Vipshop Holdings Ltd (VIPS) 2017 Q3 法說會逐字稿

Ladies and gentlemen, good day to everyone, and welcome to Vipshop Holdings Limited Third Quarter 2017 Earnings Conference Call. At this point, I would like to turn the call to Mr. Millicent Tu, Vipshop's Director of Investor Relationships. Please proceed, sir.

女士們、先生們，大家好，歡迎參加唯品會控股有限公司2017年第三季度業績電話會議。在此，我想請唯品會投資者關係總監Millicent Tu先生致電。請繼續，先生。

Thank you, operator. Hello, everyone, and thank you for joining Vipshop's Third Quarter 2017 Earnings Conference Call. Before we begin, I'll read the safe harbor statement. During this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations, assumptions, estimates and projections about Vipshop Holdings Limited and its industry. All statements, other than statements of historical facts we may make during this call, are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as anticipate, believe, continue, estimate, expect, intend, is/are likely to, may, plan, should, will, aim, potential or other similar expressions. These forward-looking statements speak only as of date hereof and are subject to change at any time, and we have no obligation to update these forward-looking statements. Joining us on today's call are Mr. Eric Shen, our Co-Founder, Chairman and CEO; and Donghao Yang, our CFO. At this time, I would like to turn the call over to Mr. Eric Shen-Zong.

謝謝你，接線員。大家好，感謝您參加唯品會2017年第三季度業績電話會議。在我們開始之前，我將閱讀安全港聲明。在本次電話會議中，我們將根據我們目前對唯品會控股有限公司及其行業的預期、假設、估計和預測，做出 1995 年《私人證券訴訟改革法案》含義內的前瞻性聲明。除我們在本次電話會議中可能做出的歷史事實陳述外，所有陳述均為前瞻性陳述。在某些情況下，這些前瞻性陳述可以通過諸如預期、相信、繼續、估計、期望、打算、是/可能、可能、計劃、應該、將、目標、潛力或其他類似的詞語或短語來識別表達式。這些前瞻性陳述僅代表截至本文發布之日的情況，並可能隨時發生變化，我們沒有義務更新這些前瞻性陳述。參加今天電話會議的還有我們的聯合創始人、董事長兼首席執行官沉先生 (Eric Shen)；和我們的首席財務官楊東浩。這時我想把電話轉給Eric Shen-Zong先生。

Good morning, and good evening, everyone. Welcome, and thank you for joining our third quarter 2017 earnings conference call. We are pleased that our strategic shifts to focus on our old customers and attractive high-quality new customers is delivering consistent results. Our ARPU increased by 11% year-over-year to RMB 643 in the third quarter, driven by the robust increase in average ticket size and the shopping frequencies. In addition, our total active customers for the TTM ended September 30, 2017, reached 6.5 million (sic) [60.5 million], increasing by 22% from the same period last year. We are pleased with the robust growth we have seen in our core categories. Further, we continue to enhance the selection of our product offerings to meet our customers' needs. In the past quarter, we made more progress, in turn, our category expansion, including the offering our pharmaceutical-related products. Meanwhile, we have seen strong growth in our sports, cosmetics and the Vipshop live channel. We are in the process of continue to open up our marketplace, which will lead to increase up better customer service and the incremental margin contribution. Recently, we added more than 100 popular domestic and international fashion brands. For this year, Singles' Day, we delivered the solid robust that exceed our expansions -- expectations. Over 4,000 brands participate in the events and the total orders exceeded 10 million. On the CRM side, we made further progress with the new Super VIP program. With this new offering, we have seen that our loyal customers shop with us more regularly. We began to roll out the program to all customers at the end of the third quarter, and believe the positive trends will continue. Our customers financing service has seen increased popularity, which is helping with the uplift. We are leveraging our 10 oversea office and 6 oversea warehouse to bring highly desirable products to consumers in China, which helps to include spending our Post '90s customers. Leveraging our 2.4 million square meters of specialized warehousing space, 27,000 delivering staff and the 3,700 delivery stations, we aim to continue to improve our end-to-end user experience. At this point, let me hand over the call to our CFO, Donghao Yang, so that he may discuss our strategies in more detail and go over our operational and the financial results.

大家早上好，晚上好。歡迎並感謝您參加我們的 2017 年第三季度收益電話會議。我們很高興我們的戰略轉變，專注於老客戶和有吸引力的高質量新客戶，正在取得一致的成果。由於平均門票金額和購物頻率的強勁增長，第三季度我們的 ARPU 同比增長 11% 至人民幣 643 元。此外，截至 2017 年 9 月 30 日，我們的 TTM 活躍客戶總數達到 650 萬（原文如此）[6050 萬]，比去年同期增長 22%。我們對核心類別的強勁增長感到高興。此外，我們繼續加強產品選擇，以滿足客戶的需求。在過去的季度中，我們在品類擴張方面取得了更多進展，包括提供醫藥相關產品。與此同時，我們的體育、美妝和唯品會直播頻道也實現了強勁增長。我們正在繼續開放市場，這將帶來更好的客戶服務和增量利潤貢獻。近期，我們新增了100多個國內外熱門時尚品牌。在今年的雙十一，我們提供了超出我們預期的強勁擴張。超過4000個品牌參與活動，訂單總額突破1000萬筆。在CRM方面，我們通過新的超級VIP計劃取得了進一步的進展。通過這項新產品，我們發現我們的忠實客戶更頻繁地在我們這裡購物。我們在第三季度末開始向所有客戶推出該計劃，並相信積極的趨勢將持續下去。我們的客戶融資服務越來越受歡迎，這有助於提升。我們正在利用我們的 10 個海外辦事處和 6 個海外倉庫為中國消費者帶來非常理想的產品，這有助於吸引我們的 90 後客戶。憑藉我們240萬平方米的專業倉儲空間、27,000名送貨人員和3,700個送貨站，我們的目標是繼續改善我們的端到端用戶體驗。現在，讓我將電話轉交給我們的首席財務官楊東浩，以便他可以更詳細地討論我們的戰略並審查我們的運營和財務業績。

