VipshopBeing able to survive until now can be said to be a miracle.

From starting with special e-commerce, to developing into comprehensive e-commerce, to refocusing on special sales, Vipshop has gone through the changes in e-commerce for more than ten years — existingAliJingdongThe foundation is evergreen, and so isPinduoduoDefeated the siege, let alone the many players in the game who had to sink their hands, gather the United States, the Faike,McCaullin, koalas,Temple depot,Gome,Suning... In the midst of ups and downs, some sang and advanced, while others left the field in tears.

Looking back at history, it may be possible to divide the history of Vipshop into three major stages:

The first stage is the momentum phase. 2008-2012, positioned as a brand-name discount website, grew from annual revenue of less than 100 million yuan in 2009 to more than 4 billion yuan in 2012, and entered the New York Stock Exchange.

The second phase is the expansion phase. 2013-2017, based on the original business, an attempt was made to diversify into the three major sectors of e-commerce, logistics, and finance. It built its own Liupinjun Express, invested in Lefeng Network, and developed Vipinhua (credit services). However, like other companies that have taken too big steps, there is a certain conflict between their ambitions and their own capabilities. By 2017, Vipshop's non-Gaap net profit growth rate had declined to 3.38%.

The third stage,TencentStrategic shareholding with JD. Since 2018, Vipshop has shut down Lefeng and Pinjun Express and acquired them at the same timeSugiCommercial groups refocus on sales by setting up offline stores.

On February 25, Vipshop announced its performance report for the fourth quarter and full year of 2020. According to the report, Vipshop achieved operating income of 35.77 billion yuan in the fourth quarter, an increase of 22% over the previous year; net profit attributable to shareholders under non-general guidelines was 2.58 billion yuan, a sharp increase of 33.4% over the previous year, and the net profit margin reached 7.2%, up from 6.6% in the same period last year.

Vipshop achieved operating income of RMB 101.86 billion for the full year of 2019, an increase of 9.5% over the previous year; net profit attributable to common shareholders under non-GAAP was RMB 6.27 billion, with a net profit margin of 6.2%. This is also the first time in Vipshop's history that total annual revenue exceeds 100 billion yuan.

Affected by revenue and net profit exceeding expectations, Vipshop's stock price bucked the trend and rose sharply when technology stocks generally suffered a setback on the same day, while the company's stock price rose by more than 120% in the last half of the year, far higher than the increase in the Nasdaq and S&P 500 indices.

In fact, whether it's McCaullin, Red Kids, Fanke Eslite, or Jumei Premium, vertical e-commerce platforms have been reduced to a false proposition in the midst of industry ups and downs. Comprehensive e-commerce holds traffic users and has a more complete service experience, and can easily reduce the impact on vertical categories. There aren't many users at the bottom of the e-commerce category, and getting customers out of the industry is even more expensive. Coupled with being attacked by giants, life is of course not going well.

Against this backdrop, Vipshop is not only alive, but is also quietly making a fortune.

Photo Credit: Yahoo Finance

Financial reports show that in terms of revenue composition, product sales revenue is still Vipshop's main revenue source. In the fourth quarter of 2020, under the influence of the Double Eleven Promotion, Vipshop's product sales revenue reached 34.11 billion yuan, an increase of 21.6% over the previous year, accounting for 95.3% of total revenue. Other business revenue, although smaller in scale, accounted for only 4.7%, but the year-on-year increase reached 32.4%.

Due to the impact of the epidemic in the first half of 2020, people's overall demand for clothing and other consumer goods has been delayed backwards. In addition, e-commerce platforms have generally increased their promotion efforts on Double Eleven this year, so the year-on-year revenue growth rate for the fourth quarter of this year was much higher than in previous years (12.4% year-on-year growth rate in Q4 2019).

