results to differ materially for more information about these risks please refer to the company's filings with the SEC.
Speaker Change: 111 does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise, except as required under applicable law.
Speaker Change: Please note that all members that all numbers are in RMB and all comparisons refer to year over year comparisons unless otherwise stated. Please also refer to the earnings press release for detailed information of the comparative financial performance on a year over year basis.
Operator: For more information, please refer to the company's filings with the S. 111 does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or other. Please note that all numbers are in RMB and all comparisons refer to year-over-year comparisons. Please also refer to the earnings press release for detailed information of the comparative financial performance on a year-over-year basis. With that, I will turn the call over to 111's CEO, Mr. Junling Liu. Please go ahead. Good evening, everyone.
Speaker Change: With that I will turn the call over to one woman CEO Mr. Jim <unk>. Please go ahead.
Speaker Change: Good morning, and good evening everyone.
Junling Liu: Thank you for joining our first quarter of 2024 earnings call. The information we'll be discussing here is also available in the slides posted earlier today on the company's website. And I encourage you to download the presentation as well as the earnings report from our investor relations website at ir.111.com.cn. For the first quarter of 2024, we are thrilled to kick off the year with solid performance.
Speaker Change: Thank you for joining our first quarter.
Speaker Change: Let's call it.
Speaker Change: The information we'll be discussing here is also available in the slides posted earlier today on the company.
Speaker Change: Site and I encourage you to download the presentation as well as the earnings reports from all of them.
Speaker Change: The relations website.
Speaker Change: While my mind BOL com thoughts yeah.
Speaker Change: For the first quarter.
Speaker Change: Yeah.
Speaker Change: Plenty of times before.
Speaker Change: So we'll kick off the year.
Speaker Change: Solid performance.
Junling Liu: Notably, we turn to quarterly operational profitability for the first time after years of dedicated effort towards long-term resilient growth with strategic operational refinement. In this call, I'll provide an overview of the macro environment, highlighting exciting opportunities ahead that will be followed by financial highlights and updates on our ongoing technology empowerment, as well as supply-side efforts. Finally, while delving into our future growth strategy before our Chief Financial Officer, Mr. Luke Chen, presents a thorough analysis of our financial performance. Looking into the micro environment for our industry, the national anti-corruption campaign in the healthcare sector that began in late 2023 is continuing this year.
Speaker Change: Notably the ton to ultimately operational profitability.
Speaker Change: After years of dedicated effort.
Speaker Change: Some of the billings growth.
Speaker Change: Strategic operational refinements.
Speaker Change: In this call I will provide an overview of the macro environment.
Speaker Change: Ultimate opportunities ahead that will follow with financial highlights and updates on our ongoing technology empowerment as all adds to the supply side athletes finally, although all of them sort of our future growth strategy before our Chief Financial Officer, Mr. Luke Chen presented as part of the analysis.
Speaker Change: As I mentioned before.
Speaker Change: Yeah.
Junling Liu: Recent developments indicate a deepening of this campaign with regulatory and ethics enforcement efforts targeting the entire industry chain. The industry anticipates that stricter scrutiny on ethical practices is becoming a longer process that will foster transparency and integrity in healthcare conduct, particularly in hospital procurement, which will ultimately promote healthy industry competition and development. As a result, more drug sales are expected to transition to retail pharmacies that are more accessible and transparent compared to the hospital system.
Speaker Change: Looking into the micro environment.
Speaker Change: Great.
Speaker Change: The National Anticorruption campaign in the health care sector.
Speaker Change: And ladies and gentlemen, thank you Bree.
Speaker Change: Yeah.
Speaker Change: Recent developments indicate a deepening of this campaign.
Speaker Change: Luxury and ethics in Boston.
Speaker Change: The entire street.
Speaker Change: The industry anticipates that strict scrutiny.
Speaker Change: It goes back to this is becoming the London process that will foster transparency and integrity and health care.
Speaker Change: Particularly in the hospital procurement.
Speaker Change: Which will ultimately promote healthy industry competition.
Speaker Change: And development as a result more dropped sales are expected to transition to retail pharmacies that are more accessible in a transparent compared to the hospital system.
Junling Liu: This transition is encouraged by the state and is poised to benefit us as we specialize in the outside hospital pharmaceutical market, where we expect huge potential and prospects. Considering current economic and capital market conditions, entry barriers for new startups in this growing industry are formidable, especially when we add in the healthcare industry's higher regulatory standards and requirements. We are, however, strategically positioned to adopt a market-oriented approach to the outside hospital pharmaceutical market.
Speaker Change: This transition is encouraged by the state and is poised to benefit us as we specialize.
Speaker Change: Hospital pharmaceutical market is huge.
Speaker Change: Pencil and prospects.
Speaker Change: Considering the current economic and capital market conditions entry barriers for new start ups in this growing industry are formidable.
Speaker Change: Actually when we add in the health care industry's high regulatory standards and requirements.
Speaker Change: We are strategically positioned to adopt a market oriented approach to the outside hospital pharmaceutical market.
Junling Liu: We aim to empower the entire industry chain through a business model that emphasizes superior operational efficiency and customer satisfaction. Our goal is to capture greater market share in this thriving sector by offering a comprehensive, cost-efficient product range with an unparalleled focus on customer experience. To achieve this, we've introduced various mechanisms, including enabling first party teams to deepen relationships with pharmaceutical companies and incentivizing merchants to offer competitively priced products on our digital platform.
We aim to empower empower industry chain through a business model that emphasizes superior operational efficiency and customer satisfaction.
Speaker Change: Our goal is to capture greater market share in the thriving sector by offering a comprehensive cost efficient product range with unparalleled focus on customer experience.
Speaker Change: So Jesus we've introduced the various mechanisms, including enabling the best possibility.
Speaker Change: <unk> deepened relationships with pharmaceutical companies and incentivizing merchants to offer competitive.
<unk> products on our digital platform.
Junling Liu: Combined with advanced technology, these mechanisms drive robust traffic, operational efficiency, and higher sales volume. By utilizing leading-edge technology, rich data insights, and innovative service models, we're strengthening 111's value proposition to both upstream and downstream customers. Also of note is the digital transformation of the entire value chain in the healthcare industry. As we are in a leadership position in this digital revolution, we are committed to reshaping the healthcare industry's value chain through our fully digitized operating system.
Combined with our advanced technology these mechanisms.
Speaker Change: <unk> robust.
Speaker Change: Operational efficiency and higher sales volumes.
Speaker Change: By utilizing leading edge technology rich data insights and innovative service models, we're strengthening the pharma ones value proposition to both upstream and downstream customers.
Speaker Change: Also of note is the digital transformation that's been.
Speaker Change: Oliver Chen and the health care industry.
Speaker Change: As we are in a leadership position in its biggest revolution, we are committed to reshaping the health care industry value chain through a fully digitized operating system.
Junling Liu: By empowering the upstream and downstream segments with highly efficient digital solutions, we're driving continuous operating cost reduction. Our high-quality digital technology facilitates effective sales, procurement, and operations management, including customer demand analysis, product inventory management, and warehouse allocation. In the first quarter, we continued to generate positive strides in digitization, which I will discuss further later on. Excitingly, our company achieved a qualitative change and operational efficiency after years of development. In the first quarter, we realized income from operations for the first time, validating the efficacy of our growth strategies and business model.
Speaker Change: Empowering the upstream and downstream segments.
Speaker Change: With highly efficient digital solutions.
Speaker Change: Driving continuous operating cost reductions.
Speaker Change: Our high quality digital technology facilities.
Speaker Change: Sales procurement and operations management.
Speaker Change: Including customer demand analysis inventory management, and a warehouse allocation.
Speaker Change: The first quarter, we continue to generate positive sides in Digitization, which I'll discuss later on.
Speaker Change: Excitingly all the company achieved a qualitative change in operational efficiency after years of development.
Speaker Change: First quarter, we realized income from operations for the first time validating the efficacy of our growth strategies and our business model.
Junling Liu: Our income from operations reached 3.7 million RMB during the period, compared with a loss from operations of 21.7 million RMB a year ago. Non-GAAP income from operations even more than tripled to a record high of 8.9 million RMB.
Speaker Change: Our income from operations reached $3 7 million RMB in the period compared with a loss from operations of <unk>.
Speaker Change: $21 7 million RMB a year ago.
Speaker Change: non-GAAP income from operations, even more than tripled.
Speaker Change: A record high of $8 9 million RMB.
Junling Liu: The achievements are particularly significant, considering a slight 4.6% year-over-year decrease in first quarter revenue. This fall was attributed to a higher baseline set in the first quarter of 2023 during the peak of the pandemic, which led to increased market demand for health-related products and medications. However, the market has since stabilized and normalized, and profitability largely stems from ongoing improvements in operational efficiency driven by continuous enhancements across pretty much all business options.
Speaker Change: The achievements are particularly significant considering a slide four 6% year will be a decrease in the first quarter revenue.
Speaker Change: This fall was attributed to a higher baseline set in the first quarter of 2023 during the peak of the pandemic, which led to increased market demand.
Speaker Change: All health related products and other medications.
Speaker Change: However, the market has stabilized and normalized.
The profitability largely stems from ongoing improvements in operational efficiency, driven by continuous enhancements across pretty much all business functions.
Junling Liu: Our total operating expenses for the first quarter accounted for 5.8% of net revenue, down 120 basis points from the previous year. Specifically, we achieved noteworthy reductions in various expense categories. We've managed to cut fulfillment expenses to 2.5% of net revenues this quarter, down from 2.8% in the same quarter last year, reflecting a decrease in fulfillment costs by 13.8%. Our general and administrative expenses have fallen to 0.5% of net revenues from 1.1% a year ago. Technology expenses were 0.5% of net revenues as well, down from 0.7% a year earlier. Selling expenses also slipped as a percentage of net revenues to 2.3% in this quarter from 2.4% in the previous year.
