As the penetration of integrated e-commerce gradually peaked, and consumption is still in the recovery period, the domestic e-commerce market environment seems to be becoming more and more complicated.

In the stock market, the good days where brands could just sit back and wait for a deal when they put their goods on an online platform are gone. Now, under more intense competition, the demand for brands has also been further derived from basic proxy operation services to full-link digital operation capabilities.

The external environment is becoming more and more complex, but it will present both challenges and new opportunities for all players on the field. Take Baozun e-commerce (09991, BZUN.US), which is undergoing a strategic transformation, as an example. The increasingly fierce market competition does not seem to be blocking the pace of its development, but Baozun is making steady progress in the process of building a second growth curve.

According to the latest financial report recently disclosed by Baozun E-Commerce, the company achieved revenue of 1.8 billion yuan (RMB, same unit below) in the third quarter of this year, an increase of 5% over the previous year; the brand management business progressed in an orderly manner, and Gap China's business losses narrowed sharply compared to the same period. At the same time, Baozun also achieved a correction in operating cash flow in the quarter for the first time in the same period in history. This also marks a qualitative leap in the company's self-hematopoietic capacity.

The highlights of the three-quarter report structure stand out. At the same time, Baozun has once again made positive progress at the level of market operation. Financial reports show that Baozun has reached a strategic acquisition agreement with Luo Krypton Xun, a leading service provider in the Douyin apparel category, and Bao Zun plans to acquire 51% of the latter's shares.

Zhitong Finance App believes that since Baozun has achieved phased results in the Douyin ecosystem at present, the current strategic acquisition of Luo Krypton may mean that the company's full-link service capabilities will be further strengthened, and Bao Zun's second growth curve is expected to become more clear in the future.

The highlights of the financial report structure are outstanding, and the omni-channel strategy is effective

In recent years, against the backdrop of slowing e-commerce market growth, traditional e-commerce platforms such as Taobao, Tmall, and Jingdong have stepped up efforts to expand cost-effective supply, and the development logic of the e-commerce industry has quietly changed. In the period of industry transformation and adjustment, as a leader, pioneer and digital business enabler in the Chinese brand e-commerce service industry, Baozun is also proactively exploring new growth paths.

Judging from the latest questionnaire handed over by Baozun, the company has achieved phased results in various fields. During the reporting period, Baozun's e-commerce business contributed 1.5 billion yuan in revenue, while the brand management business contributed 300 million yuan in revenue.

In terms of development, in terms of e-commerce business, along with the slowdown in the growth rate of online retail sales of physical goods, the growth pressure faced by branded e-commerce service companies represented by Baozun has also increased. However, in order to meet the challenges, Baozun has firmly implemented an omni-channel strategy and implemented a differentiated layout on various platforms to explore incremental business opportunities. According to the data, during Q3, about 45% of brand partners cooperated with Baozun on two or more channels.

Among them, Baozun's performance in two major emerging channels, the WeChat Mini Program and Douyin, was particularly impressive, and both achieved double-digit year-on-year growth in GMV during the period. Taking the Douyin channel as an example, Baozun continues to deeply cultivate the three categories of luxury goods, outdoor sports, and fashion apparel. With its deep understanding of brand e-commerce, the company's GMV generated through live streaming reached 100 million yuan in the third quarter.

Perhaps it is also because the company's experiments in the Douyin ecosystem continue to receive positive feedback. Baozun recently increased content e-commerce once again. The latest example is this strategic acquisition of Douyin's leading service provider, Krypton Luoxun.

According to reports, Rock Krypton is a leader in the Douyin ecosystem and a pioneer in the field of live e-commerce, and has extensive experience in the field of clothing and accessories. Following the implementation of the acquisition, Bao Zun, which has established existing advantages in the dimensions of creative content, brand matrix, and refined operation, will go one step further in the Douyin ecosystem with strong alliances between the two sides, and is expected to generate a “leverage effect” in management and achieve 1+1＞2 through strong cooperation between the two sides.