Thanks, Eric. And hello, everyone. In the third quarter, we further advanced our warehousing expansion, adding 3 more local warehouses, which brings our total number of local warehouses to 14 as of the end of September. Further, as we continue to expand our cross-border business, we added more warehousing space in Hong Kong, France, Australia and the United States. Currently, we have approximately 2.4 million square meters of total warehousing space. We are delighted to see that our delivery efficiency improved consistently. In the third quarter, we delivered over 98% of our orders through our proprietary last-mile network, up from 90% in the prior year period. Our logistics capability is an important component of our core competency and a big reason of why customers prefer to shop with us. Looking forward, we remain committed on improving our efficiency and lowering our cost. On the Internet finance side, we continue to make progress with the proposed spin-off, which will improve our cash flow and earnings. We are pleased that the Internet finance subsidiary completed its second offering of asset-backed securities, totaling RMB 500 million. Our consumer financing service has seen increased popularity, which is helping with the ARPU uplift. In the third quarter of 2017, the number of customers who used our consumer financing service increased by 146% year-over-year to 3.8 million from 1.5 million in the same period last year. We also increased the proportion of interest-bearing loans in the third quarter. As of September 30, 2017, the total balance of credit outstanding to customers was around RMB 3.4 billion, and the total balance of credit outstanding to suppliers was RMB 1.2 billion. Now moving on to our quarterly financial highlights. Before I get started, I would like to clarify that all the financial numbers presented today are in renminbi amounts and all the percentage changes refer to year-over-year changes unless otherwise noted. Total net revenue for the third quarter of 2017 increased by 27.6% to RMB 15.3 billion, primarily driven by the growth in the number of active customers and average revenue per customer. Gross profit for the third quarter of 2017 increased by 19.4% to RMB 3.5 billion from RMB 2.9 billion in the prior year period. Gross margin was 22.9% as compared with 24.4% in the prior year period, primarily attributable to our investment in promotional activities for market share gains, which is balanced by reduced spending in our broader marketing efforts. Fulfillment expenses for the third quarter of 2017 were RMB 1.7 billion as compared with RMB 1 billion in the prior year period, primarily reflecting an increase in sales volume and number of orders fulfilled. As a percentage of total net revenue, fulfillment expenses were 10.9% as compared with 8.5% in the prior year period, primarily attributable to our expansion to support an increase in our last-mile business outside of Vipshop. As of September 30, 2017, we have approximately 3,700 delivery stations, up from 1,300 in the prior year period. In addition, we have approximately 27,000 last-mile delivery staff, up from 17,000 in the prior year period. Market expenses for the third quarter of 2017 were RMB 478 million as compared with RMB 642 million in the prior year period. As a percentage of total net revenue, marketing expenses decreased to 3.1% from 5.2% in the prior year period. Technology and content expenses for the third quarter of 2017 were RMB 455 million as compared with RMB 374 million in the prior year period, reflecting our continuing efforts to invest in human capital, advanced technologies and our Internet finance business. As a percentage of total net revenue, technology and content expenses decreased to 3% from 3.1% in the prior year period. General and administrative expenses for the third quarter of 2017 were RMB 547 million as compared with RMB 501 million in the prior year period. As a percentage of total net revenue, general and administrative expenses decreased to 3.6% from 4.2% in the prior year period, primarily attributable to our improved efficiency due to our greater scale. Our income from operations was RMB 448 million for the third quarter of 2017. Operating margin was 2.9% as compared with 4.4% in the prior year period. Non-GAAP income from operations, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was RMB 703 million as compared with RMB 732 million in the prior year period. Non-GAAP operating income margin was 4.6% as compared with 6.1% in the prior year period. Our net income attributable to Vipshop's shareholders for the third quarter of 2017 was RMB 338 million as compared with RMB 343 million in the prior year period. Net margin attributable to Vipshop shareholders was 2.2% as compared with 2.9% in the prior year period, primarily attributable to decreased gross margin and increased fulfillment costs due to our investment into the Logistics business outside of the Vipshop platform. Net income attributable to Vipshop shareholders per diluted ADS was RMB 0.56 as compared with RMB 0.58 in the prior year period. Non-GAAP net income attributable to Vipshop shareholders, which excludes share-based compensation expenses, impairment loss of investments and amortization of intangible assets resulting from business acquisitions and equity method investments was RMB 560 million as compared with RMB 595 million in the prior year period. Non-GAAP net margin attributable to Vipshop shareholders was 3.7% as compared with 5% in the prior year period, which reflects our strategic short-term investment for future growth and improved customer experience and loyalty. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS was RMB 0.91 as compared with RMB 1 in the prior year period. As of September 30, 2017, our company had cash and cash equivalents and restricted cash of RMB 3.7 billion and held-to-maturity securities of RMB 230 million. For the third quarter of 2017, net cash used in operating activities was RMB 0.4 billion. Looking at our business outlook for the fourth quarter of 2017, we expect our total net revenue to be between RMB 22.8 billion and RMB 23.8 billion, representing year-over-year growth rate of approximately 20% to 25%. With that, I would now like to open the call to Q&A.

