Original title: Vipshop Holdings Limited(VIPS.US) Q4: how long can the special sale business last for 33 consecutive quarters of profits?

Under the haze of "choose one of two", Vipshop Holdings Limited (VIPS.US) handed over a fairly good "report card".

Prior to the US stock market trading on February 25th, Vipshop Holdings Limited disclosed the results for the fourth quarter and the whole year of 2020. According to the financial report, in the fourth quarter of 2020, Vipshop Holdings Limited achieved revenue of 35.8 billion yuan, an increase of 22 percent over the same period last year, and a net profit of 2.6 billion yuan, an increase of 33.4 percent. The net income for the whole year was 101.9 billion yuan, and the net profit was 5.9 billion yuan.

The point is, this is its 33rd consecutive quarter of profit. You know, in the fierce e-commerce world, except BABAIn addition, there are very few people who can maintain long-term profits, so this performance is enough to arouse the interest of the outside world to "explore" it.

However, what is interesting is that at that time, after Vipshop Holdings Limited and Love Stock "choose me or him" to choose one of the two events, there was a lot of noise about that "the special sale business is getting harder and harder to do."

Here's the whole story.

In September last year, Aiju's announcement that "Vipshop Holdings Limited explicitly requires merchants not to cooperate with Aiji" pulled apart the fig leaf of "choose one of the two". Subsequently, the State Municipal Regulatory Bureau filed a case against Vipshop Holdings Limited on suspicion of unfair competition, and by early February this year, Vipshop Holdings Limited was fined 3 million yuan by the Municipal Supervisory Bureau for disturbing the market order of fair competition.

At the same time, for this incident, the media also set a "tune" for Vipshop Holdings Limited-- in front of the rules, the size is equal. This is probably the tone of "less aggressive, but extremely insulting". After all, Vipshop Holdings Limited, once regarded as the "third pole of e-commerce", has become a small party in front of the rules.

Now, with the fresh release of Vipshop Holdings Limited's steady performance, the negative effects brought about by the storm of "choosing one from the two" have finally been washed away a bit.

Boosted by earnings, Vipshop Holdings Limited's share price also rose: as soon as US stocks opened on Feb. 25, they opened high, rising 6.33 per cent to $38.40 by the end of the day. Its share price fell slightly to the 26th and now has a total market capitalization of $25.328 billion.

Next, we might as well start from Vipshop Holdings Limited's specific performance to see whether the special sale business is easy or difficult to do in the future.

The growth of revenue and net profit is stable, but the gross profit margin is declining.

Judging from the overall performance, Vipshop Holdings Limited's revenue and net profit in 2020 are as stable as ever.

Except for the "black swan" affected by the public health incident in early 2020, the performance "missed decline" in the first quarter of 2020, all other quarters maintained a relatively strong growth-- according to financial data, its revenue fell 11.85% to 18.793 billion yuan in the first quarter, 6.01% to 24.111 billion yuan in the second quarter, and 18.19% to 23.18 billion yuan in the third quarter. In the fourth quarter, it increased by 22.02% over the same period last year to 35.775 billion yuan.

(source: wind)

Based on this, Vipshop Holdings Limited recorded positive growth in revenue and net profit for the whole of 2020: the company's revenue during the period was 101.9 billion yuan, an increase of 9.5% over the same period last year, while the net profit belonging to Vipshop Holdings Limited shareholders was 5.9 billion yuan, an increase of 47% over the same period last year.

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

According to the financial report, the number of Vipshop Holdings Limited's active users was 53 million in the fourth quarter of 2020, an increase of 37 per cent over the same period last year. The increase in the number of active users has also stimulated an increase in orders and total transactions: during the reporting period, the number of orders increased to 227.3 million from 174.6 million in the same period last year, up 30% from 47.6 billion yuan in the same period last year to 59.3 billion yuan in the same period last year, up 25% from the same period last year. For the whole of 2020, its total orders increased by 22% year-on-year to US $662.4 million, and GMV increased by 11% to 165 billion yuan.

In this regard, Vipshop Holdings Limited said frankly in the financial report that this is mainly due to the growth of active users. "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 than the same period last year," said David Cui, its chief financial officer. "

However, compared with the steady growth in revenue and net profit, its gross profit margin is less impressive-Vipshop Holdings Limited's gross profit margin was 20.9% in 2020, down from 22.2% in the same period last year.

In recent years, its gross margin has remained above 22%, except for a decline in 2018, that is, a sharp decline in 2020.

(source: wind)

Judging from the disclosure of the financial report, the decline in gross profit margin may be attributed to the rise in marketing expenses.

