2020-06-02 18:06Financial Data and Key Metrics Changes - In Q1 2020, both GMV and total net revenue grew by 18% year-over-year, reaching RMB 9.2 billion and RMB 1.52 billion respectively [8][15] - Total costs increased to RMB 1.5 billion from RMB 1.2 billion in the same quarter last year, with product costs rising to RMB 590 million from RMB 509 million [16][18] - Gross margin for product sales decreased to 15.8% from 17.6% a year ago, while blended gross margin increased to 61.3%, up 80 basis points from last year [17] - Net income attributable to ordinary shareholders was RMB 2.2 million, with non-GAAP net income at RMB 36 million [20] Business Line Data and Key Metrics Changes - Distribution GMV grew by 10% to RMB 782.9 million, while non-distribution GMV increased by 18% to RMB 8.4 million [15] - Service revenue increased by 22.9% to RMB 822.5 million, benefiting from growth in categories such as sportswear, luxury, FMCG, and food and health [15][16] Market Data and Key Metrics Changes - The pandemic led to a significant impact on various categories, with men's and women's clothing experiencing slower growth, while the apparel category overall grew by approximately 30% year-over-year [16][18] - The company noted a strong recovery in the Chinese economy since March, which has further strengthened in May [12] Company Strategy and Development Direction - The company is transitioning from a traditional e-commerce logistics partner to an O2O integrated partner, supporting brand partners in managing offline inventory and minimizing inventory risk [9][10] - There is a focus on enhancing digital marketing capabilities, including live streaming and engaging with consumers through social platforms like Douyin and Kuaishou [10][12] - The company aims to capture mid- to long-term growth opportunities by driving innovation and digitalization [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the economy and the acceleration of online retail adoption due to the pandemic [12][13] - The company anticipates a growth rate of 20% to 23% in total net revenues for Q2 2020, with service revenue expected to grow faster than total net revenue [21] Other Important Information - As of March 31, 2020, cash and cash equivalents decreased to RMB 1.7 billion from RMB 2 billion at the end of 2019, primarily due to delays in payments from brand partners [21] - The company is committed to maintaining a balanced category mix to navigate through challenging environments [14] Q&A Session Summary Question: Impact of pandemic on international brands' marketing budgets - Management noted that international brands are reallocating their marketing budgets from offline to online, especially towards live streaming and rich content marketing [27][28] Question: Performance expectations for June 18 promotions - Management indicated that early performance showed higher conversion rates compared to last year, with a focus on targeting specific consumer groups [29][30] Question: Details on service revenue growth - Management highlighted strong demand for digital marketing services, particularly in live streaming, which is expected to enhance profitability [34][36] Question: Changes in brand strategies post-COVID-19 - Management observed that many brands are shifting focus to online sales and are increasingly relying on partnerships for e-commerce operations [40][41] Question: Guidance for Q3 and Q4 performance - Management refrained from providing specific guidance for the second half of the year due to macroeconomic uncertainties but expressed confidence in maintaining growth [44] Question: Apparel inventory levels and management - Management acknowledged the challenges with apparel inventory but emphasized efforts to assist brands in managing excess stock through innovative solutions [66]