謝謝，埃里克。大家好。第三季度，我們進一步推進倉儲擴張，新增3個本地倉庫，截至9月底，我們的本地倉庫總數達到14個。此外，隨著我們不斷拓展跨境業務，我們在香港、法國、澳大利亞和美國增加了更多倉儲空間。目前，我們擁有總倉儲面積約240萬平方米。我們很高興看到我們的交付效率持續提高。第三季度，我們通過專有的最後一英里網絡交付了超過 98% 的訂單，高於去年同期的 90%。我們的物流能力是我們核心競爭力的重要組成部分，也是客戶喜歡在我們這裡購物的重要原因。展望未來，我們將繼續致力於提高效率並降低成本。在互聯網金融方面，我們的分拆計劃繼續取得進展，這將改善我們的現金流和盈利。我們很高興互聯網金融子公司完成了第二次資產支持證券發行，總額為人民幣5億元。我們的消費金融服務越來越受歡迎，這有助於提高 ARPU。2017年第三季度，使用消費金融服務的客戶數量從去年同期的150萬戶增至380萬戶，同比增長146%。第三季度我們還提高了有息貸款的比例。截至2017年9月30日，客戶授信餘額總額約為人民幣34億元，供應商授信餘額總額約為人民幣12億元。現在轉向我們的季度財務亮點。在開始之前，我想澄清一下，除非另有說明，今天提供的所有財務數據均以人民幣為單位，所有百分比變化均指同比變化。2017年第三季度總淨收入增長27.6%至人民幣153億元，主要得益於活躍客戶數量和每位客戶平均收入的增長。2017年第三季度毛利潤由上年同期的29億元人民幣增長19.4%至35億元人民幣。毛利率為 22.9%，而去年同期為 24.4%，這主要歸功於我們為擴大市場份額而進行的促銷活動的投資，以及我們更廣泛的營銷活動支出的減少所平衡的結果。2017年第三季度的履約費用為人民幣17億元，而上年同期為人民幣10億元，主要反映銷量和履約訂單數量的增加。履約費用佔總淨收入的百分比為 10.9%，而上年同期為 8.5%，這主要歸因於我們為支持唯品會之外的最後一英里業務的增長而進行的擴張。截至 2017 年 9 月 30 日，我們擁有約 3,700 個配送站，高於去年同期的 1,300 個。此外，我們還有大約 27,000 名最後一英里送貨人員，高於去年同期的 17,000 名。2017年第三季度市場費用為人民幣4.78億元，上年同期為人民幣6.42億元。營銷費用佔總淨收入的百分比從去年同期的 5.2% 下降至 3.1%。2017年第三季度的技術和內容費用為人民幣4.55億元，而上年同期為人民幣3.74億元，反映出我們對人力資本、先進技術和互聯網金融業務的持續投資。技術和內容支出佔總淨收入的百分比從去年同期的 3.1% 下降至 3%。2017年第三季度的管理費用為人民幣5.47億元，上年同期為人民幣5.01億元。一般及管理費用占淨收入總額的百分比從上年同期的 4.2% 下降至 3.6%，這主要是由於我們規模擴大而提高了效率。2017年第三季度我們的營業收入為人民幣4.48億元。營業利潤率為 2.9%，上年同期為 4.4%。非公認會計準則運營收入（不包括股權激勵費用和業務收購產生的無形資產攤銷）為人民幣 7.03 億元，而上年同期為人民幣 7.32 億元。非 GAAP 營業利潤率為 4.6%，上年同期為 6.1%。2017年第三季度歸屬於唯品會股東的淨利潤為人民幣3.38億元，上年同期為人民幣3.43億元。歸屬於唯品會股東的淨利潤為2.2%，而去年同期為2.9%，主要是由於我們對唯品會平台之外的物流業務的投資導致毛利率下降和履約成本增加。每股攤薄後歸屬於唯品會股東的淨利潤為人民幣0.56元，而上年同期為人民幣0.58元。非美國通用會計準則歸屬於唯品會股東的淨利潤（不包括股權激勵費用、投資減值損失以及業務收購和權益法投資產生的無形資產攤銷）為人民幣5.6億元，上年同期為人民幣5.95億元。非公認會計原則歸屬於唯品會股東的淨利潤為3.7%，而上年同期為5%，這反映了我們對未來增長以及改善客戶體驗和忠誠度的戰略性短期投資。非美國通用會計準則每股稀釋美國存託股歸屬於唯品會股東的淨利潤為人民幣0.91元，而上年同期為人民幣1元。截至2017年9月30日，本公司擁有現金及現金等價物及限制性現金37億元，持有至到期證券2.3億元。2017年第三季度，經營活動使用的現金淨額為人民幣4億元。展望2017年第四季度的業務前景，我們預計淨收入總額將在人民幣228億元至人民幣238億元之間，同比增長率約為20%至25%。現在，我想開始問答環節。

(Operator Instructions) The first question comes from the line of Wendy Huang from Macquarie.

（操作員說明） 第一個問題來自麥格理的Wendy Huang。

So can management give us more color and detail about what kind of technology or the innovation that you have done recently to drive down the user acquisition cost in order to improve the user retention rates? And also housekeeping question about upcoming December 8 promotion. So how December 8 promotion is different from the previous years?

那麼，管理層能否向我們提供更多關於您最近採取了哪些技術或創新來降低用戶獲取成本以提高用戶保留率的信息和細節？還有關於即將到來的 12 月 8 日促銷活動的客房服務問題。那麼12月8日的促銷活動與往年有何不同呢？

Wendy, we only can share the second part, but we'll take a second question in terms of this December, the 8th promotion and then we didn't catch on the first one. (foreign language)

Wendy，我們只能分享第二部分，但我們會就今年 12 月的第八次促銷提出第二個問題，然後我們沒有聽懂第一個問題。（外語）

Okay. (foreign language)

好的。（外語）

Okay. So Wendy, for the December 8 promotion, which is the single biggest one for the company within the year, obviously, is to celebrate our anniversary. And this year, we will start early. So we enter the promotion on the 1st of December, which will last to about 12th in December. But the biggest promotion -- the biggest discount -- the degree discount that we're going to offer will come in on the 7th of December. So this year, the duration will be longer compared to previous years.

好的。因此，Wendy 在 12 月 8 日舉行的促銷活動顯然是為了慶祝我們的周年紀念日，這是公司一年內最大的一次促銷活動。今年，我們將提前開始。所以我們從12月1號開始促銷，一直持續到12月12號左右。但最大的促銷活動——最大的折扣——我們將在 12 月 7 日提供學位折扣。所以今年的持續時間會比往年更長。

The first question, I'm not sure if she can...

第一個問題，我不確定她是否可以...

Wendy, you're online. Could you please just repeat your first question?

溫迪，你上線了。您能重複一下您的第一個問題嗎？

(Operator Instructions)

（操作員說明）

So my first question is can management give us more color and detail regarding what kind of product and the technology innovation you have done recently to actually -- to drive down the user acquisition cost in order to improve the user retention rate?