Speaker Change: Our total operating expenses for the first quarter accounted for five 8% of net leverage down by 120 basis points from the previous year.
Speaker Change: Specifically, we achieved noteworthy reductions in various expense categories.
Speaker Change: Managed to cancel some of the expenses to 5% of net revenues this quarter down from two 8% in the same quarter last year.
Speaker Change: <unk> seen a decrease in fulfillment costs by seven 8%.
Speaker Change: Our general and administrative expenses have fallen to 0.5% of net revenues from one 1% a year ago.
Speaker Change: Technology expenses was 0.5 of net revenues as well down from zero, 7%, Oh, Yeah, Oh, yeah.
Speaker Change: Selling expenses have slipped as a percentage of net revenues grew two 3% in this quarter from two 4% in the previous year.
Junling Liu: Excluding share-based compensation, our operating expenses as a percentage of net revenues have decreased 60 basis points to 5.7%. Additionally, our operating cash flow has also turned positive. Our operational efficiency was achieved through strategic investments in infrastructure and staffing as we continue focusing on key areas for long-term and sustainable growth. The digital capability we have built over the years is at a very sophisticated level to deliver value and quality performance to end customers, allowing us to reduce technology and staffing expenses.
Speaker Change: Excluding share based compensation, our operating expenses as a percentage of net revenues decreased 60 basis points to five 7%.
Speaker Change: Additionally, our operating cash flow also times policies.
Speaker Change: Our operational efficiency achieved through strategic investments in infrastructure and staffing as we continue focusing on key areas for long term sustainable growth.
Speaker Change: The digital capability, we have built over the years is a very sophisticated level to deliver value and positive performance to end customers, allowing us to reduce technology and staffing expenses.
Junling Liu: Our ambition has always been to become the most efficient healthcare e-commerce operator in the industry. With our relatively small scale and current revenue level, we have already demonstrated our exceptionally high operational efficiency, which even surpasses that of large traditional retail players.
Speaker Change: Our ambition has always been to become the most efficient health care e-commerce, operator in the industry.
Without a relatively small scale.
Speaker Change: Revenue level, we have already demonstrated our exceptionally high operational efficiency, even surpasses that of.
Large traditional pop players.
Junling Liu: This makes us very proud, and we will continue this effort towards setting an industry benchmark for efficiency as our goal, while sustaining profitability. As we grow in scale and refine our operations, operating costs are likely to further drop, contributing to higher efficiency. Our effort in this area will be relentless as we firmly believe this is going to be our competitive advantage, and we are not afraid of any competition. Next, let's delve into the operational accomplishments of the quarter, which were marked by continuous progress in technology empowerment.
Speaker Change: This makes us very proud and we will continue to suffer towards settling the industry benchmark for efficiency is our goal.
Speaker Change: While sustaining profitability.
Speaker Change: When we grow in scale.
Speaker Change: Refine our operations operating cost are likely to fund as well.
Speaker Change: The higher efficiency.
Speaker Change: In this area will be relentless as we firmly believe this is going to be our competitive advantage and we are not afraid of any competition.
Next let's.
Speaker Change: Delve into operational accomplishments of the quarter, which was marked by continuous progress and technology empowerment.
Junling Liu: These advancements not only bolster our operational efficiency but also pave the way for enhanced returns in the future, a testament to our commitment to innovation and excellence. We're seeing the initial benefit of transitioning from a product intermediary to becoming a tech power and a healthcare platform. Through the digitization of various business models, such as the JVP and marketplace, coupled with the introduction of the joint venture and the franchise warehouses, as well as a self-built logistics network to connect upstream and downstream customers, we have propelled 111 into a new platform that is widely recognized by both upstream and downstream partners.
Speaker Change: These are advancements not only bolster our operational efficiency, but also paved the way for enhanced returns in the future a testament of our commitment to innovation and excellence.
Speaker Change: We're seeing the initial benefits of transitioning from a product intermediary to becoming a tech part of health care platform.
Speaker Change: Towards the Digitization of various business models, such as the baby P and marketplace, coupled with the introduction of the joint venture and the franchise warehouses as well as a south field logistics network to connect upstream and downstream customers were propelled we have propelled by more.
Speaker Change: One it's a new platform that's widely recognized by both upstream and downstream partners.
Junling Liu: The shift has effectively ramped up cash flow, slashed inventory turnover, and enriched partnerships. This has fostered a synergistic ecosystem with shared knowledge, resources, and capabilities that drive cloud info growth and success. Our AI improvement initiatives have already yielded positive results in our operations. By utilizing AI and large language models and advanced algorithms to optimize low-price strategies and attractive allocation mechanisms, our order conversion rate saw encouraging improvements. These results highlight the success of our technology team's efforts in AI application development. One major challenge we faced was data cleaning due to the lack of common standards in the industry and the multiple names a single guide can have across different companies and regions.
Speaker Change: The shift has effectively around the top cash flow slashed inventory turnover.
Speaker Change: And rich partnerships.
Speaker Change: This has fostered a synergistic ecosystem with a shared knowledge resources and capabilities led cloud input Bose and success.
Speaker Change: Our AI frequently initiatives have already yielded positive results in our operations.
Speaker Change: By utilizing AI Lodge language models, and advanced algorithms to optimize low price strategies and attractive allocation mechanisms.
Speaker Change: All of the conversion rate so encouraging improvements.
These results highlight the success of our technology team methods.
Speaker Change: Application development.
Speaker Change: One major challenge, we faced was basically due to the lack of common standards in the industry and the multiple names single jobs can have across different companies and the regions.
Junling Liu: AI proved to be invaluable in automating this labor-intensive task, enabling us to contribute industry data to the Shanghai data exchange. We're also impressed by the impact of 111 Help, our AI-powered tool developed by our tech team. It effectively addresses both internal and external customer issues, reducing the need for additional staff and cutting expenses. Although it is still early days, we anticipate further AI applications will continue to streamline our operations and drive innovation.
Speaker Change: AI proved to be invaluable in ultimately this labor intensive past, enabling us to contribute industry the industry data.
Speaker Change: It takes change.
Speaker Change: We're also impressed by the impact of Walmart health.
Speaker Change: AI powered tools developed biotech team.
Speaker Change: Absolutely addresses both internal and external customer issues, reducing the need for additional staff and personnel expenses.
Speaker Change: Although it is still early days, we anticipate further AI applications continued to streamline our operations and drive innovation.
Junling Liu: Additionally, we continued digital empowerment for merchants with the launch of merchant-side mobile tools. These tools provide digital features such as merchant mobile reports, business compasses, and sales management, enabling our partners to access real-time business performance anytime, anywhere. We already saw a daily average usage rate of over 70% for these innovative features, which is very encouraging for further innovations. Furthermore, we can also use our intelligent system to match the most optimal carriers, which cuts costs and enhances delivery efficiency.
Speaker Change: Additionally, with continued digital empowerment vault lessons with the launch of Muslim side mobile tools. They supposed to provide digital features such as mentioned mobile report.
Speaker Change: Campuses and our sales management, enabling our partners to access our real time business performance anytime anywhere.
Speaker Change: We already saw a daily average usage rate of almost 72% for these innovative features which is very encouraging for further innovations.
Speaker Change: Furthermore, we can also use our system to match the most optimal carriers.
Speaker Change: Which parts costs and enhances delivery efficiency.
Junling Liu: For every single order, before it goes out for delivery, our system can make real-time decisions on which carrier to use based on logistics info collected, as well as volume and date. Then, every single order is selected by the system and assigned to a carrier, with the order automatically allocated to the most suitable warehouse for delivery.
Speaker Change: So every single order before it goes out for delivery, our system and make real time decisions on which carrier to use based on logistics involved collected as well as volume Unbanked.
Speaker Change: Every single order is selected by the system and assigned to a carrier with the all the automatically allocated to the loves the suitable warehouse for delivery.
Junling Liu: Diving deeper into our supply-side efforts, we empower our assortment team through our broadband intelligent data platform by analyzing the best-selling categories and products, using big data and sales forecasting algorithms, combined with online and offline transaction data and industry data, as of Q1 2024. The broadband catalog included a total of 6,567 new products, contributing to approximately 460 million RMB GMB cumulatively while reducing the group's top product out of stock rate to 2.8% from 5.2%.
Speaker Change: Stopping deeper into our supply side assets will empower our assortment team through our intelligent data platform.
Speaker Change: Analyzing the best selling categories and products.
Speaker Change: With big data and our sales forecasting algorithms combined with online and offline transaction data and industry data.
Speaker Change: Q1, hundreds on before.
Speaker Change: Broadband catalog, including included a total of 6567, new products contributing to approximately 460 million RMB G M B cumulative life, while reducing the group's pulp.
Speaker Change: Our stock rate to two 8% from five 2%.
Junling Liu: Moreover, in a move to optimize operations and add value to the supply side, we launched a new delivery and transit Model to streamline logistics not only for us but also for merchants. We established the Kunpeng Pharmaceutical Logistics Network to provide professional logistics services. Our Kwun Tong project optimizes internal cost reduction with 20% lower distribution costs compared to traditional logistics. Secondly, it empowers the external supply chain. Previously, each merchant had to send his product samples to various warehouses individually.
Speaker Change: Motorola and a move to optimize operations and add value to the supply side, we launched a new delivery and transit model to streamline logistics not only for us but also for merchants.
Speaker Change: We will be established.
Speaker Change: Pharmaceutical logistics network to provide professional logistics service.
Speaker Change: Hum project Optimizes internal cost reduction.
Speaker Change: Per cent lower distribution costs compared to traditional logistics.
Speaker Change: It empowers the external supply chain.
Speaker Change: Previously each merchant to send their product samples to various warehouses individually now.