Looking at the whole year, Vipshop's product sales revenue was 97.45 billion yuan, an increase of 9.8% over the previous year, and the growth rate was lower than in the fourth quarter. This is mainly due to the impact of the epidemic in the first half of the year. People's demand for clothing and other consumer goods slowed down, which led to a decline in the overall growth rate throughout the year. However, after entering the third quarter, as demand for consumer goods increased throughout society, the year-on-year growth rate of Vipshop's sales returned to double digits.

Vipshop's revenue growth rate continued to pick up in the second half of the year, mainly due to the second release of online traffic dividends in the post-pandemic era and the increase in its marketing investment this year, which contributed to a rapid increase in the number of active buyers.

In the fourth quarter of 2020, the number of active buyers at Vipshop reached 53 million, an increase of 37.3% over the same period last year; in 2020, the number of active buyers reached 83.9 million, a net increase of 14.9 million over 69 million in 2019. And this is far higher than the net year-on-year increases of 8.5 million and 2.7 million in 2019 and 2018.

The increase in the number of paying users has also directly driven the rapid increase in Vipshop orders. In 2020, Vipshop completed 692 million orders throughout the year, an increase of 126 million orders over the full year of 2019, an increase of 22.3%.

In terms of single-average GMV, since Vipshop increased its efforts to attract new users in 2020, the average GMV for new users is usually less than that of old users (new users are relatively cautious about purchasing for the first time), so the company's average GMV was lowered from 261.7 yuan in 2019 to 238.3 yuan in 2020.

However, compared to the rapid increase in the number of orders, the decline in the average consumption amount had relatively little impact on the company's overall GMV. This also brought the company's total GMV for the full year of 2020 to 165 billion yuan, a net increase of 16.8 billion yuan over the previous year.

In terms of gross profit, Vipshop's gross profit for the full year of 2020 was RMB 21.29 billion, up 2.9% year on year, but gross margin fell 1.3 percentage points year on year. This is mainly due to the acquisition of Shanshan's outlet stores in 2019. The overall operating cost of offline stores is much higher than that of online stores (offline stores include rent, utilities, etc.), thus reducing the overall gross profit margin.

It is worth noting that in the face of declining gross margin, the company's net profit level increased, from an average of 5.4% for the full year of 2019 to 6.2% in 2020. This is mainly due to a decrease in Vipshop's overall performance costs and an increase in operating efficiency.

Since the fourth quarter of 2019, Vipshop shut down its self-operated express delivery, Pinjun Express, and completely switched to third-party delivery, the company's overall performance costs have continued to improve.

The company's performance cost for the full year of 2020 was RMB 6.88 billion, a year-on-year decrease of 9.4%; the average execution cost also fell from RMB 13.41 in 2019 to 9.93 in 2020, a drop of up to 26%. Since Vipshop is related toShun FengA strategic cooperation agreement has been reached, so while the user's logistics experience has not declined, overall efficiency has been greatly improved.

In addition to the reduction in performance costs, Vipshop's operating expenses ratio in 2020 also fell from 9.3% in 2019 to 9.1% in 2020, mainly due to the reduction in the company's R&D and content expenses.

In terms of market fees, due to the 2020 pandemic, the e-commerce industry as a whole is in a traffic dividend period, and the company has increased its marketing expenses throughout the year to attract new users.

In the conference call after the financial report was released, Shen Ya said that Vipshop has further increased its marketing efforts in Q4. There are various customer acquisition channels, including precision marketing, mobile pre-installation, TV series, and variety shows. In addition, Vipshop is also experimenting with customer acquisition methods such as live broadcasts, short videos, WeChat groups, and communities.

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Judging from financial data alone, Vipshop's performance is worth focusing on.

However, in addition to financial reports, some signs also sounded a wake-up call for the re-growth of Vipshop — important shareholder Gao Lin Capital is reducing its holdings in Vipshop. In August 2020, the US stock holdings for the second quarter of 2020 disclosed by Hillhouse Capital showed that it had reduced its holdings of 1,567,700 shares of Vipshop shares. However, in Hillhouse Capital's position data for the fourth quarter of 2020, the name of Vipshop can no longer be found.

Source: Capital Detective

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