所以我的第一個問題是，管理層能否為我們提供更多關於您最近所做的什麼樣的產品和技術創新的細節和細節——以降低用戶獲取成本，從而提高用戶保留率？

(foreign language)

（外語）

(foreign language)

（外語）

(foreign language)

（外語）

So internally, we are developing our own priority target the advertising platform, so that we can match the traffic with our customers a bit more accurately. And we are still in the process of doing the optimization. And from the external marketing or traffic acquisition channel, obviously, we're looking at social platforms, including WeChat, and even mini programs. And we will -- we just started a mini program, and so far the results are showing some good signs. Obviously, we're still testing it. And it must turn out to be one of the very effective way to acquire traffic for Vipshop.

所以在內部，我們正在開發自己的優先目標廣告平台，以便我們能夠更準確地匹配流量和客戶。我們仍在進行優化。而從外部營銷或者流量獲取渠道來看，顯然我們正在關注社交平台，包括微信，甚至小程序。我們剛剛啟動了一個小程序，到目前為止，結果顯示出一些好的跡象。顯然，我們仍在測試它。這一定會成為唯品會獲取流量的非常有效的方式之一。

The next question comes from the line of Bonnie (sic) [Binnie] Wong from Merrill Lynch.

下一個問題來自美林證券 (Merrill Lynch) 的 Bonnie (sic) [Binnie] Wong。

It's Binnie here. So my question is on the user growth strategy. How much do you see are active customer growth this quarter come from repeat customer? How much is it coming from the new customers? This quarter, it looks like the growth has been moderated. Can management give us any color on that in terms of any update on the user growth strategy? And also, it looks like company this quarter has prioritized ARPU growth. Because ARPU has been growing quite nicely compared to the active customer growth. Can you elaborate on -- is that due to more about consumption upgrade or is it because an expansion as customer buy from multiple categories or any other reasons?

賓尼在這裡。所以我的問題是關於用戶增長策略。您認為本季度的活躍客戶增長有多少來自回頭客？有多少來自新客戶？本季度，增長似乎有所放緩。管理層能否就用戶增長策略的更新向我們提供任何信息？而且，看起來公司本季度優先考慮了 ARPU 增長。因為與活躍客戶的增長相比，ARPU 的增長相當不錯。您能否詳細說明一下，這是由於更多的消費升級，還是因為客戶購買多品類的擴張或其他原因？

(foreign language)

（外語）

Okay. (foreign language)

好的。（外語）

So Binnie, to summarize on what Eric just said. Overall, our user growth is quite healthy. Although our new user growth was not running as fast compared to when we were a lot smaller in the past. But something to highlight this quarter. Obviously, the quality of new users and even the old users improved quite substantially, which was demonstrated by our ARPU lift for this quarter by 11%. Eric also mentioned that we are working on conversion rate improvement constantly, and we have seen some continued progress on this front. And to answer your question, what contributed to the ARPU uplift? There are 4 components here. So number one, our personalized packaging using our data and mention our customers a bit more accurately. And secondly, category expansion to offer more SKUs and more product to our customers. And thirdly, the Super VIP program rollout. Obviously, customers that buy more regularly on our platform. And last, but not the least, is the adoption of our Internet finance, offering installment payments to our users. So all of these contributing to ARPU uplift. And we believe that trend will continue down the road.

Binnie，總結一下 Eric 剛才所說的內容。總體而言，我們的用戶增長相當健康。儘管與過去規模較小時相比，我們的新用戶增長速度沒有那麼快。但本季度有一些值得強調的事情。顯然，新用戶甚至老用戶的質量都有很大提高，本季度 ARPU 提升 11% 就證明了這一點。Eric還提到，我們正在不斷致力於提高轉化率，並且我們已經看到這方面的一些持續進展。回答你的問題，是什麼促成了 ARPU 的提升？這裡有 4 個組件。第一，我們的個性化包裝使用我們的數據，並更準確地提及我們的客戶。其次，品類擴張，為客戶提供更多 SKU 和更多產品。第三，推出超級VIP計劃。顯然，客戶更經常在我們的平台上購買。最後但並非最不重要的一點是我們採用互聯網金融，為用戶提供分期付款。所有這些都有助於提高 ARPU。我們相信這種趨勢將繼續下去。

The next question comes from the line of Mr. Alex Yao from JPMorgan.

下一個問題來自摩根大通的Alex Yao先生。

(foreign language) Let me translate the question myself. So for this quarter, sales and marketing seems to be a bit lighter than the previous quarters in terms of absolute term and in terms of percentage of revenue. We understand from past, the conversation that you guys take the combination of cost of revenue and the sales and marketing as a combined resource to drive new user growth. But this quarter, you have sequential improvement in gross margin. But you actually cut sales and marketing budget meaningfully, both in absolute terms and as a percentage of total revenue. Can you share with us how you think about the sales and marketing strategy? And how shall we look at this line item for the next few quarters?

（外語）我自己翻譯一下這個問題。因此，就本季度而言，從絕對值和占收入百分比來看，銷售和營銷似乎比前幾個季度要淡一些。我們從過去的對話中了解到，你們將收入成本與銷售和營銷相結合作為推動新用戶增長的綜合資源。但本季度，毛利率連續改善。但實際上，無論是絕對值還是佔總收入的百分比，您都有意義地削減了銷售和營銷預算。您能與我們分享您對銷售和營銷策略的看法嗎？未來幾個季度我們將如何看待這個項目？

(foreign language)

（外語）

Okay. Well, Alex, this is Donghao. Thank you very much for your question. Well, the reason that our marketing expenses went down in Q3 was because we shifted some of our marketing budget from the third quarter to fourth quarter. The third quarter is typically our low season. The temperature is usually very hot in July, August and the first half of September. And just people simply don't buy that much apparel product. So we've decided that we should probably shift some marketing budget to the fourth quarter, which is our peak season quarter when the weather -- the temperature is very cold and people tend to buy a lot of clothes. So that's exactly what happened. And this will help us achieve higher ROI for our marketing budget. And going forward, in Q4, I think, the marketing expenses as a percent of revenue will come back up to its normal level. So this trend, this low marketing expense level will not continue into the next couple of seasons -- quarters.