Junling Liu: Now they can consolidate their shipment to one airhouse first, and then our system will intelligently distribute them to their respective locations. This makes a major improvement in efficiency as well as provides a service to merchants, which we can charge for separately. Merchants using this service can save costs, and their damage rate resulting from transportation can fall as much as 60%.
Speaker Change: They can consolidate their shipment to one of our house first and then our system intelligently distributing them to their respective locations.
Speaker Change: This makes a major improvement in efficiency as well as provide a service to margins.
Speaker Change: Which we can charge for separately.
Speaker Change: Makes sense only service can save cost and damage rates, resulting from the transportation fall as much as 60%.
Junling Liu: With the support of the Kunpeng Project, strengthening business negotiations, and our intelligent selection of the most optimal carriers, logistics expenses dropped. This, together with lower delivery costs, less warehouse and labor costs, and generated from enhanced work efficiency, and decreased warehousing expenses primarily led to a 14% year-over-year reduction in procurement costs to 89 million RMB in the first quarter.
Speaker Change: With the support over the clinical products strengthen the business negotiations.
Speaker Change: Our intelligent selection of the most optimal areas logistics expenses dropped this together with the lower delivery costs less warehouse labor costs and is generated from enhance the work efficiency.
Speaker Change: And decrease their housing expenses, primarily led to a 40% year over year reduction in fulfillment costs to 89 million RMB in the first quarter.
Junling Liu: Meanwhile, the company has innovated its supply chain model by unveiling joint venture warehouses. The new model is poised to revolutionize our expansion strategy, slashing investment timelines and capital expenditures while accelerating nationwide coverage. Previously, we invested in and built our own warehouses, which may take at least two years to see profitable operations. The new model allows us to partner with strategic warehouse owners to achieve growth and reduce intensive capex expenditure by leveraging their existing assets and our proprietary digital systems.
Speaker Change: Meanwhile, the company it has integrated supply chain model by unveiling joint venture warehouses.
Speaker Change: The new model is poised to revolutionize our expansion strategy slashing investment and time lines on capital expenditures, while accelerating nationwide coverage.
Speaker Change: Previously when investing and building our own buy houses, which may take at least two years to see profitable operations.
Speaker Change: New model allows us to partner with a strategic warehouse owners to achieve growth and reduce intensive capex expenditure by leveraging partners at this asset and our proprietary in vivo system.
Junling Liu: We've also garnered significant accolades and a new patent, all demonstrating valued recognition from government agencies and professional institutions for our business practices, operational performance, and dedicated innovation. These affirm our pioneering role in the digital commerce transformation. Notably, we were honored as the 2023 Shanghai Industrial Internet Demonstration Platform by the Shanghai Municipal Commission of Economy and Informatization, solidifying our position as a digital service platform for the pharmaceutical industry chain. This recognition elevates our commitment to digitization, enhancing service capabilities, and driving technological innovation. We earned the prestigious title of 2023 to 2024 Shanghai E-Commerce Demonstration Enterprise from the Shanghai Municipal Commission of Commerce, showcasing our pivotal role in advancing high-quality e-commerce in the city.
Speaker Change: We've also got a significant excellence on the new patents, all demonstrating value recognition from government agencies and professional institutions for our business practices operational performance and dedicated innovations.
Speaker Change: As a firm our pioneering bowl.
Speaker Change: Digital commerce.
Speaker Change: Formation multiple laden with almost as 20, <unk> Shanghai industrial Internet demonstration platform by the Shanghai Municipal Commission of the economy, and the eco Mod and the polymerization solidifying our position as a digital service platform for the pharmaceutical industry chain.
Speaker Change: This recognition validates our commitment to digitization, enhancing our service capabilities and driving technological innovation.
Speaker Change: We earned the prestigious title of <unk> 33 to 2020, Ebola Shanghai E Commerce demonstration enterprise from the Shanghai Municipal Commission of Commerce, showcasing our pivotal role in advancing high quality e-commerce in the city.
Junling Liu: In April, we secured a new patent for our voice service enhancement system, expanding our technology portfolio to 24 patents. This reaffirms our ongoing commitment to innovation, enabling more intelligent responses to customer inquiries and maintaining our technological leadership in the industry.
Speaker Change: In April we secured a new patent for our voice service enhancements system, expanding our technology portfolio to plentiful patents. This.
Speaker Change: This reaffirms our ongoing commitment to innovation, enabling more intelligent responses to customer inquiries and maintaining all the time.
Speaker Change: Logical leadership in the industry.
Speaker Change: Next I'm.
Junling Liu: I'm going to discuss our strategies for future growth, revenue, margin, and profit. We remain committed to delivering efficient, cost-effective, one-stop shopping experiences that meet customer needs and secure our competitive edge. Utilizing data analytics and market research, we can anticipate customer preferences, ensuring our offerings align with demand while prioritizing low pricing through advanced digital capabilities.
I'm going to discuss our strategies for future gross revenue margin and profit.
Speaker Change: We remain committed to delivering efficient cost effective one stop shopping experiences that meet customer needs in a secure our competitive edge.
Speaker Change: Utilizing data analytics and market research, we can't anticipate customer preferences, ensuring our offerings aligned with demand, while prioritizing low pricing through advanced digital capabilities.
Junling Liu: This commitment ensures exceptional value without compromising quality, fostering long-term loyalty and recognition from customers. Another core strategy is to deepen our partnerships with pharmaceutical companies. By closely collaborating with these partners, we aim to better serve the needs of our customers with a diversified medicine portfolio and to drive mutual growth. We've made significant strides in this area and will continue to do so, particularly by leveraging our digital marketing network to promote sales, especially in lower-tier cities.
Speaker Change: This commitment to ensure that exceptional value without compromising quality false strong long term loyalty and the reputation from customers.
Speaker Change: Another core strategy is to beat some partnerships with pharmaceutical companies.
Speaker Change: By closely collaborating with those partners, we aim to better serve the needs of our customers with a diversified medicine portfolio and to drive mutual growth.
Speaker Change: We've made significant strides in this area and we'll continue to do so, particularly by leveraging our digital marketing network to promote sales, especially in lower tier cities.
Junling Liu: Our extensive digital marketing network provides us with a powerful platform to showcase the products of our pharmaceutical partners. Through positive campaigns and promotions, we'll be able to increase brand visibility and drive sales in previously underserved markets.
Speaker Change: Our extensive digital marketing network provides us with a powerful platform to showcase the power of our pharmaceutical partners.
Speaker Change: These campaigns and promotions will be able to increase brand visibility and drive sales in previously underserved markets.
Junling Liu: This benefits not only our partners but also enhances our position as a leading e-commerce platform in the pharmaceutical sector. Amid the evolving market situation, our private label business demonstrates impressive results. Its revenues surged 89% from the previous year in the first quarter, while gross profit rose 55%, with a gross margin of 29%.
Speaker Change: This benefits not only our partners, but also enhances our position as the leading e-commerce platform in the pharmaceutical sector.
The maintenance of evolving market situation, our private label business demonstrates impressive results.
Speaker Change: Revenues surged, 89% from the previous year in the first quarter, while gross profit rose, 55% with a gross margin of 29%.
Junling Liu: This line of business, currently encompassing three distinct brands, enables us to offer a diversified product portfolio that significantly contributes to our gross margin. Additionally, it strengthens our brand equity and enhances customer trust. Moreover, we will accelerate our investment in the JVP platform, which has been attracting an increasing number of partners, enabling us to substantially increase our product range. The growth trajectory of this model is particularly exciting as it indicates the growing value proposition of our innovative business model and its ability to draw interest from a diverse range of stakeholders. Looking ahead, our efforts for the JPP platform will include enhancing its features and functionalities to address the needs of our partners, as well as expanding its reach to a wider partner base.
Speaker Change: This line of business currently encompassing three distinct brands enables us to offer a diversified product portfolio that significantly contributes to our gross margin.
Speaker Change: Additionally, the strengthening of our brand equity and enhances customer class.
Speaker Change: Moreover, we will accelerate our investment in the JBT platform, which has been attracting an increasing number of partners, which.
Speaker Change: Substantially encourage style product range.
Speaker Change: The growth trajectory of this model is particularly exciting as it is.
Speaker Change: Indicates the growing value proposition of our innovative business model and its ability to draw interest from a diverse range of stakeholders.
Speaker Change: Looking ahead, our efforts for the <unk> platform will include enhancing its features and functionalities to address the needs of our partners as well as expanding its reach so by the partner base.
Junling Liu: We believe that ADP will continue to be a key driver of our growth and competitiveness in the years to come. In addition to driving pipeline growth, we're also focused on optimizing our offering costs to improve efficiency and profitability. We will step up our efforts to advance several initiatives implemented for achieving this goal. For example, we aim to onboard half of our merchant partners onto our new delivery and accounting model. We will use an upgraded warehouse network to enhance inventory management and fulfillment capabilities, thereby reducing lead times and improving customer satisfaction. Additionally, we are adopting AI sales representatives to automate and optimize the sales process, driving higher platform traffic and conversion rates while reducing operational costs.
Speaker Change: We believe that ADP will continue to be a key driver of our growth.
Speaker Change: The competitiveness in the years to come.
Speaker Change: In addition to driving top line growth. We're also focused on optimizing our operating costs to improve the efficiency and profitability.
Speaker Change: Our efforts to advance several initiatives implemented for achieving this goal.
Speaker Change: For example, with aim to onboard half of our merchant partners on plant a new delivery unattended model will be used upgraded by our house network to enhance inventory management and fulfillment capabilities, thereby reducing lead times and improving customer satisfaction.
Speaker Change: Additionally, we are adopting AI sales representatives to automate and optimize the sales process driving higher platform traffic and conversion rates, while reducing operational costs.
