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spk07: Good morning, ladies and gentlemen. Thank you for standing by for Bowson's fourth quarter and full year 2020 earnings conference call. At this time, all participants are listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to host for today's call, Ms. Wendy Sun, Investor Relations Director of Bowson. Please proceed, Wendy.
spk05: Thank you, operator. Hello, everyone, and thank you for joining us today. Our fourth quarter and full year 2020 earnings release was distributed earlier today and is available on our IR website at ir.baozhen.com, as well as on global newswire services. You can also find a PowerPoint presentation that accompanies our comments today on our IR website at the sections for quarterly results and webcasts and presentations. On the call today from Bowdoin, we have Mr. Vincent Chiu, Chairman and Chief Executive Officer, Mr. Arthur Yu, Chief Financial Officer, and Ms. Tracy Lee, our BD Vice President. Mr. Qiu will review the business operations and the company highlights, followed by Mr. Yu, who will discuss financials and guidance. They will all be available to answer your questions during the Q&A section that follows. Before we begin, I would like to remind you that this conference call contains forward looking statements within the meaning of the Securities Exchange Act of 1934 and the U.S. Private Security Litigation Reform Act of 1995. Those forward-looking statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors. All of which are difficult to predict, and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks and certainties or factors is included in the company's filing with the U.S. SEC and the announcement notice and other documents published on the website of the Stock Exchange of Hong Kong Limited. The company does not undertake any obligation to update any follow-up statement except as required and applicable law. family, please note that unless otherwise stated, all figures mentioned during this call are R&D. It is now my pleasure to introduce our Chief Executive Officer, Mr. Winston Chu.
spk08: Thank you, Wendy, and thank you all for joining us. It's been a busy and exciting quarter, and I'm pleased to report another solid set of results. During the fourth quarter, Brand partners accelerated their digital transformation in response to rapid changes across the e-commerce landscape in China. The nature of online consumption is evolving rapidly. Our unique positioning as a leader solution-driven platform for brands puts us at the center of this evolution. With technology that enables us to keep our brand partners ahead of the curve. If you are following along with our presentation, I'll start on slide number two. We executed our strategies throughout the fourth quarter. We would like to share a few key highlights with you, including a record-breaking W11 campaign, strong momentum in brand acquisition with a net of six brand partners to reach 263. and continuous operating margin enhancements. Overall, our non-GAAP operating profit grew by 64% while non-GAAP net income increased by 67%. We believe these achievements demonstrate the effectiveness of our high-quality growth strategy and reflect the long-term cumulative results of our investments in technology infrastructure. Now moving on to slide number three. Empowered by technology and innovation, we have been able to achieve continuous breakthroughs that improve customer experience and enhance operational efficiency. 2020, the 11 day long W11 campaign has become a touchstone validating the efforts we have put into creating such solid, effective, and efficient infrastructure. During the quarter, we upgraded our dynamic technology system and expanded capacity to 5 million orders per hour to support a record-breaking order search. In addition, we launched a variety of automation and one-click toolkits, including SKU rollout, labeling, short video processing, and sales intelligence applications from our proprietary retail operations support system, or ROSP. By leveraging Cloud infrastructure, AI algorithms, and data analytics, we launched a virtual intelligence dashboard system that improves operation efficiency while reducing risk. From a digital marketing perspective, we focused on the deployment of creative and innovative engagements to drive consumer exposure and the conversion rate. Deployment of data-driven analytical tools and the insights enables us to help brand partners better understand their customers and engage with them more effectively through price precise targeting and positioning. Besides, this fourth quarter we established a 1,000 square meter live streaming studio that allows us to integrate in-store live streaming into daily operations and streamline our portfolio of live streaming solutions. On the warehouse and logistics side, for corporate this year's extended double peaks during the W11 campaign, we not only upgraded our capacity and equipment, but also used algorithms to optimize real-time big data monitoring across the entire order flow process to improve order fulfillment efficiency. All these efforts enabled us to launch instant arrival services for several of