好的。嗯，亞歷克斯，這是東浩。非常感謝您的提問。嗯，我們的營銷費用在第三季度下降的原因是我們將部分營銷預算從第三季度轉移到了第四季度。第三季度通常是我們的淡季。七月、八月和九月上半月的氣溫通常非常炎熱。只是人們根本不買那麼多服裝產品。因此，我們決定將一些營銷預算轉移到第四季度，這是我們的旺季季度，當時天氣非常寒冷，人們傾向於購買大量衣服。事實正是如此。這將幫助我們實現更高的營銷預算投資回報率。展望第四季度，我認為營銷費用佔收入的百分比將恢復到正常水平。因此，這種趨勢、這種低營銷費用水平不會持續到接下來的幾個季度——幾個季度。

And the next question comes from the line of Jerry Liu from UBS.

下一個問題來自瑞銀集團的Jerry Liu。

My question is relating to competition. And when we look at the December quarter, should we expect gross margin to trend down sequentially, as is the case the last 2 years? And how do we look at this December quarter generally from a competitive standpoint? And then, the second question is on the fulfillment expense. Given the high -- higher percentage of revenue in the September quarter, do we expect that to remain in this level or trend down in the December quarter and maybe some comments on initial plans for next year?

我的問題與競爭有關。當我們觀察 12 月份的季度時，我們是否應該預期毛利率會像過去兩年一樣呈連續下降趨勢？從競爭的角度來看，我們總體上如何看待這個 12 月季度？然後，第二個問題是關於履行費用。鑑於 9 月份季度的收入比例較高，我們是否預計 12 月份季度的收入將保持在這一水平或呈下降趨勢，也許對明年的初步計劃有一些評論？

All right. Thank you for your question. Let me try to answer those 2 questions. First, on gross margin. Usually, we don't give guidance on our gross margin. But if you look at our strategy, which is to grow our top line as fast as possible while maintaining a relatively stable bottom line, so we could be flexible the other line items. The -- we don't see much change in the competitive landscape in Q4 versus Q3, but Q4 is typically our peak season. And we will have our biggest promotional campaign in the whole year on December 8. So again, we will try to grow our top line as fast as possible, while maintaining a stable bottom line. And fulfillment, the reason our fulfillment expenses went up in Q3 was because we made quite a lot of investment into our last-mile delivery network work. As we mentioned in our earnings release and our -- the call script, we added quite substantially like more than 7,000 delivery staff to our delivery operations in the first 9 months of this year, which obviously has added to our fulfillment costs. And going forward, as our business continues to grow and as we gain more businesses from outside of Vipshop platform, the utilization of our fulfillment network will go up substantially, which will definitely help bring down the fulfillment expenses as a percent of revenue.

好的。謝謝你的問題。讓我嘗試回答這兩個問題。首先是毛利率。通常，我們不會給出毛利率指導。但如果你看看我們的戰略，那就是在保持相對穩定的利潤的同時，盡可能快地增長我們的營收，這樣我們就可以靈活處理其他項目。我們沒有看到第四季度的競爭格局與第三季度相比有太大變化，但第四季度通常是我們的旺季。我們將於 12 月 8 日舉辦全年最大規模的促銷活動。因此，我們將再次努力盡快增加我們的收入，同時保持穩定的利潤。至於履約，我們第三季度的履約費用增加的原因是我們對最後一英里的交付網絡工作進行了大量投資。正如我們在財報和電話會議腳本中提到的，今年前 9 個月，我們在配送業務中大幅增加了 7,000 多名配送人員，這顯然增加了我們的配送成本。展望未來，隨著我們業務的不斷增長，以及我們從唯品會平台之外獲得更多業務，我們的配送網絡的利用率將大幅上升，這肯定有助於降低配送費用佔收入的百分比。

The next question comes from the line of Alex Liu from Daiwa.

下一個問題來自大和的 Alex Liu。

(foreign language) So my question is on the categories. So I was wondering whether the management can give us some updates on the growth perspective of the entire apparel, shoes, cosmetic categories in the online market in the coming few years; and specifically, all of our market share, although given the fact that we are already quite sizable in these core categories. And for the new categories, which categories are we targeting? And how should we think about the revenue contribution from these new categories in the coming 3 years?

（外語）所以我的問題是關於類別的。所以我想知道管理層是否可以給我們一些關於未來幾年在線市場上整個服裝、鞋子、化妝品類別的增長前景的最新信息；具體來說，我們所有的市場份額，儘管我們在這些核心類別中已經相當大了。對於新類別，我們的目標類別是哪些？我們該如何看待這些新品類未來3年的收入貢獻？

(foreign language)

（外語）

So Alex, I will just quickly summarize what Eric said. So you're right. We are quite strong, in particular, our core categories, which include apparel, handbag, shoes, sport, which has demonstrated quite robust and steady growth over the past few quarters. And we continue to believe that there's a huge demand for these categories online in China, as we have already become a vital business partner for the key suppliers. In terms of our cosmetics, mom and baby and home goods, we also recorded quite strong growth, in particular, cosmetics. And in terms of the new category expansion, Eric mentioned that we added Vipshop live channel. And we have seen although a small base, it grew more than 300% year-over-year. And we are in the process of trying to increase some categories to include both key items on to our third-party platform to offer more SKUs, more choices and selection to our customers.

亞歷克斯，我將快速總結埃里克所說的話。所以你是對的。我們非常強大，特別是我們的核心品類，包括服裝、手袋、鞋子、運動，在過去幾個季度表現出相當強勁和穩定的增長。我們仍然相信中國對這些類別的在線需求巨大，因為我們已經成為主要供應商的重要業務合作夥伴。在我們的化妝品、母嬰和家居用品方面，我們也取得了相當強勁的增長，特別是化妝品。而在新的品類拓展方面，Eric提到我們新增了唯品會直播頻道。我們看到，雖然基數很小，但同比增長超過 300%。我們正在嘗試增加一些類別，將這兩個關鍵商品納入我們的第三方平台，以便為我們的客戶提供更多 SKU、更多選擇和選擇。

The next question comes from the line of Yufei Gao from 86Research.