On the other hand, in the field of brand management, Baozun continues to promote the renewal of Gap's Chinese brand and adjusts its brand tone from being discount-driven in the past to winning with brand strength. In the third quarter, Gap China launched a new localized design, tailoring three product lines for Chinese consumers, covering diverse urban life scenarios such as daily life, leisure, and commuting. At the end of September, Gap China also opened 5 new stores, with a more distinct store design style and closer to the aesthetics of young Chinese consumers. In addition, Gap China has also successfully created social topics such as “I AM GAP” and “GAP if you want GAP, GAP”, which has further enhanced brand influence.

In order to better support Gap China's digital transformation, Baozun has successfully built an omni-channel retail operation platform (ROP). The omni-channel retail operation platform can better manage product inventory and truly open up online and offline inventory.

The above new changes are reflected in the overall improvement of Gap China's operating data at the data level. According to information, the total number of Gap members in China has now exceeded 28 million, and the number of active members is about 2.5 million. During the third quarter, Gap China's key indicators such as customer traffic, conversion rate, average customer unit price, and floor efficiency were all optimized to varying degrees, and the number of inventory turnover days was also shortened to 177 days from 220 days in the same period last year.

What is particularly critical is that during the Q3 period, Gap China's gross margin reached 56%, an increase of 10% over the same period last year. Continued improvement in the profit margin of this innovative business will undoubtedly bring more confidence to Baozun e-commerce, which is striving for transformation.

The pace of strategic transformation is accelerating, and the second growth curve is becoming more clear

Looking through the three-quarter report of Baozun E-Commerce, it is easy to see that the company is making every effort to open up a second growth curve at the same time that it is consolidating its traditional dominant business.

As a leader in the brand e-commerce service industry, it is not surprising that Baozun is seeking change. Take the e-commerce shopping festival that just ended a while ago, as an example. Although this year's Double Eleven is still bustling, it doesn't seem like it can talk about the “hustle and bustle” anymore. As platforms, brands, and consumers all tend to be more rational and calm, Baozun e-commerce, which is in it, naturally needs to change over time to find new growth grippers.

According to the Zhitong Finance App, there are three main paths for Baozun to seek change:

First, use technology to enhance its ability to serve brands while at the same time implementing an omni-channel strategy in depth. In Double 11 this year, Baozun's digital intelligence product BBI has been iteratively upgraded once again. Through real-time digital warehouse links, omnichannel data decision support, self-service and intelligent analysis, it empowers brands to quickly adjust their operating strategies. At present, Baozun BBI data platform has integrated 20+ channel data sources, tracked 60+ industry categories, and achieved omni-channel coverage.

Second, use creative content to leverage business and strengthen its influence on channels such as Douyin by following the idea of combining epitaxial expansion with endogenous growth. In the field of live streaming business, the Baozun Creative Content Business Center has provided live streaming services for more than 30 brands, and the acquisition of Locke Krypton will undoubtedly be another important step for Baozun to grow in the Douyin ecosystem. What is even more critical is that since the fields of expertise of the two sides are extremely complementary, subsequent cooperation between the two sides is expected to have a good “leverage effect”, thereby amplifying their respective advantages. It is reported that in the next step, Baozun and Luk Kun Xun will set up two major live broadcast centers in Shanghai and Hangzhou, with a total area of over 12,500 square meters.

Last but not least, as Gap China gradually gets better, Baozun's brand management business will also enter a new stage with its head held high, and the operating experience and methodology accumulated during this period may help Baozun achieve value transformation.

According to the Baozun Analysts' Conference, company-level expectations for Gap China are “turning losses into profits in 2025 and doubling revenue in 2027.” To achieve this long-term goal, Baozun will upgrade Gap China in all aspects around the brand, marketing, channels, and systems. What is to be expected is that, over time, Baozun's reshaping of Gap China will also feed back the company itself, and brand management will become a new growth pole outside of its e-commerce business.

Looking back at the three-quarter report disclosed by Baozun this time, whether it is the first time in the same period in the history of operating cash flow or the orderly progress of the brand management business, it indicates that the pace of the company's strategic transformation is accelerating. Looking ahead to the future market, as the company's omnichannel capabilities, technological capabilities, and creative live streaming capabilities continue to flourish, Baozun's ability to serve brands and manage brands well will also reach a new level, and the resulting growth potential of the company will also be fully demonstrated in terms of performance and stock price.