Junling Liu: Operational efficiency is central to our strategy, and we will continue investing in advanced technologies to streamline processes, reduce waste, boost productivity, and ultimately solidify our leading position in the marketplace. An important aspect of our technology investment is innovation and digitization. Many parts of our operations are embedded in AI, and we fully embrace digital transformation across our business to drive operational efficiency, customer engagement, and product innovation, unlocking future growth opportunities. It is important to note that digitalization is vital to our vision for the future.
Speaker Change: Operational efficiency is central to our strategy.
Speaker Change: And we will continue investing in advanced technologies to streamline processes, and reduce waste and boost productivity and ultimately to solidify our leading position in the marketplace.
Speaker Change: An important aspect of our technology investment is paying off with AI innovations and Digitization.
Speaker Change: Many parts of our operations are embedded in AI, and we fully embrace digital transformation across our business to drive operational efficiency customer engagement and product innovation unlocking future growth opportunities.
Speaker Change: It is important to note that digitization is vital to our vision for the future.
Junling Liu: With a 100% digital operating system internally, we have achieved industry-leading operational efficiency. This performance has not only enhanced our bottom line but also positioned us as a catalyst for transformation across the entire value chain, granting both upstream and downstream customers access to our technological ecosystem and expertise. We're not just improving our own process. We are revolutionizing the way our industry operates and reshaping the traditional value chain. We are confident in our ability to remain at the forefront of digitization and how it will empower us to achieve higher revenue and profit levels. With that, I'll hand the call to Mr. Luke Chen to walk through our financial results. Thank you. Thank you, Jimmy, and good morning or evening, everyone.
Speaker Change: With 100% digital operating system internally, we'll have achieved industry, leading operational efficiency.
Speaker Change: This performance has not only enhanced our ultimate line, but also position us as a catalyst for cancellation across the entire value chain grandson, both upstream and downstream customers access to our technological ecosystem and expertise.
Speaker Change: By doing so.
Speaker Change: They're not just improving our own processes.
Speaker Change: We are revolutionizing the way our industry operates and reshaping the traditional value chain.
Speaker Change: We are confident in our ability to remain at a whole firms.
Speaker Change: Foundation, and how it will empower us.
Speaker Change: Higher revenue on the cross.
Speaker Change: Rate levels.
Speaker Change: With that I'll hand, the call to Mr. Luke Chen to walk through our financial results.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Thank you, Jamie and good morning or evening everyone.
Luke Chen: Moving to the financials, my prepared remarks will focus on a few key business and financial highlights. For details on our first quarter 2024 results, please refer to slides 16 to 19 in section 2 of our presentation. Again, our comparisons are year over year, and all numbers are in R&D unless otherwise stated. Let's start with the first quarter results. Considering the sudden surge during the pandemic in Q1 last year, we managed to maintain our net revenue base for a quarter, which decreased 4.6% to 3.5 billion. Gross segment profit for the quarter amounted to $208.5 million, while gross segment margin was 5.9% for the quarter. Total operating expenses for the quarter decreased 20.6% to $204.8 billion.
Luke Chen: Moving to the financials.
Luke Chen: My prepared remarks, we're focused on a few key business and financial highlights.
Luke Chen: For details on our first quarter 2024 repels.
Luke Chen: Please refer to slide 16 to 19 section two of our presentation.
Luke Chen: Again, all comparisons are year over year, and all numbers are in RMB unless otherwise stated.
Luke Chen: Let's start with the first quarter results.
Luke Chen: Considering the study yourself surged during the pandemic in Q1 last year.
Luke Chen: Man made we managed to maintain our revenue net revenue base for the quarter.
Luke Chen: Which decreased four 6% to $3 5 billion.
Luke Chen: Ralph segment profit for the quarter amounted to 200, and an $8 5 million but.
Luke Chen: Bounce back in the margin was five 9% for the quarter.
Luke Chen: Total operating expenses for the quarter decreased to 26% to $204 8 billion.
Luke Chen: As a percentage of net revenue, total operating expenses for the quarter were down to 5.8 percent from 7 percent as we continue to enhance our operating leverage and optimize our operational efficiency. Procurement expenses as a percentage of net revenue for the quarter were down to 2.5% from 2.8% in the same quarter of last year. Telling a marketing census as a percentage of net revenue for the quarter was 2.3%, down from 2.4% in the same quarter of last year.
And as a percentage of net revenue total operating expenses for the quarter were down to five 8% down 7% as we continued to enhance our operating leverage and optimize our operational efficiency.
Luke Chen: Well accumulate expenses as a percentage of net revenue for the quarter were down to two 5% to 8% in the same quarter of last year.
Luke Chen: Selling and marketing expenses as a percentage of net revenue for the quarter was two 3% down from two 4% in the same quarter of last year.
Luke Chen: General and administrative expenses as a percentage of net revenue accounted for 0.5%, down from 1.1% in the same quarter of last year. Technology expenses accounted for 0.5% of net revenue, down from 0.7% in the same quarter of last year. And it's a re-vote.
General and administrative expenses as a percentage of net revenue accounted for <unk>, 5% down about 1.1% in the same quarter of last year.
Luke Chen: Technology expenses accounted for 0.5% of net revenue bounced around 0.7% in the same quarter of last year.
Luke Chen: And as a result.
Luke Chen: Income from operations was RMB $3 7 million.
Speaker Change: Care to loss from operations of RMB 21, 7 billion in the same quarter of last year.
Luke Chen: Income from operations was RMB 3.7 million compared to a loss from operations of RMB 21.7 million in the same quarter of last year. NGAP's income from operations was RMB 8.9 million compared to RMB 2.5 million in the same quarter of last year. As a percentage of net revenues, NGAP income from operations accounted for 0.3% in the quarter as compared to 0.1% in the same quarter of last year. The gap net loss attributable to ordinary shareholders was $8.6 million, compared to $7.6 million in the same quarter last year.
Speaker Change: non-GAAP income from operations was RMB $8 9 million.
Speaker Change: <unk> $202 5 million in the same quarter of last year.
Speaker Change: A percentage of net revenues non-GAAP income from operations account for 0.3% in the quarter.
Speaker Change: Compared to 0.1% in the same quarter of last year.
Speaker Change: non-GAAP net loss attributable to ordinary shareholders was $8 6 million.
Speaker Change: <unk> 276 million in the same quarter last year.
Luke Chen: As a percentage of net revenues, the net loss attributable to ordinary shareholders accounts for 0.2% in the quarter, which is the same as last year. As you can see, we are improving our financial performance quarter by quarter and have achieved operating income on a quarterly basis for the first time. Please refer to slides 20 to 24 of the appendix section for a selected financial statement. A quick note on our cash position as of March 31st, 2024. We had cash and cash equivalents with share cash and short-term investment of RMB 627.3 million.
Speaker Change: As a percentage of net revenues.
Speaker Change: GAAP net loss attributable to ordinary shareholders account for 2% in the quarter.
Speaker Change: Which was same as last year.
Speaker Change: As you can see we are improving our financial performance quarter by quarter and it has achieved operating income on a quarterly basis for the first time.
Speaker Change: Please refer to slides 20 to 24 of the appendix section for selected financial statements.
Speaker Change: A quick note our cash position as of March 31st 2024, we had a cash cash equivalents restricted cash and short term investments of RMB $627 3 million.
Luke Chen: And we were pleased to report that we achieved positive operating cash flow during the quarter. As of the date of this early release, the company had a total outstanding amount of IMD 1.1 billion, which has been included in the balance of redeemable non-controlling interest and accrual expenses and other liabilities, only to a group of investors in one pharmacy technology pursuant to the equity investment made in 2020 as previously disclosed.
Speaker Change: And we were pleased to report that we have achieved positive operating cash flow during the quarter.
Speaker Change: As of the date of this earnings release, the company had a total outstanding amount of RMB, One 1 billion, which has been included in the balance of redeemable noncontrolling interest in accrued expenses and other liabilities, earning to a group of investors up one pharmacy technology pursuant to the Aberdeen.
Speaker Change: That's been made in 2020 as previous disclosed.
Luke Chen: As of the date of this earnings release, we have received redemption requests from certain of such investors for a total redemption amount of RMB 0.2 billion in accordance with the terms of their initial investment in one pharmacy technology. Furthermore, we have entered into written agreements, and our commitment matters with investors are representing the majority of the total carrying amount. For the, for the rescheduled.
Speaker Change: As of the date of this earnings release, we have received redemption requests on certain of such investors for a total redemption amount of <unk> dollars 2 billion in accordance with the terms of their initial investments in loan pharmacy technology.
Speaker Change: Furthermore, we have entered into written agreements and all commitment matters with investors.
Presenting the majority of the total carrying our mountains.
Speaker Change: For the for the rescheduled.
Operator: Redemption payment. This concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. If you wish to cancel your request, press star 1 on your telephone and wait for your name to be announced.
Speaker Change: Redemption.
Speaker Change: Payment.
Speaker Change: This concludes our prepared remarks, thank you.
Speaker Change: Operator, we are now ready to begin the Q&A session.
Speaker Change: Thank you.
Speaker Change: One on the telephone and wait for your name to be announced.
Speaker Change: If you wish to cancel your request. Please press star two if you're on a speakerphone. Please pick up the handset to ask your question.
Speaker Change: Polls momentarily for questions to enter the queue.
Speaker Change: Your first question comes from Edwin Xu individual Investor. Please go ahead.
Edwin Zhu: Edwin Zhu, Individual Investor, please. Good evening, this is Edwin Zhou. I would like to extend my congratulations on the outstanding results achieved this quarter. The impressive performance is a clear testament to the collaborative efforts and strategic initiatives taken by the company. I have two questions.
Speaker Change: Okay.
Edwin Xu: Good evening, Desperado, and Joe I would like to extend my congratulations anyway without actually this quarter.
Speaker Change: Interesting.
Speaker Change: The attachments to the collaborative efforts and strategic in nature can be taken by the company.