下一個問題來自86Research的Yufei Gau。

My question is about the Internet finance. So for this caller, what is the revenue contribution of Internet finance business? And what percentage of GMV is generated through Internet finance?

我的問題是關於互聯網金融的。那麼對於這位來電者來說，互聯網金融業務的收入貢獻是多少呢？而通過互聯網金融產生的GMV有多少比例？

(foreign language)

（外語）

(foreign language)

（外語）

Okay. So Yufei, I think, your question on the interest bearing for our Internet finance, if you look at the other net revenue line, it's about 4% of the contribution.

好的。所以宇飛，我想，你關於我們互聯網金融的利息承擔的問題，如果你看一下其他淨收入線，大約是4%的貢獻。

And well, in terms of the percentage of GMV supported by our Internet finance unit, it's about 20%.

那麼我們互聯網金融部門支持的GMV比例大概是20%左右。

The next question comes from the line of Virginia Yu from Citigroup.

下一個問題來自花旗集團的 Virginia Yu。

This is Virginia asking on behalf of Alicia. So we have 2 questions here. Firstly, we would like to know about the trend for ARPU for customer. So we are wondering whether you will continue to grow double digits in the next quarters. And in addition, can management share with us the demographic breakdown of the active users to right now in terms of age group, income group or the geographic location? The second question is, can management also update us on the warehouse utilization rates, and also, the profitability of Logistics business?

這是維吉尼亞代表艾麗西亞提出的請求。所以我們這裡有兩個問題。首先，我們想了解一下客戶的ARPU 趨勢。因此，我們想知道您在接下來的幾個季度是否會繼續實現兩位數增長。此外，管理層能否與我們分享目前活躍用戶的年齡組、收入組或地理位置的人口統計數據？第二個問題是，管理層能否向我們通報倉庫利用率以及物流業務的盈利能力？

(foreign language)

（外語）

Okay. (foreign language)

好的。（外語）

So the first question, whether we're able to continue to maintain the double-digit ARPU. Earlier on the call, Eric mentioned that there are 4 primary reasons why ARPU increased by 11% in the quarter compared to the same period last year. Given all the trends that we are seeing now, we believe that the trend is sustainable and even perhaps leading to further improvement down the road. And obviously, we're looking at conversion rate improvement, too. And your second question in terms of the customer breakdown by the geography, Eric mentioned that if -- when we look at the past 2 quarters, some cities might -- some tier cities might grow by 1%, whereby, the other cities might be 1% up. But overall, I'm afraid that does not change too much. Over the past few quarters, it's been quite stable. (foreign language)

那麼第一個問題，我們是否能夠繼續保持兩位數的ARPU。早些時候，Eric 在電話會議上提到，本季度 ARPU 較去年同期增長 11% 有 4 個主要原因。鑑於我們現在看到的所有趨勢，我們相信這種趨勢是可持續的，甚至可能會導致未來的進一步改善。顯然，我們也在考慮提高轉化率。你的第二個問題是按地理位置劃分的客戶細分，埃里克提到，如果——當我們回顧過去兩個季度時，一些城市可能——一些一線城市可能會增長 1%，而其他城市可能會增長 1%。上漲 1%。但總體來說，恐怕不會有太大變化。過去幾個季度，情況相當穩定。（外語）

(foreign language)

（外語）

So the utilization rate of our current warehouse space is roughly standing at around 80% to 85%.

所以我們目前倉庫空間的利用率大致在80%到85%左右。

The next question comes from the line of Mitchell Kim from Maybank.

下一個問題來自馬來亞銀行的 Mitchell Kim。

I have a question on the logistics business, including third-party or external logistics business. If you could just help me understand what's the rationale behind it. I understand that you're trying to reduce on a cost per shipment basis. But other than that, do you expect this business to further aid your revenue growth in terms of leading to further revenue growth opportunity or is this more just purely on a cost basis? And if so, if your warehouse utilization rate is already running at 80% to 85%, do you need to provide this service to third party in order to maximize your utilization?

我有一個關於物流業務的問題，包括第三方或外部物流業務。如果您能幫助我理解其背後的原理是什麼。據我了解，您正試圖降低每次發貨的成本。但除此之外，您是否期望這項業務能夠進一步幫助您的收入增長，從而帶來進一步的收入增長機會，還是這純粹是基於成本？如果是這樣，如果您的倉庫利用率已經運行在80%到85%，您是否需要向第三方提供這項服務，以最大限度地提高您的利用率？

Okay. Let me take this one. Well, first and foremost, our expansion to clients outside of Vipshop platform is to reduce our fulfillment cost because as we explained earlier, the more intensity you can bring to the delivery staff, the lower the cost per package. So that's actually the biggest reason. And one other reason is, if we want to compete effectively outside of Vipshop, we really need to build more stations, hire more staff and increase our coverage nationwide. And if we do that, we can further reduce the delivery time to our customers, which is always an important component in our customer satisfaction. So basically, it's both to reduce cost and to improve efficiency to make our customers happier. So the goal is not to actually to aid in, anyway, our revenue growth because compared to our huge revenue generated from our retail business, this third-party logistics or the last-mile delivery revenue outside of Vipshop is just very, very small. It's not really meaningful. And in terms of warehouse expansion, we -- currently, our utilization is quite high. You're right. Absolutely right. That's 80%, 90%, especially, when we go into the peak season and expecting another successful -- a big promotion on December 8. But we are still building more warehouse space right now, and we're acquiring more land, building more warehouse space in anticipation of the need going forward. So as we build, add more warehouse space, we will definitely need more packages to fill the space, increase the utilization rate, whether it be from our own platform or outside of Vipshop.

