On November 22nd, Baozun E-commerce disclosed its financial report for the third quarter of 2023. According to the financial report, Baozun's net income in the third quarter of 2023 was 1.8 billion yuan, a year-on-year increase of 5%, including a year-on-year increase of 26% in operating income from sports clothing; The operating cash flow continued to improve, achieving the first positive conversion in the same period in history.
Baozun E-commerce is expected to further expand its growth potential through brand management, "an e-commerce analyst told Securities Daily. In early 2023, Baozun completed its acquisition of Gap China, increased brand management, and steadily promoted the transformation of Gap business in the third quarter. It has achieved multiple important results in new products, new stores, market promotion, and visibility enhancement, such as upgrading its brand power, We have created a set of ROP (omnichannel retail operation platform). In recent years, the key category of Baozun has transitioned from small household appliances to clothing and accessories. From the performance of segmented categories in the third quarter, the clothing category has stabilized and grown at full speed.
Online channels
Achieve breakthrough progress
The omnichannel strategy remains the primary task for promoting sustainable growth of Baozun. For Baozun, the purpose of expanding all channels is not only to obtain incremental traffic, but more importantly, to carry out differentiated layout on each platform to promote incremental business opportunities, "said Baozun e-commerce.
In the third quarter, the GMV (total transaction volume) generated by Baozun on non Tmall platforms and channels accounted for approximately 40.2% of the total GMV, compared to 31.1% in the same period of 2022. By the end of the third quarter, about 45% of brand partners had cooperated with Baozun in store operations in at least two channels, up from 42.4% in the same period last year. Among them, emerging channels, including WeChat applet and Tiktok, had achieved double-digit growth in GMV year-on-year.
In addition, in the field of live broadcast business, Baozun has made initial achievements in Tiktok ecology. In the third quarter, Baozun Creative Content Business Center has provided live streaming services to more than 30 brands, and achieved a GMV of up to 100 million yuan through live streaming in the third quarter.
In addition, in order to continue to enhance Baozun's comprehensive ability in the Tiktok channel, Baozun and Tiktok Clothing, Shoes, and Footwear Track Head Service Company Luo Keluxun reached an intention to acquire 51% of its equity. According to financial reports, in the future, Baozun and Luokruxun will establish two major live streaming centers in Shanghai and Hangzhou, with a total area of over 12500 square meters.
"Lockheed is a leader in Tiktok ecology and a pioneer in the field of live broadcasting e-commerce, and has a deep understanding of the clothing accessories track. Baozun's market leading advantages in creative content, brand matrix, and refined operation, combined with Lockheed's rich experience and unique insights in the field of live broadcasting, will promote Baozun to take the lead in Tiktok ecology." said Qiu Wenbin, founder of Baozun e-commerce, chairman and CEO of Baozun Group.
Zhang Yi, CEO and Chief Analyst of iMedia Consulting, told Securities Daily that Baozun, as an e-commerce service-oriented enterprise, has entered the live streaming e-commerce field. From the narrowing of its loss margin, it can be seen that the new business direction has brought a new path to profitability for the enterprise. However, how to control costs throughout the entire process will be the key to further improving profits.
Gap China Business
Significant improvement in multiple data points
After taking over Gap China, Baozun continued to empower the brand. In the third quarter of 2023, Baozun brand management business continued to focus on the orderly transition of Gap China business, shifting from discount driven in the past to focusing on consumers' mental construction of the brand and products.
The financial report shows that the gross profit margin of Gap China reached 56% in the third quarter of this year, an increase of over 10% compared to the same period last year, and the loss amount is significantly narrowed compared to the same period last year; The inventory turnover days have improved from 220 days a year ago to 177 days. The steady optimization of key indicators such as passenger flow, conversion rate, average passenger unit price, and floor area efficiency. In terms of new stores, 5 new stores have opened at the end of September and are expected to open a total of 10 new stores in the second half of 2023.
On the supply chain side, the Gap China team quickly optimized the localized supply chain, and to date, the localized production capacity of Gap China has almost fully covered local procurement needs, accounting for nearly 100%. The supply chain upgrade strategy has significantly shortened the lead time from design to launch of Gap products, from 3 to 6 months in the past to just a few weeks.
Zhang Yi stated that not only did Baozun acquire Gap, but in recent years, Baozun has invested in and acquired many brands. Through its relatively mature e-commerce sales channels and online and offline operation capabilities, Baozun has transformed these businesses facing the Chinese market, such as Gap, from traditional offline to full platform sales, thereby forming a linkage effect and further empowering independent brands such as Gap in all aspects.
An analyst from a securities firm industry told Securities Daily that with the recovery of consumption and years of deep cultivation of the brand e-commerce service market by Baozun, its more specialized and in-depth omnichannel online operation capabilities will bring new incremental markets to Baozun. Secondly, the acquisition of Gap's Greater China business is a "brand management" milestone that Baozun has fully launched. Coupled with its comprehensive e-commerce layout, it may open up the second largest growth curve for Baozun.