Edwin Zhu: The first is that I have observed a significant double-digit sequential decrease in FG&A expense and IT expense this quarter. What is the potential for further reduction in operating expenses? The second one is, has the company initiated any new attempts in IT technology, such as AI-related projects? Could you elaborate on any particular application?
I have two craft chain.
Speaker Change: First is that I have other debt, that's big enough to kind of double digit sequential decrease in SG&A expense and <unk> expense. This quarter what is the potential for further reduction in operating expenses.
Speaker Change: The second one is that as a company in nature any pain and in your attempts E. I T technology, such as AI related project.
Speaker Change: Can you elaborate on any pre clinical application.
Speaker Change: <unk>.
Luke Chen: Thank you. Yeah, let me just answer the first question with regard to the reduction in SGMA and operating expenses. Obviously, we have been pursuing the goal of being the most efficient operator in our industry. So, with the current resources in hand, we feel that we absolutely can continue to scale our business. When we grow in scale, let's say when we cross the 20 billion RMB threshold, we're very confident we can operate between the 45% range, which means a lot to our business. So this quarter, with 3.5 billion in revenue, we're already operating at 5.7%.
Speaker Change: Yeah, Let me let me just.
Speaker Change: The first question with regards to the reduction.
Speaker Change: In our SG&A and our.
Speaker Change: I think expenses.
Speaker Change: Obviously, we have been pursuing the go to be the most efficient upgrades right now.
Speaker Change: The street, so we'd be kind of in the resources and we feel about that.
Speaker Change: We absolutely can continue.
Speaker Change: To scale our business.
Speaker Change: When we grow in scale than say when we cross the 220 billion RMB thresholds.
Speaker Change: Very content that we can operate in 45% range.
Speaker Change: Which means the law type business, so each quarter, we've got $3 5 billion in revenue.
Luke Chen: And obviously, mind you, we have a lot of potential to grow our post margin over time as we gain an upper hand in the market. And, of course, our ability to deliver profit will stand out in the industry. So fundamentally, our competitive edge will depend on our operational efficiency. And we're going to pursue this relentlessly, and we're confident that when we grow in scale and when we further refine and streamline our operations, we'll be confident that overall operational efficiency will continue to improve. Thank you. Let me take the second question to Evan to ask about what advancements the company has made in technology, and especially related to AI. Let me just mention a few.
Speaker Change: We already are operating at five 7% and in obviously, a mango will be will have a lot of potential to grow our gross margins over time as we gain the upper hand in the market and of course, our ability to deliver profit will spend out in the industry. So fundamentally.
Speaker Change: Our competitive edge and our operational efficiency and algorithm, we're going to pursue this relentlessly and they have confidence that that.
When it grows in scale.
Speaker Change: You know further refine and streamline our operations.
Speaker Change: The confidence that the overall operational efficiency, we will continue to improve.
Speaker Change: Thank you.
Speaker Change: Let me take the second question Edwin.
Speaker Change: You asked about our work to advancement of the company has made in technology, especially related to AI and let me just mention a few.
Luke Chen: First of all, as you can see, we have made some initial success in transitioning to platform-based. Our platform total GMV reached over 70%, and certainly, we have made progress on several fronts. One is the launch of JVP, and we have, you know, speeded up our warehousing development through venture and franchising warehouses, and also we established the Qunpeng logistics services for upstream and downstream partners. All these need strong support from IT, and a lot of the new warehouses use our systems, and we provide these services through SAS. And second, we used large language models in an algorithm to improve our traffic allocation as well as conversion.
Speaker Change: First of all as you can see that were made there some initial success in transitioning our.
Speaker Change: <unk> platform business our platform total I can be reached over 70% on a certainty we have made several progress in several product lines.
Speaker Change: <unk>.
Speaker Change: And we'll have a you know Uh huh.
Speaker Change: Eat up our warehouse in development through joint venture on the franchising warehouses.
And also where you stop it should there couldn't hold.
Logistics.
Speaker Change: Services to upstream and downstream partners all of these are.
Speaker Change: All this need a strong support from our I T and a lot of the new warehouses use our systems.
Speaker Change: We provide these services to SaaS.
Speaker Change: On a.
Speaker Change: Second is that we.
Speaker Change: We use the <unk>.
Speaker Change: Large language models to an algorithm to improve our traffic allocation as well as conversion. So we will have for these.
Luke Chen: So we have through this process also improved cross-selling, and you can see that our conversion rate has significantly improved. Also, we have launched various supply chain finance services. Certainly, we have lots of partners; banks and financial institutions provide the services. We have to do the optimal matching, you know, for our customers, how to match them to the best service and the best providers.
Speaker Change: <unk> also improved cross selling.
You can see that our conversion rate has a significant.
Speaker Change: It can be improved.
Speaker Change: Uh huh.
Speaker Change: Have a language barriers.
Speaker Change: So Biogen finance services, certainly will have lots of partner to the banks and the.
Speaker Change: Hmm issue institutions provide the services will have to do the ultra matching.
Speaker Change: Or are customers how to match them to the best service the best providers, but also down through a our primarily to use our technology and our data services.
Luke Chen: That's also down to our technology and our data service. And Junling just mentioned that we established a platform called BorgOne data platform. Such a platform uses not only our internal data, online data, but also offline data, you know, for our customers and industry data. And through this process we have introduced, these data help us to introduce over 6,000 new products. And these products give us... a much higher margin rate and a higher sales rate. So let me just mention these few that are enabled through IT and AI technology.
Speaker Change: And the journey of transformation that we establish a core borgwarner data platform.
Platform use is not only.
Speaker Change: Our internal data online pick it up also offline data to our customers and industry data.
Speaker Change: And through this process, we're having introduced these data help us to introduce over 6000, new products and these products gave us.
Speaker Change: Much higher.
Speaker Change: Margin rate and the sales rate so that image estimation dispute.
Speaker Change: That's enabled through our I T and AI technology.
Luke Chen: Thank you. I'm looking forward to continued success and even greater achievements in the next quarter. Adieu.
Speaker Change: Thank you.
Speaker Change: So let me.
Speaker Change: With continued success in even greater achievements in the Mexican content.
Speaker Change: Okay.
Speaker Change: I do.
Speaker Change: Thank you. The next question is from Victor Yang individual Investor. Please go ahead.
Yang Chen: Good evening, this is Victor Yang. I'm an individual investor. First of all, congratulations to Gang, Junling, Luke, and the whole staff of 111 on the impressive performance. I have two questions.
Victoria: Good evening pieces, Victoria, I'm, an individual investor.
Speaker Change: First of all congratulations to gang gene linked Luke and the whole staff off one on one on the impressive performance.
Speaker Change: I have two questions.
Yang Chen: First is... In achieving operating profitability and net profits this quarter, can you give more details on the strategic initiatives and operational changes that led to this milestone? And what are you expecting for the rest of the year 2024?
Speaker Change: First is.
Speaker Change: In achieving operating profitability and the net profits this quarter.
Can you give more details on the strategic initiative and operational changes.
That lead to this milestone.
Speaker Change: And what.
Speaker Change: What are you expecting for the rest of the years 'twenty to 'twenty four.
Yang Chen: We'll last keep this pace of being profitable. Profitable? This is the first question.
Speaker Change: We are alas keep this pace of being profit.
Speaker Change: Profitable.
Speaker Change: This is the first question and the second question is.
Speaker Change: The supply chain cost.
Yang Chen: And the second question is about a supply chain call. We have noticed a significant reduction in cost. In 111's supply chain, can you explain what measures and actions the company has taken to achieve this result? Thank you.
Speaker Change: We have noticed a significant reductions in costs.
Speaker Change: In one month, one supply chain.
Speaker Change: Can you explain what measures and actions the company has taken to achieve these results. Thank you.
Speaker Change: Yeah.
Junling Liu: When it comes to achieving profitability, as an Internet company, it is a real major milestone. Companies in this space have to spend lots of capital and resources to build up their infrastructure and systems. But our strategy has always been clear.
Speaker Change: When it comes to achieving.
Speaker Change: Achieving profitability as you know.
Speaker Change: Internet company it is a real major milestone.
Speaker Change: And the companies in this space have to spend lots of the capital and resources to build out the infrastructure and systems and our strategy has always been clear.
Junling Liu: Our first step is to build infrastructure, and secondly, we have to build scale, and thirdly, we're going to achieve profitability. In previous years' ECU scripts and earnings calls, we have elaborated on that strategy, and we actually deliver it. The fundamental driver to achieve profitability comes from our operational efficiency by leveraging our digital technology.
Speaker Change: Our first stop is to physical infrastructure and secondly, we have to build the scale.
Speaker Change: And then thirdly, we're going to achieve profitability so that in our previous years.
Speaker Change: You see Youll scripts on earnings calls that we have elaborated on that strategy and we actually believe that so the fundamental driver to achieve the profitability.
Speaker Change: Comes from really operational efficiency by leveraging our digital technology and of course, our goal is to be the most efficient operator in our industry and are well on our way.
Junling Liu: Of course, our goal is to be the most efficient operator in our industry, and we are well on our way. When it comes to the future, we feel very confident that with a foundation that builds the trend of drug sales outside of the hospital space and a focus on value delivery for our customers, we feel very excited by the opportunities lying ahead of us. Okay, that looks very promising. Let me take a question for Pai Chen.
Speaker Change: When it comes to the future.
Speaker Change: We still are.
Speaker Change: Very confident to sustain profitability.
Speaker Change: The foundation, we have built a bit.
Speaker Change: Trained of block sales outside of the hospital space.
Speaker Change: And are they focus on value would be great for customers.
Speaker Change: We'll do better excited by the opportunities volume ahead ahead of us.
Speaker Change: Okay and that looks very promising.
Speaker Change: Okay.
Speaker Change: Let me take it a question not on supply chain.
