Under the “choose one of two” haze,Vips.US (VIPS.US)I handed over a “report card” with a pretty good performance.

Before the US stock market on February 25, Vipshop disclosed the fourth quarter and full year results of 2020. Financial reports show that in the fourth quarter of 2020, Vipshop achieved revenue of 35.8 billion yuan, a year-on-year increase of 22%, and net profit of 2.6 billion yuan, an increase of 33.4% year-on-year. Net revenue for the whole year was 101.9 billion yuan, and net profit was 5.9 billion yuan.

The key point is that this is its 33rd consecutive quarter of profit. You need to know that in addition to fighting fierce e-commerce rivalries,AliFurthermore, there are almost few that can maintain long-term profits, so this performance is enough to arouse interest from the outside world to “explore” it.

What is interesting, however, is that after the “choose me or him” incident between Vipshop and Ai Stock at the time came out, voices about “the bargain business getting worse and worse” spread all over the place.

This is how it all happened.

In September of last year, Ai Stock's announcement that “Vipshop explicitly requires merchants not to cooperate with iStock” tore off the “choose one of two” shrouded in the veil of “choose one of two.” Subsequently, the State Municipal Supervision Bureau opened an investigation into Vipshop's alleged unfair competition. As of the beginning of February this year, Vipshop had been fined 3 million yuan by the Municipal Supervisory Bureau for disrupting the fair competition market order.

At the same time, in response to this incident, the media also set a “tone” for Vipshop — in the face of rules, equal size. This is probably the tone of “not very aggressive, but extremely insulting”. After all, Vipshop, once regarded as the “third pole of e-commerce,” has become a minor side in the face of the rules.

Now, with Vipshop's steady performance being revealed, the negative effects brought about by the “choose one of two” crisis have finally been washed away.

Boosted by its profitable performance, Vipshop's stock price also rose: on February 25, as soon as the US stock market opened, its stock price opened higher and moved higher, surging 6.33% to 38.4 US dollars by the end of the day. It was only on the 26th that its stock price fell slightly. Currently, its total market value is 25.328 billion US dollars.

Let's start from Vipshop's specific performance and see whether the special sale business will be good or bad in the future?

Revenue and net profit growth is steady, but gross margin is declining

Judging from the overall performance, Vipshop's revenue and net profit in 2020 were still “stable” as always.

In addition to being affected by the “black swan” of the public health incident in early 2020, all other quarters maintained a relatively strong increase in performance in the first quarter of 2020 — financial data showed that in the first quarter, its revenue fell 11.85% year on year to 18.793 billion yuan, the second quarter increased 6.01% year on year to 24.111 billion yuan, the third quarter increased 18.19% year on year to 23.18 billion yuan, and the fourth quarter increased 22.02% year on year to 35.775 billion yuan.

(Data source: Wind)

Based on this, Vipshop's revenue and net profit both recorded positive growth in 2020: during the period, the company achieved revenue of 101.9 billion yuan, an increase of 9.5% over the previous year; net profit attributable to Vipshop shareholders was 5.9 billion yuan, an increase of 47% over the previous year.

Of course, if you focus on active users and GMV (total transaction value), you may be able to find out the secrets of their revenue growth.

According to financial reports, in the fourth quarter of 2020, the number of active users of Vipshop was 53 million, an increase of 37% over the previous year. The increase in the number of active users also spurred an increase in order volume and total transaction volume: during the reporting period, its order volume increased from 174.6 million in the same period last year to 227.3 million, an increase of 30% over the previous year, while GMV increased from 47.6 billion yuan in the same period last year to 59.3 billion yuan, an increase of 25% over the previous year. In 2020, its total order volume increased 22% year on year to US$662.4 million, and GMV increased 11% year on year to 165 billion yuan.

In response to this, Vipshop admits in its financial report that this is mainly due to the growth in active users. David Choi, its chief financial officer, said, “Driven by strong growth in the number of active customers, the company continued to achieve rapid growth in the fourth quarter of 2020, with new customers growing faster year over year.”

However, compared to the steady increase in net revenue and profit, its gross margin performance was not that impressive — in 2020, Vipshop's gross margin was 20.9%, down from 22.2% in the same period last year.

In recent years, its gross margin has remained above the 22% level. Apart from the decline in 2018, it declined sharply in 2020.

(Data source: Wind)

Judging from what was disclosed in the financial report, the decline in gross margin may be blamed on the rise in marketing expenses.

Since 2020, Vipshop's presence has become more and more active in various variety shows and hit dramas. According to incomplete statistics, through sponsorship and advertising, it hit the screens of major TV shows and variety shows this year, including “Just Thirty”, “Twenty Never Confused”, “My Daughter in My Family”, and “The Sister Who Rides the Wave”. However, this has brought about a sharp rise in marketing expenses,

Vipshop's marketing expenses for the fourth quarter were 1.7 billion yuan, compared to 944 million yuan for the same period last year, an increase of about 80% over the same period last year, and the percentage of total net revenue also rose to 4.8% from 3.2% in the same period last year.