好的。讓我拿走這個。首先，我們向唯品會平台之外的客戶進行擴張是為了降低我們的配送成本，因為正如我們之前所解釋的，您給配送人員帶來的強度越大，每個包裹的成本就越低。所以這實際上是最大的原因。還有一個原因是，如果我們想在唯品會之外有效競爭，我們確實需要建立更多的站點，僱用更多的員工並擴大我們在全國范圍內的覆蓋範圍。如果我們這樣做，我們就可以進一步縮短向客戶交付的時間，這始終是我們客戶滿意度的一個重要組成部分。所以基本上，既要降低成本，又要提高效率，讓我們的客戶更滿意。因此，無論如何，我們的目標並不是真正幫助我們的收入增長，因為與我們零售業務產生的巨額收入相比，唯品會之外的第三方物流或最後一英里配送收入非常非常小。這其實沒什麼意義。在倉庫擴張方面，目前，我們的利用率相當高。你說得對。絕對正確。這是 80%、90%，尤其是當我們進入旺季並期待 12 月 8 日再次成功的大型促銷活動時。但我們現在仍在建造更多的倉庫空間，我們正在收購更多的土地，建造更多的倉庫。預計未來需要的倉庫空間。所以當我們建設、增加更多的倉庫空間時，我們肯定需要更多的包裹來填充空間，提高利用率，無論是來自我們自己的平台還是唯品會之外的。

The next question comes from the line of Monica Chen from Crédit Suisse.

下一個問題來自瑞士信貸銀行的 Monica Chen。

I have one question regarding our cross-border business. So I think in your prepared remarks earlier, we are talking about we're actually actively expanding our warehousing space overseas and also adding new locations overseas. So I'd like to hear management's latest thoughts on strategy on this cross-border business, especially, how is like the current contribution to our total revenue or to our GMV? And how is the margin profile looks like compared to our other core categories?

我有一個關於我們跨境業務的問題。因此，我認為在您之前準備好的發言中，我們正在談論我們實際上正在積極擴大海外倉儲空間，並在海外增加新的地點。所以我想听聽管理層對這個跨境業務戰略的最新想法，特別是目前對我們總收入或GMV的貢獻如何？與我們其他核心類別相比，利潤狀況如何？

(foreign language)

（外語）

Okay. (foreign language)

好的。（外語）

Yes. So Monica, as of now, in the third quarter -- sorry. In the third quarter, cross-border accounted for about 5% to our GMV, which has been growing quite steadily over the past few quarters. You have heard from Shen-zong that we added more warehouse space, including 6 internationally. And we have 10 overseas offices. We added a lot of merchandisers, buyers and the direct recruiters. And we are in the process of building infrastructure in order to bring more brands, more SKUs and better prices to meet the demand in China. Eric believes that as we continue to invest for this business, down the road, we might be expecting some kind of a reacceleration for this particular business once the infrastructure investment is largely in place. So yes.

是的。所以莫妮卡，截至目前，在第三季度——抱歉。第三季度，跨境業務約占我們GMV的5%，並且在過去幾個季度中一直在穩步增長。您聽說神總說我們增加了更多的倉庫空間，其中國際有6個。我們有10個海外辦事處。我們增加了很多跟單員、買家和直接招聘人員。我們正在建設基礎設施，以便帶來更多的品牌、更多的SKU和更好的價格來滿足中國的需求。埃里克認為，隨著我們繼續投資這項業務，一旦基礎設施投資基本到位，我們可能會期望這項特定業務會出現某種形式的加速。所以是的。

(foreign language)

（外語）

So our overall cost for the business is slightly profitable, although the profitability is lower compared to our domestic core business.

所以我們的業務整體成本是微利的，儘管盈利能力比我們國內的核心業務要低。

The next question comes from the line of Jialong Shi from Nomura Securities.

下一個問題來自野村證券的史家龍。

(foreign language) I will translate my questions into English. I have 2 questions here. My first question is a big-picture question. We see the competition is intensified between the 2 top e-commerce giants in apparel and some other women-oriented categories. So I was just wondering what's management view on the competition landscape. And whether we are seeing -- or whether VIPS is seeing any particular impact on its own apparel business from the competition. My second question is about VIPS' private label business. Just wonder if management can provide any updates on development of this private label business. And also, we see NetEase has been able to grow its private label business at a really fast pace. So we just wonder if we can deem Vipshop's private label business as one of the key top line drivers down the road.

（外語）我會將我的問題翻譯成英語。我這裡有兩個問題。我的第一個問題是一個大局問題。我們看到兩大電子商務巨頭在服裝和其他一些女性導向品類領域的競爭正在加劇。所以我只是想知道管理層對競爭格局有何看法。以及我們是否看到——或者 VIPS 是否看到競爭對其自己的服裝業務產生任何特殊影響。我的第二個問題是關於VIPS的自有品牌業務。只是想知道管理層是否可以提供有關該自有品牌業務發展的任何最新信息。此外，我們看到網易已經能夠以非常快的速度發展其自有品牌業務。因此，我們只是想知道是否可以將唯品會的自有品牌業務視為未來主要的收入驅動因素之一。

(foreign language)

（外語）

So Jialong, for the benefit of others, I will quickly translate the answer. In terms of competition, Eric said, this year, we have seen intense -- intensifying competition compared to last year or even the year before, in particular, in acquiring users from offline to online. And we have seen some peers actually expanding into FMCG and first produce and trying to cater for the demand online. However, our core categories in apparel, handbag, shoes and we have already accumulated a lot of experiences. And we have established a very strong hold in these core categories, supported by our loyal customer base. And early on the call, Eric mentioned that we recorded quite strong growth in mom and baby, home goods and even on cosmetics. So these are all some evidence to show that our key categories will continue to be very strong. As for your second question, for private label, we are going to launch it sometime in December. We are not trying to copy exactly what others are doing. But obviously, we're trying to do is to offer good products and good quality, good pricing to -- of the SKUs to customers in China. And it's in the process of exploring, and we don't anticipate the contribution will be meaningful in the future or anytime soon. Because we are still become -- we are still a very vital partner for many, many brands here in China. So we've made the right balance there.