Speaker Change: Uh huh.
Luke Chen: As you can see, last quarter, even the last couple of years, supply chain efficiency improvement has been a highlight at the very core of our business. We are very proud of it. As you know, the supply chain contains many components, including sourcing, the warehousing, the storage, the warehouse operations, the packaging, the delivery, handling downstream returns, and also our own RTVs. So all these are very important parts of the supply chain. So we have made progress in all these aspects.
Speaker Change: You can see that our last quarter, even in the last couple of years I change efficiency improvement.
Speaker Change: What's been the highlight on the very core of our business. Our we're very proud of it because they know that our proprietary contain spending components, including the sourcing warehousing the storage, although warehouse operations the packaging delivery Imodium downstream returned.
Speaker Change: So first of all our Tvs. So all these are.
Speaker Change: A very important part of the supply chain. So we have made progress in all these aspects.
Luke Chen: First of all, Junling mentioned sourcing, you know, we go more and more direct to source from the pharmaceutical companies. And then about warehousing, we not only through process improvement, not only improve our own warehouse costs but also through joint venture and franchising warehouse, we speed up our, you know, cut the extension. Uh, also, we had new negotiations that reduces our rental costs as well as packaging costs.
Speaker Change: First of all can you mention of outsourcing, where you go more and more direct to our stores from the.
<unk> companies.
Speaker Change: About warehousing, where not only are we through.
Speaker Change: Process improvement and not only improve the.
Speaker Change: Our own warehouse costs also through joint venture.
Speaker Change: And franchising warehouse, we are you know.
Speaker Change: Our.
Crosby.
Speaker Change: Expansion.
Speaker Change: Oh.
Speaker Change: Yeah.
Speaker Change: We have renegotiated.
Speaker Change: Gaucher patients toward reduces our rental cost that's why it's packaging cost.
Luke Chen: Regarding delivery costs, we have made several improvements. One is that we have a system that chooses the best optimal assignment of the delivery of each package to the best logistics service providers. Also, we established the so-called Kunpeng Logistics Service. This service started by serving our internal needs by transshipping goods from all our fulfillment centers. As you know, we have a total of 11 FCs, fulfillment centers, which is already a large, very large volume.
Speaker Change: Regarding the delivery cost we have made several improvements why is that so we have a system that truly is the best optimal.
Speaker Change: The assignment of the delivery of each package to the best.
Speaker Change: Okay.
Service providers.
Speaker Change: Also we are in fact, the so called the Ping Pong logistic service. So these service started.
Speaker Change: Yeah.
Speaker Change: Certainly our internal needs.
Speaker Change: <unk> chicken.
Speaker Change: From all our fulfillment hundreds if I didn't know that we have a total of 11 F.
Speaker Change: F E fulfillment centers, which you saw.
Speaker Change: Already a large very large ballroom.
Luke Chen: And we established all those routes that not only reduced our internal transshipment cost by 20% but drastically reduced the damage cost, you know; that damage cost was reduced by 60%. So then we extended that service to our partners, you know, all the JVP partners and all the pharmaceutical companies. We enabled them to just ship out one open center. We did all the distribution. And we started to extend that line because that line has truckload capacity as well as lower cost, much, much lower damage cost. Also, as you know, since our damage is reduced, that also helps us in reducing the RTVs.
Speaker Change: We expect all of those.
Speaker Change: With that not only reduce our internal transshipment cost by 100%, but drastically reduce the bandwidth cost.
Speaker Change: The average cost reduced by 60 per ton so that we extended our services to our partners and all that gives me be partners that and Oh.
Speaker Change: The answer of companies, we enable them to adjust should follow one fulfillment center, we make all the distribution are with large extend that line because the deadline has the truckload capacity as well as lower cost much much lower bandwidth cost so that help us in the debate.
Cost.
Speaker Change: Although I do know it says our damages reduced.
Speaker Change: Also how about in.
Speaker Change: Reducing the our T V.
Speaker Change: So all these together help us to reduce the total fulfillment cost by a.
Speaker Change: Remarkable amount until we feel that we are we are becoming the most efficient operator in the industry.
Speaker Change: Thank you. Thank you thank.
Speaker Change: Thank you for the answers and I'm looking forward to seeing.
Speaker Change: Continuous growth and more success in the coming months. Thank you.
Luke Chen: So all these together help us to reduce the total fulfillment cost by a very remarkable amount. We feel that we are becoming the most efficient operator in the industry. Thank you. Thank you. Thank you for the answers, and I'm looking forward to seeing continuous growth and more success in the coming months. Thank you. The next question is from James Bonsall, an individual. Good evening.
Speaker Change: Thank you. The next question is from James from individual Investor. Please go ahead.
James Bonsall: This is James Bonzo, an individual investor. First, I would like to congratulate the company on achieving impressive results this quarter. It's evident a lot of hard work and persistence has gone into this, and I have two questions as well, if I may. Firstly, you mentioned China's anti-corruption health care campaign is expected to boost the retail pharmaceutical market. How does the company plan to capitalize on this to increase market share? And what specific competitive strengths does the company possess in this growing industry?
james bonds: Hi, Good evening. This is james bonds or an individual investor I would like to congratulate the company on achieving impressive results. This quarter first David in that a lot of hard work and persistence is going into this and I have two questions as well if I may Firstly, you mentioned China's anti corruption health care company is expected to boost the retail pharmacy.
James Bonsall: And then secondly, 111 is known for leveraging digitalization both upstream and downstream in the healthcare sector. Are there any forthcoming plans or measures aimed at further enhancing online engagement for both in the upcoming quarters? Thank you. Yeah, thank you, James.
james bonds: Co market, how does the company plans to capitalize on this to increase market share and what specific competitive strengths to the company possess in describing industry and then secondly, 111 is known for leveraging digitalization, both upstream and downstream in the health care sector are there any forthcoming plans will measures aimed at further enhancing online engage.
For both in the upcoming quarters. Thank you.
Junling Liu: I'm glad you noticed the anti-corruption campaign in the healthcare sector in China. Obviously, we absolutely want to grab this golden opportunity to grow our market share. And today, you know, our scale is still relatively small, but small compared to some of the well-established players, especially traditional players. However, we have already built up our core competency, which is our operational efficiency. We don't have the resources and access to free capital or pretty much close to free, like some of the state-owned enterprises.
Speaker Change: Yeah. Thank you James sorry, I'm glad you noticed the anticorruption campaign in the health care sector in China.
Speaker Change: Honestly, we absolutely won't scrap discussing opportunities to grow our market share.
Speaker Change: And today as you know our scale are still relatively small a small compared to some of the well established players, especially those traditional players.
Speaker Change: However, we have already built up our core competency, which is our operational efficiency.
Speaker Change: We don't have the resources and access to free capital or pretty much close to free.
Speaker Change: Some of these state owned enterprises.
Junling Liu: What we rely on is really our ability to operate this business with utmost efficiency. The competitive advantage, you know, will enable us to offer the widest selection at very competitive prices, and over time, customers will recognize this value and buy more and more from us. Hence, our market share and wallet share will grow. And I believe that our internal 100% digital operating system has proven its value when it comes to operational efficiency.
Speaker Change: We rely on is really our ability to operate this business with the utmost efficiency.
Speaker Change: A big competitive advantage.
Speaker Change: Enable us to offer a biased selection and very competitive about competitive prices and all the time customers recognize this value and buy more and more from us.
Speaker Change: Our market share and wallet share will grow and I believe that.
Speaker Change: Our internal 100% digital operating system has proven its value menu.
Speaker Change: It comes to operational efficiency and we are in a position to really enable both upstream and downstream customers and estimation is that it's pushing digitization. This set of competitive advantages for them to really create momentum for our business. Thank you.
Junling Liu: And we are in a position to really enable both upstream and downstream customers. And as the nation is pushing digitization, this competitive advantage is going to really create momentum for our business. Let me talk about the enabling business we have launched and what we are planning to do. I can mention that we provide a lot of tools for our partners who are moving towards platform business. So we launched a lot of mobile tools for merchants, and through these tools, they can see daily reports, their business canvas, and manage their sales; they can see their product flow, they can see the profile of their customers, and the prices of their products sold, and so on. All those important metrics can be seen and revised through the platform. We are going to launch many more new digital tools for our partners. That's just one.
Speaker Change: Let me talk about the neighboring visits are we are we have lowington malware or what we are planning to do.
Accumulation that we are providing a lot of our tools or our partners are moving towards a platform business away.
Got it.
Speaker Change: A lot of our mobile tools for our merchants.
Speaker Change: And therefore, there is pool and so they can see daily reports there is campus.
Speaker Change: And commenced their cells. So they can see their product flow they can see.
Speaker Change: The profile of the customers.
Speaker Change: Price itself their product. So that's what both of those are important metrics can be seen.
Our revised through the platform.
We are going to launch many more new digital tools for the.
Speaker Change: For our partners. That's one second valuation of our simple our logistic network right now have more than.
Junling Liu: Second, I mentioned the Qunfeng Logistics Network. Right now, we have more than 30 or so routes, and we are definitely expanding those routes since we see the huge demand from our partners. We can also see a very remarkable cost reduction as well as damage reductions.
Speaker Change: Biker 30, so Ralph on the way are definitely expanding those.
Ross: Ross I think where we see the huge.
Ross: Demand from our partners more towers this year.
Ross: There you are remarkable cost reduction as well as Spanish reductions. So those are welcomed by our partners. So we are definitely expanding those were also.
Junling Liu: And those are welcomed by our partners, so we're definitely expanding those. We also go through regular training and communication activities to improve the overall supply chain responsiveness and The Efficient.
Ross: Go through a very regular training and communication activities to improve the overall supply chain responsiveness.
Speaker Change: And the efficiency.
Speaker Change: Yeah.