Since 2020, Vipshop Holdings Limited has become more and more active in variety shows and popular dramas. According to incomplete statistics, through sponsorship and advertising, he has brushed the screen of this year's popular dramas and variety shows, including "only 30", "20 without perplexity", "my Girl" and "my Sister who braved the Wind and waves" and so on. And this brings a sharp rise in marketing expenses.

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

In addition, in terms of cash flow, its performance is robust relative to the decline in gross profit margin. As of December 31, 2020, the company's cash and cash equivalents and cash restrictions are 12.8 billion yuan. For the quarter ended December 31, 2020, the net cash of operating activities was 7.2 billion yuan, compared with 6.1 billion yuan in the same period last year.

To sum up, in addition to the decline in gross profit margin due to rising marketing costs, Vipshop Holdings Limited's other core financial data are relatively stable.

Growth anxiety is emerging, special sale business is not easy to do?

Judging from the above data, Vipshop Holdings Limited is indeed sound, but in fact, his growth anxiety hidden under the iceberg is also gradually surfacing.

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

Since it was listed in 2012, it has become BABA and JD.com with the business model of "discount + Vertical".After that, net revenue of the third largest e-commerce platform increased by 204.7% in 2012 and 145.1% in 2013 compared with the same period last year.

However, after highlight, its revenue growth seems to have encountered a growth bottleneck soon, and has been showing a trend of "slow down, slow down again" since listing: its revenue growth rate reached 121.59% in 2014, but plummeted to 73.82% in 2015. after crossing the "horizontal line" of 100%, its revenue growth slowed from 40.76% in 2016 to 15.93% in 2018 to 9.53% today.

(source: wind)

In fact, in order to stop the slowdown in revenue, Vipshop Holdings Limited is not without action.

Like Jumei, in the past few years, Vipshop Holdings Limited has been trying to "go out of the circle", buying Lefeng, opening a fresh community store, "Pinjun Life", etc., stopping at a number of e-commerce outlets. However, the development of diversification still did not bring it new growth. In July 2018, Vipshop Holdings Limited had to admit the failure of the transformation and announced his return to the special sale track.

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

The performance of the above slowdown in revenue growth all points to the fact that the special sale business is getting harder and harder to do.

To sum up, at present, Vipshop Holdings Limited has encountered some resistance on the special sale track, as follows:

First, there is a competitive environment in which "there are snipers in the front and pursuers in the rear". On today's special track, Vipshop Holdings Limited is no longer the only player on this track. On the one hand, the new e-commerce that focuses on the distribution mode loves inventory and the rapid rise of a good wardrobe; on the other hand, BABA and JD.com also pay attention to the tail goods market and speed up the pace to cut into the tail goods market.

Second, C2M mode squeezes the living space. In recent years, the e-commerce industry has sprung up a "C2M style". C2M refers to the user directly connected to the manufacturer, that is, the consumer direct factory, which emphasizes the connection between the manufacturing industry and the consumer, and can also be understood as the customization mode. A major feature of C2M mode is that according to demand production, users first place orders, factory reproduction, there is no inventory-to-sales ratio, to eliminate inventory problems. It can be said that the emergence of the C2M model will be a great blow to the merchants who make a living by selling special sells. after all, it brings a big blueprint that does not generate inventory.

In addition, in recent years, modes such as live short videos and online celebrities have further eroded Vipshop Holdings Limited's remaining market share. According to the Quarterly Monitoring report of China's online Retail B2C Market in the fourth quarter of 2020, the transaction volume of China's online retail B2C market was 2.18324 trillion yuan in the fourth quarter of 2020, while Vipshop Holdings Limited's market share was only 2.6 per cent.

In order to cope with the above pressure, Vipshop Holdings Limited also had to take the lead by using the method of "choosing one of the two"-that is, Vipshop Holdings Limited explicitly required that merchants should not cooperate with Love inventory and restrain the cooperation between merchants and other platforms. It is reported that after suffering from "choosing one of the two", Aiku existence affected as many as 545 merchants from August to December 2020, resulting in a loss of more than 2.026 billion yuan for GMV. In addition, a lot of money has been invested in marketing, and the growth rate of marketing expenses has risen sharply. In the third quarter of 2020, marketing expenses increased by more than 50% compared with the same period last year. By the fourth quarter of 2020, marketing expenses increased by more than 80% year-on-year.

However, these measures also have a lot of negative effects. For example, they were fined 3 million yuan by the Municipal Supervisory Bureau for unfair competition. In other words, gross profit margin has fallen from 24% that year to 20% today.

Based on the above, it is not difficult to see that in the highly competitive special sale track, as well as the increasingly in-depth background of the C2M model, there is not much space left for Vipshop Holdings Limited to perform.