Vipshop Holdings Limited

Ladies and gentlemen, good day, everyone, and welcome to VIP Shop Holdings Limited's fourth quarter and full year of 2019 earnings conference call. At this point, I would like to turn the call to Ms. Jessie Fan, VIP Shop's Director of Investment Relations. Please proceed.

Thank you, Operator. Hello, everyone, and thank you for joining VIP Shop's fourth quarter and full year 2019 earnings conference call. Before we begin, I will read the Safe Harbor Statement. During this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations, assumptions, estimates, and projections about VIP Shop Holdings Limited and its industry. All statements other than statements of historical facts we make during this call are forward-looking statements. In some cases, These forward-looking statements can be identified by words or phrases such as anticipate, believe, continue, estimate, expect, intend, is or are likely to, may, plan, should, will, aim, potential, or other similar expressions. These forward-looking statements speak only as of the date hereof and are subject to change at any time, and we have no obligation to update these forward-looking statements. Joining us on today's call are Eric Shen, our co-founder, chairman, and CEO, and Donghao Yang, our CFO. At this time, I would like to turn the call over to Mr. Eric Shen.

Good morning and good evening, everyone. Welcome and thank you for joining our fourth quarter and full year 2019 earnings conference call. In the fourth quarter of 2019, we delivered strong financial results and the solid operating performance. Our customer metrics continued to show strength. During the quarter, total active customers grew nicely at 19% year-over-year. The number of active customers for the full year of 2019 increased by 14% year-over-year, reaching 69 million. These are the results of solid customer retention and improved customer stickiness. In 2019, repeat customers as a percentage of total active customers increased to 80% from 76% in 2018. We were able to achieve this success due to our focus on discount apparel. In the fourth quarter of 2019, The apparel-related category contributed to over 70% of our total GMV. Since the first quarter of 2018, we have spent a lot of time and effort in improving our merchandising, offering desirable products to our customers at a deep discount. This has paid dividends to our business in 2019. Going forward, we remain committed to the execution of our merchandising strategy, further enhancing our product offerings. In November 2019, we discontinued our delivery unit operated by Pingjun and began to work with SF Express. As a result, our delivery service has improved and our delivery cost has come down, allowing us to invest in enhancing the overall customer experience on our platform. For example, in December 29, we lowered our free shipping threshold from 288 RMB to 88 RMB, and the returns are now free. We also upgraded the benefits for our super VIPs. On top of existing benefits, They now receive an additional 2% off. We believe these changes will encourage customers to shop with us more, further enhancing their customer stickiness. Currently, we are experiencing some short-term impacts from the novel coronavirus outbreak, which has affected ourselves in the first quarter of 2020. The apparel category was especially impacted as customers are not leaving their home as much, which decreased their demand for apparel. We are working closely with our suppliers to get through this difficult time together. The good news is we have seen some signs of recovery in March and believe customers' demand will rebound quickly once the virus is contained. We continue to have full confidence in the strength of our Chinese economy and the long-term growth potential in China's discounted retail market. At this point, let me hand over the call to our CFO, Dong Haoyang, so that he may discuss our strategy in more detail and go over our operational and financial results.