our brand partners, that allows us to deliver over 80% of packages to consumers within 24 hours, which in return greatly enhanced customer experience. All these efforts greatly enhanced our value proposition for our client partners, allowing them to extend touchpoints and capture emerging opportunities for omni-channel strategies. As a third-party service provider, our infrastructure and tech assets allow us to allocate resources in an optimal way based on a universal online strategy. As we look ahead on slide number four, we reiterate our vision of technology empowers future success. And we will continue delivering for our brand partners a customer-centric e-commerce solution to reinforce our value proposition. To capitalize on the opportunities, we are launching a three- to five-year medium-term strategy plan to achieve our objectives of sustainable and profitable growth. First, we will adopt a customer-first approach to drive growth by focusing on service differentiation to meet brand partners' diverse needs. We will explore business opportunities and implement customer segmentation strategies to attract potential new business from both our existing and new brand partners. Though we have been the market leader in China's brand e-commerce service industry, we believe there are a lot of opportunities for us to become number one in more subcategories to increase market share. Secondly, we will drive growth through new business expansion. We believe that as e-commerce in China evolves, there are increasing opportunities to explore new channels, such as the Tencent Mini program, and the JD platforms. In the meantime, we will continue to explore new business models in accordance with the new channels. we will seek even greater optimization of our cost structure through technology-driven business process re-engineering and service quality-oriented location strategy. As our initial step, we recently established two additional remote service centers in low-cost cities of Nantong and Hefei. which we believe will improve service quality and reduce costs from the second half of 2021. Lastly, on slide number five, what was abundantly clear throughout 2020 was that our people are the greatest asset. This is key to our culture and based on our belief of delivering quality through developing people. the resilience, agility and commitment demonstrated by the Baozhen team and honored to have once again been awarded Shanghai Best Employer Top 30. Here I'm excited to announce a major office move planned for the second half of 2021 to a brand new headquarters with over 40,000 square meters. We believe the new Baozhen campus will accommodate our growing talent team support future business expansion and nurture the bulging culture of leading edge innovation. I will now pass the call over to Arthur who will go over our financials. Thank you. Okay.
spk06: Thank you Vincent. Hello everyone. Thank you for joining our earnings call today. I will talk about our financial performance in Q4 and the full year 2020 and discuss our priorities in 2021. Let me start with the fourth quarter 2020 financial results, which is on slide number seven in our prepared presentation deck. We saw impressive growth in total GMV this quarter, which increased by 28.7% to 22.9 billion. Breaking this down, our distribution GMV rose by 13.6% to 1.6 billion. and our non-distribution GMB increased 30% to 21.2 billion. Overall, the 2020 W11 campaign involved the largest marketing activities since the emergence of COVID and the longest duration with a deeper discount across categories and across multiple market sites. We have also observed a higher return rate this fourth quarter post the Double 11 as a result of the extended 11 days promotion period. Although this higher return rate led to some discrepancies between the fourth quarter GMV and Double 11 other values, we believe that we have managed this well across the board. We also strategically limited discount on certain brands in our distribution model to protect brand image and profitability at the expense of faster growth. We believe the longer-term benefits will outweigh the near-term impacts as we strengthen relationships with brand partners and expanded our service scope. Breaking it down by category, which you can see on the right side of the slide, during the quarter We continue to see modest growth momentum in the sportswear, luxury, and FMC categories. The apparel category has an outstanding quarter. As you know, the apparel category, which includes sportswear, luxury, and men's and women's clothing, contributes over 50% of our total GMV. During the quarter, we saw nearly 30% year-on-year growth. Electronics, which represents about 25% of total GMV, showed major growth as well, with a 20% increase year-over-year, despite the impact of optimization of the smartphone sector throughout the year. i5-CG contributed over 10% of our total GMV and had a double-digit growth rate on a low base. this quarter because we proactively adjusted our promotional strategy to sustain profit. One of the key categories of the distribution model, personal care appliance, had a negative growth rate. But we have seen the discount and sales trend