Also, in terms of cash flow, compared to the decline in gross margin, its performance was quite steady. As of December 31, 2020, the company's cash and cash equivalents and cash limits were $12.8 billion. For the quarter ended December 31, 2020, net cash from operating activities was $7.2 billion, compared to $6.1 billion for the same period last year.

Overall, apart from the decline in gross margin due to rising marketing expenses, Vipshop's other core financial data are still relatively stable.

Growth anxiety is gradually emerging. Is the sale business not going well?

Judging from the above data, it is true that Vipshop's performance is quite steady, but in reality, its growth anxiety hidden under the iceberg is also gradually surfacing.

This can be seen from Vipshop's slowing revenue growth rate.

Since its launch in 2012, with the “discount+vertical” business model, it has once become Ali,JingdongAfter that, the third largest e-commerce platform had net revenue growth of 204.7% and 145.1% year-on-year in 2012 and 2013, respectively.

However, after the highlight, its revenue growth rate seems to have hit a growth bottleneck soon, and has been “slowing down, slowing down, then slowing down” since listing: in 2014, its revenue growth rate still reached 121.59%, but in 2015 it plummeted to 73.82%. After crossing the “horizontal line” of 100%, its revenue growth rate slowed from 40.76% in 2016 to 15.93% in 2018, up to 9.53% today.

(Data source: Wind)

In fact, in order to stop the slowdown in revenue, it's not that Vipshop hasn't done anything.

Like Jumei Premium, over the past few years, Vipshop has been trying to “get out of the ring,” buying Lefeng Network, opening a fresh food community store “Pinjun Life,” etc., and has settled in many e-commerce trends. However, diversification has not brought it new growth. In July 2018, Vipshop had to acknowledge the fact that the transformation had failed and announced its return to the bargain circuit.

At the same time, Vipshop is also speeding up its offline layout. By the end of 2019, Vipshop had about 300 offline stores and 200 Vipshop warehouses. However, although there are many offline layouts, the offline business is an innovative project launched by Vipshop in accordance with the company's special sales strategy. According to data released by Vipshop, currently Vipshop's entire offline project is still at a loss.

The above signs of slowing revenue growth all point to one fact — that is, the bargain business is getting worse and worse.

Overall, at present, Vipshop has encountered some resistance on the special sale track, as follows:

First, there is a competitive environment where “there is sniper ahead, and soldiers are chasing after”. In today's special sales circuit, Vipshop is no longer the only player on this track. On the one hand, there is the rapid rise of a new type of e-commerce that focuses on distribution models that love inventory and clothing stores; on the other hand, it is because Ali and JD have also noticed the end goods category market and are entering the final goods market at an accelerated pace.

Second, the C2M model squeezes living space. In recent years, a “C2M style” has emerged in the e-commerce industry. C2M means that users connect directly to the manufacturer, that is, consumers go directly to the factory. It emphasizes the connection between manufacturing and consumers, and can also be interpreted as a customized model for users. One of the major features of the C2M model is that production according to demand, users place orders first, and the factory reproduces. There is no ratio between inventory and sales, eliminating persistent inventory problems. It can be said that the emergence of the C2M model will be a big blow to merchants that make a living from special sales. After all, it brings a big blueprint for not generating inventory.

In addition to this, in recent years, models such as short video broadcasts and influencers bringing goods have further eroded Vipshop's remaining market share. According to the “China Online Retail B2C Market Quarterly Monitoring Report for the Fourth Quarter of 2020” report, in the fourth quarter of 2020, the transaction volume of China's online retail B2C market was RMB 218.3.24 billion, and Vipshop's market share was only 2.6%.

In order to cope with the above pressure, Vipshop also had to take the lead and use the “choose one of two” approach — that is, Vipshop explicitly requires merchants not to cooperate with iStock and curbs cooperation between merchants and other platforms. According to reports, after “choose one of two”, iStock had 545 affected merchants from August to December 2020, and GMV losses exceeded 2,026 billion yuan. In addition to this, a lot of money has also begun to be spent on marketing. The growth rate of marketing expenses has risen sharply. In the third quarter of 2020, marketing expenses have increased by more than 50% year on year; by the fourth quarter of 2020, marketing expenses have increased by more than 80% year on year.

However, these measures also had quite a few negative effects. For example, the Municipal Supervision Bureau fined 3 million yuan due to unfair competition. Furthermore, gross margin has also declined from a level of 24% that year to 20% today.

Based on the above, it's easy to see that in the fiercely competitive special sales circuit and in the context of the growing depth of the C2M model, there is not much room left for Vipshop to perform.