Junling Liu: Thank you. Thank you. I appreciate the extra color and good luck for future implementation. Thank you very much. Good evening. This is Kirin Wang from Hong Kong.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you I appreciate the extra color and good luck for future implementation.
James: Thank you James.
Speaker Change: Thank you. The next question is from Karen Wang Private Investor. Please go ahead.
Kevin Wang: I'm an individual investor. Congratulations on the big progress made in this quarter. I have two questions.
Speaker Change: Good evening. This is skewing, one from Hong Kong and invest.
Speaker Change: Individual investor.
Speaker Change: Congratulations on the big progress in this quarter I have two questions first question the private label business at the company has shown rapid growth do you envision this becoming one of the primary growth.
Kevin Wang: First question: The private label business at the company has shown rapid growth. Do you anticipate this becoming one of the primary growth drivers in the coming years, and what strategies are in place to develop this business further throughout 2024? Second question: Have you made any strategic adjustments post-COVID to strengthen revenue streams? Are these adjustments expected to have an impact in the upcoming quarters?
Speaker Change: Drivers in the coming years.
Speaker Change: What strategies are in place to develop this business third throughout 2024.
Speaker Change: Second question is have you make my Ami set P cheek adjustments post COVID-19 to strengthen breath of new streams of this adjustment is expected to have.
Speaker Change: <unk> impact in the upcoming quarters.
Speaker Change: Thank you.
Speaker Change: Yeah.
Kevin Wang: Thank you. Okay, I will take the question regarding private labels, and I think Junling will take the second question. And for private label, we already have a couple of private label registers. We have Guangzhou, Guangzhou, meaning care, that is for our chain store customers. And also, we have another brand called Huangjia Rongyao, whose direct translation will be a royal owner. This is for our individual store customers. And also, we have Lanydia, that is for dietary supplements. And also, some others, like for medical devices, et cetera.
Speaker Change: Oh, Okay I will take the question regarding the private label and I think what it does.
Speaker Change: Second question.
Speaker Change: And for private label.
Speaker Change: And we already have a couple for either Labour registered.
Speaker Change: We have one one though a.
Speaker Change: Little town that is for our telco customers.
Speaker Change: And although we have a.
Speaker Change: Not a brand called carved out a little younger.
Speaker Change: Translating directors based on where we are.
Speaker Change: Your Oh no.
Speaker Change: This is for our individual store customer and also we have the <unk>.
Speaker Change: Glad to hear that as for dietary supplements.
Speaker Change: Or some other like for medical device et cetera.
Speaker Change: Uh huh.
Speaker Change: Yes.
Luke Chen: Uh, yeah. Junling just mentioned in the last quarter, our private label products kept a very strong momentum and grew 89%, close to 90% YOY. Most of these prime label products have been very well accepted by our pharmacy customers across the country. I think they are now sold in various pharmacies across the country, including in very remote areas, like in Xinjiang, in Xi'an, etc. Unknown Speaker 111.
Speaker Change: Joining that manager last quarter our.
Speaker Change: Our private label product.
Speaker Change: A very strong momentum.
Speaker Change: One eight.
Speaker Change: 89% of coastal 90% Y O y.
Speaker Change: Most list a private label product.
Speaker Change: I have two very well accepted by our.
Speaker Change: Pharmacy customers.
Speaker Change: No.
Speaker Change: Currently I think they are now sold in various pharmacies across the country.
Speaker Change: Fruiting.
Speaker Change: Barely remote areas like food down to receive power et cetera.
Speaker Change: Yeah.
Luke Chen: Okay. There are more and more SKUs in our pipeline. Yes, we will keep our investment in these private labels, including OTCs, including Rx, medical devices, batteries, blood supplements, et cetera. But why, you know, do we put so much effort into this private label? I think, as you know, private label products have been a very key margin contributor and also revenue contribution of those top chain stores, which has been disclosed if you can find this detail in the financial report. As our customer, our 111 customer knows pharmacy, and they are basically small or medium chains or even individual stores. They don't have such the capability to build up their own brands.
Speaker Change: They are more and more skus.
Speaker Change: In our pipeline, yes, we went out we will keep.
Speaker Change: Keep our investment.
At least a private label.
Speaker Change: Our recruiting OTC and really high.
Speaker Change: Yeah.
Speaker Change: Medical device.
Speaker Change: Three that supplements et cetera.
Speaker Change: And why are we.
Speaker Change: Cause so much ever or at least the private label I think as you know private label products had.
Barry: Yeah Barry.
Barry: Key module country, we would have.
Barry: And also revenue contribution of the top 10.
Barry: Which has been disclosed but you can find them this detail in that filing.
Barry: Actual report.
Barry: As our customer a warmer one customer alone pharmacy.
Barry: And they are basically.
Ooh media and.
Barry: He just goes right don't have such a capability to build up their own brands.
Luke Chen: So our Guanzhao, our Huangjia Longyao has become a very attractive solution for these pharmacy customers because they also need those products to compete with those top chain stores. To conclude, these private-labeled products bring us sustainable profit, and bring sustainable profit to 101. They also bring sustainable profit to our pharmacy customers. They are not only high margin for us, but also high margin for our customers. And literally, they also help us build up a long-term relationship with those customers because, if they want to buy Guanzao or Huangjia Longyao, they can only come to 101.
Barry: So oh quite as all of our farmed out in reality.
Barry: Has become a very attractive solution for or at least our pharmacy customers. Because they may also include a gross product to compete with those cop 10 stores.
Barry: And to conclude these private label products Green Green.
Speaker Change: Uh huh.
Speaker Change: Animal protein.
Speaker Change: Through a sustained sustainable profit well run they also green sustainable profit pool, our pharmacy customers Theyre.
Speaker Change: High margin for us.
Speaker Change: And for our customers.
Speaker Change: And literally they also help us build out that long term relationship with those customers because.
Speaker Change:
Speaker Change: If they want to buy those are ones all hung out.
Speaker Change: They can come to one of alignment.
Luke Chen: So, Kieran, let me just take on the question about the adjustments post-COVID, and obviously COVID-generated demand is not really sustainable. Our sales went through the roof during the peak of the pandemic, but we always assumed that the market would normalize fast.
Speaker Change: So we will continue our investment in this area. Thank you.
Speaker Change: Karen I just picked up on the question about it.
The adjustments post Covid, obviously COVID-19 Jana.
Speaker Change: Generally the demand is modest there is not really sustainable I'll say it was it went through the roof. During the peak of the pandemic, but we always assumed that the market will normalize fast.
Junling Liu: And as I spoke earlier, our mindset has always been to have an assortment that really meets customer needs. And I spoke about having Broguine as our guide for assortment management. So Broguine is really the tool we use to constantly seek feedback from customers on what they really need. And our objective is to offer the widest selection at a competitive price, including private label products.
Speaker Change: And as I spoke earlier, our mindset has always been so hot the assortments that really meets customer needs.
Speaker Change: And I spoke about having borgwarner as olive guys fall assortment management.
Speaker Change: So brook run these really the tool we use to ultimately seek feedback from customers, what they really need and the objective is to offer the widest selection at a competitive price.
Speaker Change: Including basically private label products. So we should really anticipate that we'll be adding more and more categories and there should be more and more revenue sources in the future. Thank you.
Junling Liu: So we should really anticipate that we will be adding more and more categories, and there should be more and more revenue sources in the future. Thank you. Thank you. The next question is for Lu Duan from Virtue Capital. Please go ahead.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Thank you the next question.
Speaker Change: She capital. Please go ahead.
Speaker Change: Okay.
Speaker Change: Okay.
Jessie Lu: Good evening. This is Nick from Virtual Capital. And I have two questions.
Nick: Good evening this is Nick from venture capital.
Nick: I have two questions.
Jessie Lu: My first one is about Hong Kong's IPO. So the Chinese authority has been encouraging domestic companies to go public in Hong Kong. I'm wondering if the company has been considering a dual listing in Hong Kong. And my second question is about our cast memory.
Nick: My first one is about Hong Kong I P O.
Nick: Are the Chinese authority has been encouraging our.
Domestic companies to go public in Hong Kong I'm wondering if campaign that's been concerning.
Nick: A dual listing in Hong Kong.
Nick: And my second question is about our cash burn rate.
Jessie Lu: Specifically, can you talk about our current cash status versus our redemption expectation and what measures we are going to take to improve our cash status? Thank you.
Nick: Specifically can you talk about our current cash status with a salary.
Speaker Change: Shouldn't expect should peak expectation and a mixture as I was going to take to improve our.
Speaker Change: Cash status. Thank you.
Luke Chen: Yeah, we are actually open to all listing options, including the domestic stock exchange and the Hong Kong stock exchange. So we will evaluate the options which will be most suitable for the growth of the company as well as the benefits of our shareholders. Of course, secondary listing or primary listing in Hong Kong is an option that we will take into consideration.
Speaker Change: Yes.
Nick: Nick Yeah, we are actually open to or lifting auctions, including domestic cited change and that's why I asked the Hong Kong stock exchange.
Nick: So we will evaluate the options, which would be most suitable for the growth of the company as well as the benefits of our shareholders.
Nick: Of course secondary listing our second primary listing in Hong Kong is as its auction each.
Nick: Consideration and we will make the appropriate disclosure regarding any lifting initiatives. According to the FCC rules.
Luke Chen: And we will make the appropriate disclosure regarding any listing initiatives according to SEC rules. Regarding the second pair of questions on the cash position and the cash position improvement, As we just disclosed, as of March end of 2024, we have cash and cash recoupments, and we see cash and short-term investments of around $630 million, and we have achieved positive cash operating cash flow for the quarter. Now, you have noticed that we are turning to profit from quarter to quarter this year, and we are no longer burning cash, and we believe our cash at hand is sufficient to support our business expansion. Junling mentioned that we are improving our operation efficiently.
Speaker Change: Regarding the second question on your cash position.