improving in quarter one 2021. Now moving on to slide number eight. Our GMV growth translated into substantial growth in revenue, particularly in service revenue. Total net revenue increased by 20.2% to $3.35 billion, within which product sales revenue increased by 14% to $1.5 billion, and services revenue increased by 25.6% to $1.9 billion. With the increase in product sales revenue, cost of products increased to $1.3 billion from $1.1 billion last year. Product sales gross margin declined to 12.7%, mainly due to discounting initiatives during the 2011 period, and a change in the category mix. Our blended gross margin was 62%, broadly in line with last year. Now move on to slide number nine. Along with the business growth, fulfillment expenses increased to $851 million from $665 million last year. Our fulfillment expense as a percentage of GMV improved to 3.7%, helped by our efficiency program and offset by an increase in the labor overlay rate. related to the extended W-11 period this year. Sales and marketing expenses increased to $741 million from $648 million last year. As a percentage of GNV, our sales and marketing expense ratio improved to 3.2% from 3.6% a year ago. mainly due to the effectiveness of our digital marketing services and efficiency gain from deploying the latest technology in daily operations. Technology and content expense were 110 million. This was an improvement as a percentage of GMV from 0.6% to 0.5%. Most of this improvement was due to more effective cost control, productivity improvement, and better prioritization of our development pipeline. G&A expenses slightly increased to 69 million from 67 million last year. This was mainly due to our investment in pilot acquisition and infrastructure, and was offset by effective cost control and procurement initiatives. As a percentage of GNV, the G&A expenses ratio improved from 0.4% to 0.3%, which reflected a continuous trend of greater economies of scale while we grow our business. Now move on to slide number 10. income from operations increased by 53.4% year-over-year to $301 million. On a non-GAAP basis, income from operations was $333 million, up 53.8% from last year. Operating margin hit 9%, while non-GAAP operating margin reached 10%. To offset the interest income, net interest expense narrowed to $0.4 million, down by 95%. This is mainly driven by paying off the majority of our short-term borrowing during the fourth quarter. Now onto slide number 11. Non-GAAP net income attributable to ordinary shareholders of Bolton totals $272 million. an increase of 68.4%. Basic and diluted non-GAAP EPADN were RMB 3.71 and 3.58 respectively, which grow by 33.9% and 32% respectively. I now move to slide number 12. Overall, 2020 was a remarkable year. and we are very pleased with our financial results. Not only were we able to deliver high-quality growth, resulting in 22% growth in net revenue and a 45% increase in non-operating profits, but we also achieved a second consecutive year of positive operating and free cash flow. As of December 31, 2020, we had $5 billion in cash cash equivalent and short-term investment in our bank account after our successful secondary compound listing. This gives us a solid foundation to pursue a sustainable and profitable future growth. Looking ahead into 2021, as Vincent just outlined in our new strategic plan earlier, We will continue to enhance our value proposition by focusing on customer first to drive growth. We will do this both organically and inorganically through iMunday opportunities. I believe many of you have seen our recent iMunday announcement this year. One of these was to further expand our capabilities on mini programs to strengthen value proposition in the Tencent ecosystem. Another one is to capture emerging opportunity in the luxury sector. I'm glad to say the integration of both deals is well on track and we expect to see tangible financial results starting in the second quarter of 2021. We are also making progress in strengthening our omni-channel capabilities such as Douyin and Jingdong and continue to explore opportunities in new business model integrations through GBO initiatives. It's worth mentioning that for the first time on an annualized basis, our 2020 non-TMO channels accounted for over 25% of total GMVs, in which non-official dot-com GMVs also surpassed 10% for the first time. While there might be some initial investments, we believe these results are encouraging, and we are confident we will strike a healthy balance by generating sustainable and profitable top-line growth. In addition, we will continue to optimize our cost base through technology-led efficiency and business process re-engineering initiatives. We believe this will transform how we serve our brand partners by improving our service quality and reducing costs at the same time. And last but not least, in order to enhance sustainability in terms of long-term growth, we are initiating a comprehensive ESG program to improve environmental, social, and governance aspects of the company. to create long-term value for our shareholders. And this concludes our prepared remarks. Thank you very much. Operator, you are now ready to begin the Q&A session.
spk07: Certainly. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. We have the first question from the line of Min Wang from HSBC. Please go ahead.
spk05: Hi, good evening, management. Thank you for taking my questions here. So congratulations on a strong set of results and wrapping up 2020 with a good solid set of quarter, especially on the margin side, right? So we see a meaningful improvement on the margins. And then this is something that's also almost close to our historical high, right? And do you think that like any structural drivers, you think that I guess post-COVID that we can think about that will go forward to 2021. And should we expect that the target we talked about earlier, we should expect actually a better, a higher, I guess raising the long-term margin target from here. And then the second question is also very encouraging to see that you talk about this non-PMO channel contribution is also rising. That contribution rise here. to 25% of total. And so can you help us to just understand in terms of that 25%, how are they allocated? Is it some in mini program or maybe some into brand flagship stores? How is that 25% allocated? Just to get a rough sense for our understanding. Thank you so much. Okay.
spk06: Thank you Bonnie and I will take the first one about the marketing in 2021, make some comments and then I will pass on to Vincent for the second question. So in terms of the marketing in 2021, we gave our investment into technology and our optimization of our different brands. We have seen a strong outlook into the 2021 on our marketing. So there are several factors. One is In some of the categories like the luxury, which we enjoy a very good margin compared with the other sectors, and we are now seeing a great growth in that area. And secondly, our efficiency drive, like by the technology and innovation, has now seen the benefit coming through. And we have seen some really strong driver to enhance our profitability and our overall marketing in 2021. At the same time, I just want to add another comment. 2021 is a year of investments. As we mentioned, we're actually making investments into new channels and into new business models. We would like to see some early investments. but we believe this investment will lead us to higher top-line growth in 2021 and also in the next three to five years. So that's my outlook for the market.
spk08: Okay, I'm here for your second question. I think last year is a quite different year because we see this very clear trend of multiple channel or omni-channel trend is realizing quite quickly. So it's the first time, as we said, it's the first time that the non-tmall channel contributes more than 25% of the total GMB. Inside of this 25%, we are seeing that several channels like the official web store, like MiniProgram and JD, all growing quite apparently. So I think the detailed distribution of this, we can exchange more views on that later on. But an interesting thing is that I think a lot of brands now take several of the new channels as their private domain, so-called private domain or .com initiative, like the Minute Program and even Douyin for a lot of brands, they take this as a private domain. So I think they will put more resources and treat the channel differently from the major transaction-based channels. So I think for this year, looking forward, I think there will be a lot of dynamics going to happen in the private domain or non-traditional channels. Thank you, Vinny.
spk05: Well, thank you. Thank you. And by the way, Vincent, thank you for clarifying too. Just a quick follow-up on your comment. So should we think structurally because there's more and more channels? You also mentioned some of the short video platforms. Does that mean that brands actually rely more to use a third-party service solutions like Baozhen even more of a higher demand, right? Because now they have multiple channels and they don't know how to allocate, well, they don't know, but they will leverage your expertise even more, right? Because you have expertise across multiple channels. So the more diversified the e-commerce channel, it actually works towards the benefit for Baozhen's longer-term growth.
spk08: Thank you for the follow-up question. Yeah, sure. Thank you for the follow-up question. I think traditionally for the transactional part of the e-commerce, you know, Boston has established a very strong solid foundation to enable brand partners to do business through online. So I think for the new channels, basically for the mid-end and the back-end, I think it's mostly the same. For example, technology, other processing, payment collection, other fulfillment, customer service, all these kind of things is basically the same. So actually, we can just use the infrastructure that built up in the past and keep serving all the new business and to leverage the cost as well. So that's number one. Number two is that for the... For the new channels, yes, I think for the new channels, for the front end, I think the marketing, the way they expand their marketing dollars will be very different. So that's why we think the marketing capability is so important for the emerging new channels. We remember we did this more than three years ago, and now I think our digital marketing capability you know, very strong than before. So, in this case, we can deliver an end-to-end solution for the brand on new channels, on new platforms. Thank you.