Speaker Change: And the cash position improvement.
Speaker Change:
Speaker Change: As we just disclosed as of March end of 'twenty 'twenty, four we had cash and cash equivalents and restricted cash and short term investment of RMB 600.
Speaker Change: 630 minutes, and we have achieved positive cash operating cash flow for the fourth quarter.
Speaker Change: You'll have noticed that we are coming to profitability profit upon quota.
Speaker Change: Quoted this year and we no longer burning cash now we believe our cash on hand are sufficient to support our business expansion.
Speaker Change: Clearly mentioned that we are improving our operation.
Luke Chen: We want to be the most efficient operator in this industry. It's also related to our working capital management. We have very high working efficiency in working capital management. If you look at our account payable date, around 45 days, our inventory turnover date, around 25 days, and our accounts receivable, around 10 days.
Speaker Change: We want to be the most efficient operator in.
Speaker Change: In this industry is also also relate to our working capital management, we have very high working efficient working capital management.
Speaker Change: If you look at our accounts payable days, along with 45 days, our inventory turns over the last 25 days and our accounts receivable is around 10 days.
Luke Chen: Now, did that give us positive cash flow? So we will continue to monitor very closely our working capital, including the initiative to better utilize the vision of supply chain finance, so that we will create extra cash at hand. In terms of redemption, we have also disclosed that we are in the process of negotiating with investors on the rearrangement of those redemptions. As a matter of fact, we have already entered into written agreements and arrangements with investors to rearrange the redemption schedule, which already represents the majority of the total repayment amount, but Nick, I hope I answered your two questions.
Speaker Change: Does that give us positive cash flow.
So we will continue to monitor very closely our working capital.
Speaker Change: And including the initiatives to better utilizes a division of supply chain finance.
Speaker Change: So that we will create the actual cash at hand.
Speaker Change: In terms of redemption, we have also disposed.
Speaker Change: That said we are in the process of negotiating.
Speaker Change: With our investors on the rearrangement so redemptions.
Speaker Change: As a matter of fact, we have already entered into agreements all.
Speaker Change: The matters with investors.
Speaker Change: To re arrange to redemption schedule of which already representing the majority of the total recurring amount.
Speaker Change: Hope I answered to go to questions.
Yeah.
Speaker Change: Thank you.
Luke Chen: Thank you. Thank you. The next question is from Jacqueline from Watertower Research. Please go ahead.
Speaker Change: The next question is from Jeff.
Speaker Change #100: And also tower research. Please go ahead.
Jacqueline: Hi, this is Jack with Water Tower Research. Thank you for taking the question and congratulations on those other results. It's really interesting to see that 111 has innovated the joint venture warehouse model. So my first question is, how well does this model support the company's growth? And are there plans to establish additional warehouses under this model in 2024? And my second question is that we see that your operational expenses are just below 6% of revenues.
Jack: Hi, This is Jack with what is a research. Thank you for taking my question and congrats on the solid results.
Speaker Change #102: So really interesting to see about one one and one that has been shared with the joint venture warehouse model.
Speaker Change #102: So my first question is how well this model supported the Companys growth and are there plans to establish additional warehouses and data models and replenishment its work.
Speaker Change #102: And my second question is that we see about your operational expenses are just below 6% of revenues. So do you believe this figure has already been more waste within the industry or.
Jacqueline: So do you believe this figure is already the lowest within the industry? Or will there be opportunities to further enhance operational efficiency? Or is your goal just maintaining this level going forward? Any color you can share on that would be great.
Speaker Change #102: Would there be opportunities to further enhance operational efficiency.
Speaker Change #103: Is your goal just maintaining this level going forward any.
Speaker Change #103: Any color you can share on that would be great. Thank you.
Speaker Change #104: Uh huh.
Luke Chen: Thank you. [inaudible] Regarding the joint... I'll take this question. And yes, besides our first-party managed warehouse, you know, we set up warehouse and local operation standards by a joint venture model with our, in certain provinces, you know, with local partners. And this province, including Bansu, Yunnan, and Inner Mongolia, et cetera.
Speaker Change #105: The Jordan brand.
Speaker Change #106: These are warehouse.
Speaker Change #107: Next question.
Speaker Change #108: And yes, Besides all first party manage a warehouse.
We set up a warehouse in local operation and Uh Huh Bye.
Speaker Change #108: A joint venture model with our in certain provinces.
With our local partners.
Speaker Change #108: These troubling, including like patterns to arena.
Speaker Change #108: Mmm gonia et cetera.
Luke Chen: So our JD partner is basically a local leader in the pharmaceutical business. They have run this business for 10 or 20, even 30 years locally. And they have actual capacity in their warehouse. And they already have their logistics network to cover local customer demand. And all these capabilities can help us better serve our customers.
Speaker Change #108: So our JV partners.
Speaker Change #108: They are basically local leader.
Speaker Change #108: Pharmaceutical business.
Speaker Change #108: Ron.
Speaker Change #108: This specific.
Speaker Change #108: Handle turnkey that 30 years locally.
They have extra capacity.
Speaker Change #108: Capacity.
Speaker Change #108: In warehouse and they already have their logistics network to.
Speaker Change #108: To cover local customer demand.
Speaker Change #108: And Oh, this capability and help us better serve our customers.
Luke Chen: You know, by using the traditional first party model, we want to set up those warehouses in those remote provinces. It will take a very long time. [inaudible] With help from our partner, you know, we set up a shady warehousing model that provides local sourcing and also faster delivery lead time and also a very low damage rate has been reduced compared to a long-distance shipment. So, with the launch of LeaseJD Warehouse, we are seeing business growth in these remote provinces. In 2024, we do have plans to expand this model, and actually, our Xinjiang joint venture is already in the establishment process.
Speaker Change #108: You can imagine are valuable to us.
Traditional first party model, we lose the ones, who said I have noticed a warehouse.
Speaker Change #108: Luxury mode.
Speaker Change #108: You'll take they take very little time.
Speaker Change #108: So.
Speaker Change #108: With help from our partner and how we set up the JV warehousing model.
Speaker Change #108: Yeah.
Speaker Change #108: Provide a local sourcing and also a faster delivery lead time.
Speaker Change #108: And also a very low damaging and also that.
Speaker Change #109: Great that's been revealed.
Speaker Change #109: Compared to our long distance shipments.
Speaker Change #109: So with the launch of these JV warehouse.
Speaker Change #109: We're seeing the business growth.
These remote provinces.
Speaker Change #109: <unk> four and we do have plans to expand this model and actually.
Speaker Change #109: <unk> seen.
Speaker Change #110: <unk> Jones joint venture.
Speaker Change #111: Already in the setup process. Thank you.
Speaker Change #110: No.
Luke Chen: Yeah, I just realized we ran out of time, so I'll make my answer fast. So if 6%, you know, less than 6%, if it is the best in the industry based on our internal research and intelligence, I believe it is. And I also want to give some references.
Speaker Change #112: Yeah. So.
Speaker Change #112: Just realize when we run out of time, if I make my boss.
Speaker Change #112: So it's.
Speaker Change #112: 6%.
Speaker Change #112: 6% if that is the best in the industry from our own research and intelligence I believe it is and I also want you to keep some references.
Luke Chen: You know, we are still relatively small compared to some of the established players. For example, the biggest player in the industry has a revenue of $700 billion. And last year, we only did $15 billion. And, you know, the value of one shipment from the traditional guys to the hospitals is probably a few hundred thousand at least. And our shipment, sometimes it runs as low as $300 million. And to give you that comparison to illustrate how efficient our operation is, as I said earlier, we definitely still have room to continue to optimize. Staying at the status quo is never in our culture.
Speaker Change #112: We are still relatively small compared to some of the established players.
Speaker Change #112: Biggest play.
Speaker Change #112: Player in the industry. It has a revenue of 700 billion in the last year, we only 15 billion.
Speaker Change #112: Now the value one shipment from the.
Speaker Change #112: The traditional guys.
Speaker Change #112: So the hospitals is probably a few hundred thousand at least and our.
Speaker Change #112: And the shipments sometimes eight months as low as 300, Guyana and to give you that comparison illustrates how efficient our operation and as I said earlier, we definitely still have room to continue to optimize staying at the status quo is never in our culture.
Speaker Change #113: Thank you.
Luke Chen: Thank you. Very good. Thank you all very much.
Speaker Change #114: Very good.
Speaker Change #114: Great.
Speaker Change #115: Next on quality.
Speaker Change #116: Thank you in closing on behalf of the entire 111 management team wed like to thank you for your interest and participation in today's call.
Operator: Thank you. In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call. If you require any further information or have any interest in visiting 111s in Shanghai, China, please let the company know. Thank you for joining us on this call today. This concludes the call.
Speaker Change #117: If you require any further information or have any interest in visiting my mom one in Shanghai, China. Please at the company and I. Thank.
Speaker Change #117: Thank you for joining us today. This concludes the call.
Speaker Change #117: Okay.
Speaker Change #117: Okay.
Speaker Change #117: [music].
Speaker Change #117: [music].
Speaker Change #117: Yes.
Speaker Change #117: Yeah.
Speaker Change #117: Yeah.
Operator: 8 9 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35, 111. 111. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc.
Speaker Change #117: Yeah.
Speaker Change #117: Yes.
Speaker Change #117: Yeah.
Operator: I am. I am. I am. I am. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc. 111, Inc.
Sure.
Speaker Change #117: [music].
Speaker Change #117: Sure.
Speaker Change #117: [music].
Speaker Change #117: Okay.
Speaker Change #117: [music].
Speaker Change #117: Yeah.
Speaker Change #117: [music].
Speaker Change #117: Yeah.
Speaker Change #117: Yeah.
Speaker Change #117: Yes.
Speaker Change #117: Okay.
Speaker Change #117: Yeah.
Speaker Change #117: [music].