spk05: Thank you.
spk06: Thank you, Benjamin. Yeah, and just to add a point on Vincent's comment about the multiple channels, we're actually not only using the organic growth, we are using the inorganic way to enhance our capabilities as well. So, for example, you may remember in our IceLeak field, We are utilizing the fast capability of iClicks to deploy our front-end, the front-end eProgram solution, which helps us to deliver the growth to our brand partner in a very effective and also a good service way. So this is why we are putting all those capabilities together.
spk07: Thank you. We have our next question from the line of Alicia Yap from Citigroup. Please go ahead.
spk05: Hi. Thank you. Good evening, management. Thanks for taking my call. Congratulations on the solid quarter. I have two questions. The first one is related to your recent partnership with iClick. Could management help us to frame the financial opportunity in terms of the incremental upside from the revenues or even the additions of the new brands onto the future monetization improvement with the existing brands? with the launch or even the readiness of this private traffic domain platform. Second question is we heard from another e-commerce peer recently that this year, Chinese New Year, because of these travel restrictions and all that, so they are actually seeing a stronger than usual Chinese New Year seasonality. So, not sure if Baojun is also seeing the similar trend that this year New Year is a little bit stronger than usual. So, if so, could you elaborate on the demand? Is that strong demand on fashion or electronics or even FMCG? Thank you.
spk06: Okay. Thank you. I will take the first question on iClicks and then you can comment on the Chinese New Year. On iClick, since acquisition, we have started to conduct several workshops. So the workshop is looking into the IT and data of both companies. What we are looking for is to have an integrated IT solution which combines the very strong SaaS front-end and the very strong OMS and operation capability of Baldwin to create a solution And that solution will be an attractive proposition to our brand partner in the content ecosystem. So this is the first thing we are currently doing. And secondly, we have seen there has already the cross-selling opportunity which we have already seen, which is there is a tribal kind of brand we have introduced to iClicks. and another kind of the petrol brand which I clicked into with the introduction to us. So we are confident that it will lead to some tangible financial results very soon. And thirdly, we are now looking into the digital advertising operation because iClick historically are very strong in the digital advertising area and we are looking at how to combine our digital marketing and to create more synergy and to create a better outcome for our brand partners. So combining all those three things together, we think we will start to see the financial results from the second quarter of this year. purely down to the iClick field and not down to the iClick field because the reason we do this at MOU is to build our capability to allow our original mini program team or mini program business to grow bigger. This will contribute to the top line growth of Boson for the 2021, but it's difficult to split to say which certificate has contributed to iClick and which has not to iClick. But we are confident about the program.
spk08: Okay, yes, the second one is about the CMY sales, you know.
spk05: Yeah. We do see a good sign regarding the consumer perception regarding the trends. And also, we think the private domain is a good sign regarding the consumer perception regarding the trends. And also you can see, actually, we have a revision on the major platform since the beginning of this year. And among them, you can see, to improve the consumer experience and enhance membership and the sense management of the major topics. So, to our observation, from the Q1, we already see the platform, the Q2, the Q3, the Q4, the Q5. It's spending effort in many angles to improve the consumer journey. For example, to reduce the complexity of certain mechanism and to decrease the promotion channels to synchronize the traffic and also to create a more friendly environment to brands and also to these partners to do business on the e-commerce platform. So all of the efforts and the methods have been, I think, lead the environment to be more healthy and also promising for the growth. And to brands, I think it will also affect their budget plan on media and the promotion and also their investment on consumer data assets in longer time. And so from this point of view, we actually, we do believe in the trends on the consumer perception regarding the entertainment-oriented and also live streaming-oriented is going to be the trending topic for the whole year. That's why we have been paying much more attention on opportunities of live streaming, especially on the self-owned live streaming and also short video production, performance advertising, and also interactive marketing technologies to expand our capabilities on the new marketing tools. Thank you. Thank you.
spk07: Thank you. We have our next question from the line of George Shih-Chu from Bank of America. Please go ahead.
spk04: Good evening, Vincent, Arthur, and Wendy. Congrats for the fourth quarter and thanks for taking my questions. My first question was related to this year's full-year outlook. As we know, Baozun Shuhua has already discussed with the brand for this year's growth plan. Just want to get an idea for this year when you discuss the outlook with brands, is there any outlook which you see different from last year? Or generally speaking, you see the growth plan, how it compares to last year, and is there any new areas we should actually focus on? And the second question was related to the addressable market, because of our new channels and new categories, we know like Bolton actually will look to expand its presence in, like you mentioned, like Douyin, WeChat, and also JD, just want to get a quantitative idea how big will be the potential market, how how much GMV contribution we should actually expect from these new channels in the following years. Thanks a lot.
spk06: Okay, so I probably will, yeah, I will, that means to talk about the first question and then I will cover the second one.
spk08: Okay, thank you for the question. Yeah, for 2021, can I think? A lot of surprises to look to expect. I think firstly from the brand point of view, you can see a lot of initiatives happening on the private domain, including the official PC, official web source, mini program app, this kind of thing, and also some new channel expansion plans. So I think 2021 may be the first year for the brand to try to allocate a lot of resources on multiple platforms seriously. So I think in this case, there will be a lot of new initiatives like a data application, related application, and a CRM, these kind of omni-channel driven solutions is quite important. And also talking about the size of the business in 2021, I think we can refer to an aggregated GMB for each of the platforms. So generally, I think that is the addressable market or the brand's expectation for the channels. The specialist goals, which is previously not a brand e-commerce marketplace, but right now it's getting more and more brand e-commerce oriented. So I think the potential is huge. So the second one is about the addressable market.
spk07: Yeah, yeah.
spk06: So in terms of the addressable market, I think they will... On one hand, it will depend on the market trend, i.e. where the brand partners will select how they sell their product. In Baozun, we are here because we have the omni-channel capability. It doesn't matter how it changes from Tmall or non-Tmall, we are there to support our customers. And in terms of the category, we actually see still a very strong in terms of the luxury and apparel kind of category. This is which we are making the investment into to further grow our market share. And also we have seen some new opportunity in the healthcare, which is after the COVID-19, people now making further attention to their own personal health. So we think there will be some new opportunities in that as well. And finally, on the new business model, we are seeing some new ways of cooperating with the client partner under the GPO initiative, and that will help us to further strengthen our relationship with the brand partner, which is giving us more room to further grow the business in the existing business. So that's our view on the channels and on the opportunities for next year.
spk05: Perfect.
spk07: Thank you. Can we move to the next question? Presenters, can we move to the next question? Hi, good evening.
spk02: Thanks management for taking my questions and congratulations on a solid set of results. I think this is the first time that we talk about the three to five year strategic plan. May I ask about how we should think about it translating into financial outlook? Thank you.
spk06: Okay, thank you for the question. I think we have spent time to look into our strategy going forward. Our goal is to deliver a sustainable and profitable growth. Our long-term view is depending on the market growth overall rate, We are looking at to become a business with 150 billion GMB in 3 to 5 years time and we would like to make a operating profit of 2 billion by the end of this 3 to 5 years period. So this is our goal and our financial outlook.
spk07: Can we go ahead and move to the next question? The next question comes from the line of Tina Ho from TH Capital. Please go ahead.
spk05: Yeah, thank you, management. So I saw the GMV, the distribution GMV as a percentage of total continue to decline. So can management share with us some of your thoughts and outlook in that front in terms of the two business models, distribution and services. How do you think those composition will be in the future?
spk06: Okay. Thank you for the question. In terms of the distribution model, as you can see in Q4, it's actually not performing strongly. So this is due to one of our personal appliance brands, which is a big brand, which has an overall softness in their overall performance in the Q4 2020. And actually, Zaojun, our online channel, is performing better than that brand's offline channel. and also the Tmall channel is performing better than other channels online. So basically we are confident in terms of, so this is only a one in a time kind of performance drop. So in Q1 this year, we have already seen a trend of recovery and we are seeing an improvement hopefully, so this brand will be able to recover. and Bolton will have shared our insights into the brand to help them to recover quickly through the Tmall channel online. And secondly, the reason why it has an impact is also due to the high discount and higher return rate. In terms of the high discount, because it's a distribution model for Bolton, so we actually, in order to protect the brand image, We didn't go further on the discount in order to achieve the volume. We actually go for the profit and also the longer-term brand image because as a responsible brand partner, we think that's something we should be doing. And in terms of the higher return rate, it's actually an industry down for the Q4 due to the extended period of W11. So overall, we hope This is a trend for the Q4 only, and hopefully in Q1 this year we will see a recovery.
spk05: Thank you so much. I have a follow-up question. Okay, keep going.
spk06: Please, please.
spk05: Okay, so the follow-up question is regarding your Omni channel. So I realize a lot of brands are seeking out much more fresher and newer channels. go beyond Tmall. And so in other channels, you know, in terms of the operator like you guys, are there any existing operators? And, you know, how do you, you know, how to say, position yourself in the other channels like Xiaohongshu, Douyin, JD? And, you know, what is your competitive advantage over existing operators, if there are any. So that's the second question. Thank you.
spk08: Okay, thank you for the second question. Actually for the emerging channels like Douyin or you just mentioned Xiaohongshu, there traditionally were not a lot existing operating service partners just because previously this kind of channel or platform is not a TMA platform. But right now they are changing. They are more and more turning to e-commerce business because they need the brand's media expenditures and also So it's a new one, so it's emerging. We call it emerging new channels. So for Baozun, we are as new as the others, but for the farmland operations, we did have for more than 10 years of the e-commerce operating experiences, and also we have been investing in digital marketing for multiple channels for more than three years. So given this tool, I mean, I think we are very solid and very strong in facilitating the brand e-commerce business on any of the new emerging channels. Thank you.
spk05: Thank you, Vincent. That's all my questions.
spk07: Thank you. We have our next question from the line of Charlie Chin from China Organizations. Please go ahead.
spk01: Thank you. Thank you, management, for taking my question. I have two questions. First of all, it's about the brand partner pipeline. How does that look like? Especially, we understand that the company has been exploring the opportunities in categories like premium brands, luxury brands, as well as health food. So how's the progress there? And in particular, any initial signal that the full jet is helping the company to get breakthrough into the premium brand segment? I'll take the first one first. Thank you.
spk08: OK. I'll be here to answer your first question. I can see that the company is more capable in bringing on board new brand partners, including you know, different categories. Right now, I think the pipeline is very strong. We see not only the demand for the traditional channels like PMO is growing in our pipeline, but also the private domain opportunities is also a lot. So I think for, you know, different platforms, you're getting more and more, you know, how to say, more and more reach. pipeline items. And for the categories, we think that different categories like fashion, like cosmetics, like premium or luxury, all very promising. So we are happy to see that. For Fujifilm, I think they are very experienced in talking to global brands and premium brands. So we are working with them closely not only to work with the local team of the premium brands, but also the global team. So in this case, I think we can form up a better positioning and integrated strategies to work with the potential brands. Thank you. Please go ahead with the second one.
spk01: Sure, sure. Thank you. My second question is more of a high-level question. changes in the brand's partner strategy and internet. As we understand, last year was a pretty difficult year on the full-year impact of COVID. So after the full year, how does your company recognize the difference between the marketing activities now versus pre-COVID? I understand you talked about the private domain, et cetera. Can you give us more details on how they spend their dollars differently. Are they using the private domain to get new traffic or maintain their users or any other details that you can share more with us? That would be great. Thank you.
spk08: Okay. Yeah, I think the last year, the COVID year, is very special and it changes. It has a profound influence to the brand e-commerce or digital marketing industry. I think right now e-commerce or digitalization is being the center of the strategy of most of the consumer brands. So they are pouring more and more resources to enhance their position on their DDC initiatives and also e-commerce digital marketing. I think the key for this one is that at the center of the strategy, that means that the brand will invest for long term, not only short term. So for short term, it's channel, it's sales, it's discounting, it's promotions. For long term, it's more about system, it's more about capability and talents. So in this case, we are quite comfortable working with the brand for longer term of the partnership.
spk06: Yeah, and just to add a comment on this, we have seen the brand partners start to explore different channels. For example, in Q4 and Q1 this year, we have one of the major one of our major stock partner, a stock brand partner to do some live radio show which achieved some really good results and that we have seen more brand partners talking to us about different channels.
spk01: Great. Thank you very much. That's all my questions. Thank you. Thank you.
spk07: Thank you. We have the next question. From the line of Ashley Xu from Credit Suisse, please go ahead.
spk05: So on the mini program, because in the past we have seen that effective take rate is actually lower than the service fee model on Tmall. Just want to understand whether this is attributed to structural difference in these two platforms or it's just due to different development stage? And if we look at the long-term, do we see similar monetization opportunity on mini program compared to Tmall? Thank you.
spk08: Okay. Thanks for the question. Before, there's a lot of discussions happening for mini program, you know, e-commerce. I think, you know, from three years ago, we have formed a very solid team to serve the clients who, open source mini program. Right now we have already tens of existing mini programming, you know, working for different brands. So we think there's a lot of potential in that. Talking about the structure of different platforms, especially for mini program, I think they are quite different from the traditional ones like BMO because it is more It's more marketing driven and more data driven transactions. So for example, there's not a commission for the platform or even there's not a platform. It's actually separated private domains on the ecosystem. So in this case, it's quite important. There's a social commerce space, so for doing the e-commerce transactions, it's easier than the traditional platforms. So I think in this case, yes, the front end maybe is not as a lot of things to be done as a traditional platform. And for Bolzano, I think the middle end, like the order processing and the back end order fulfillment is the same. So in this case, in this value chain part, I think the cost structure and the profit model will be the same. For the front end, transactions is easier than before, but marketing is more comprehensive. So in this case, I think we can form up a long-term, a very healthy charge model for the brand partners. Thank you.
spk07: The next question comes from the line from CICC. Please go ahead.
spk03: Hi, management. Thanks for taking my question. We saw the net addition of brand partners in the fourth quarter was five to six. We know we are adjusting our brand portfolio in the fourth quarter, so just wondering how many brand partners terminated the cooperation with us and how many new brand partners we acquired in the fourth quarter. What is our brand acquisition strategy moving into 2021? Can we share some color on our current brand pipelines? Any color would be very helpful. Thank you.
spk06: Okay. So in terms of the brand partner, we only had six new additions for quarter four. And quarter four, historically speaking, is not a quarter where a lot of brand partners will open the T-Mall. So that's because it's after the double 11th. And so the six is actually not a bad number from our perspective. From a full year perspective, we actually added 35 new brand partners, which is a good contribution to our portfolio. And secondly, I just want to maybe talk about the principle in terms of adding the brand partners. We're only looking for those brand partners which will contribute to our sustainable and profitable growth. Our proposition is how Compulsion adds value to the brand partner and how we can create, how we can help the partner to grow their business. We are not a company where focus on extremely low cost in order to win the business. So in this case, we will optimize our portfolio if the brand partners overall strategy on selecting the QC partner is not meeting our value proposition. But we will do it with our effort. We will try to keep our overall growth and try to serve as many brand partners as possible.
spk03: Thanks, very helpful.
spk07: Thank you. Thank you. If there are no further questions, I would like to hand the call back to Wendy. Over to you.
spk05: Thank you, Aubrey. In closing, on behalf of the browser management team, we would like to thank you for all your participation in today's talk. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the poll.
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