所以嘉龍，為了別人的利益，我趕緊翻譯一下答案。在競爭方面，Eric表示，今年我們看到了激烈的競爭，比去年甚至前年更加激烈，特別是從線下到線上的用戶獲取方面。我們看到一些同行實際上擴展到快速消費品領域，首先生產並試圖滿足在線需求。但是我們的核心品類在服裝、手袋、鞋子方面我們已經積累了很多經驗。在我們忠實客戶群的支持下，我們在這些核心類別中建立了非常牢固的地位。埃里克在電話會議一開始就提到，我們在母嬰用品、家居用品甚至化妝品領域都取得了相當強勁的增長。因此，這些都是一些證據，表明我們的關鍵類別將繼續保持強勁。至於你的第二個問題，對於自有品牌，我們將在 12 月的某個時候推出它。我們並不是試圖完全複製其他人正在做的事情。但顯然，我們正在努力做的是向中國客戶提供優質的產品和良好的價格。它正在探索過程中，我們預計這種貢獻在未來或短期內不會有意義。因為我們仍然是中國許多品牌非常重要的合作夥伴。所以我們在那裡取得了適當的平衡。

The next question comes from the line of Chi Tsang from HSBC.

下一個問題來自匯豐銀行的Chi Tsang。

This is Heather Li dialing on behalf of Chi Tsang. I wanted to get some color on what you expect in the next quarter and year, specifically, in regards to customer growth and fulfillment expenses, with the big promotional event in December. So should we expect number of active customers to be close to this quarter's levels going forward and fulfillment expenses to keep increasing?

我是 Heather Li 代表 Chi Tsang 撥打。我想通過 12 月份的大型促銷活動了解您對下一季度和下一年度的預期，特別是在客戶增長和履行費用方面。那麼，我們是否應該預期活躍客戶數量將接近本季度的水平，並且履行費用將繼續增加？

(foreign language)

（外語）

(foreign language)

（外語）

So the fourth quarter, as you can understand, is the golden period for all retailers. It's the peak season for Vipshop. And we -- if you look at our Singles' Day promotion performance, it was actually quite encouraging. And obviously, for the promotion that we're going to launch in December on the 8th is going to be even bigger than the Singles' Day event. So Eric believes that the user growth will continue to be quite healthy and even the ARPU trends going to be encouraging, too.

所以第四季度，你可以理解，是所有零售商的黃金時期。現在正是唯品會的旺季。如果你看看我們的雙十一促銷表現，你會發現這實際上非常令人鼓舞。顯然，我們將於 12 月 8 日推出的促銷活動將比雙十一活動規模更大。因此，Eric 相信用戶增長將繼續保持健康，甚至 ARPU 趨勢也將令人鼓舞。

Let me take your other question on fulfillment. Well, as I explained earlier, the reason why our fulfillment expenses, as a percent of revenue, went up substantially in Q3 was because we have invested heavily in our last-mile delivery operations. We added about 7,000 people in the first 3 quarters of the year to our last-mile delivery operations. And also, during the meantime, we added about 1,000 delivery stations and a number of local warehouses and some overseas warehouses as well. So we -- and also, I explained the reason we made these investments is to reduce costs and improve efficiency and customer satisfaction. So going forward, as our own business continues to grow and as we continue to grab more business from outside of Vipshop, the utilization of our logistic -- logistics network will continue to improve, which will eventually bring the costs -- fulfillment cost down in the long run. And well, we typically don't provide guidance for those expensive line items. But in the long run, we're confident that the fulfillment expenses will eventually come down.

讓我回答你關於履行的另一個問題。嗯，正如我之前解釋的那樣，我們的履行費用佔收入的百分比在第三季度大幅上升的原因是我們在最後一英里的交付業務上投入了大量資金。今年前 3 季度，我們為最後一英里配送業務增加了約 7,000 名員工。同時，我們還增加了約1000個配送站和一些本地倉庫以及一些海外倉庫。因此，我解釋說，我們進行這些投資的原因是為了降低成本、提高效率和客戶滿意度。因此，展望未來，隨著我們自己的業務不斷增長，隨著我們不斷從唯品會之外搶奪更多業務，我們的物流網絡利用率將不斷提高，最終將降低履行成本。從長遠來看。而且，我們通常不會為那些昂貴的訂單項提供指導。但從長遠來看，我們有信心履行費用最終會下降。

The next question comes from the line of Tian Hou from T.H. Capital.

下一個問題來自 T.H. 的天后台詞。首都。

My question is related to your overseas commerce. So for the overseas commerce, what are the expansion plan? You have the 6 region or 6 country already. And so do you plan to build more warehouse in the existing 6 country or expand to other countries? And this is the first question. And also, in terms of CapEx, as you build up more warehouse in China and to overseas, so Donghao, I would like to know the CapEx plans for the next 12 months. (foreign language)

我的問題與你們的海外貿易有關。那麼對於海外業務，有哪些拓展計劃呢？您已經擁有 6 個地區或 6 個國家/地區。那麼你們計劃在現有的6個國家建立更多的倉庫還是擴展到其他國家？這是第一個問題。另外，就資本支出而言，隨著您在中國和海外建立更多的倉庫，東浩，我想知道未來 12 個月的資本支出計劃。（外語）

(foreign language)

（外語）

So Tian, currently, we have 10 offices internationally and 6 -- currently, 6 international warehouses. And we are in the process of adding more. But the space per region is much smaller compared to what we have currently in China.

So Tian，目前，我們在國際上設有 10 個辦事處和 6 個（目前有 6 個）國際倉庫。我們正在添加更多內容。但與我們目前在中國的情況相比，每個區域的空間要小得多。

In terms of CapEx for the next 12 months, I expect that to be around RMB 3 billion in total, including warehouse expansion, both overseas and domestic. And the construction of our new headquarters in Guangzhou.

就未來12個月的資本支出而言，我預計總額約為30億元人民幣，其中包括海外和國內的倉庫擴建。並在廣州建設我們的新總部。

There are no further questions at this point of time. Over to you, sir.

目前沒有其他問題。交給你了，先生。

Well, thank you all very much for taking the time to join us. And we look forward to speaking with you next quarter.

非常感謝大家抽出寶貴時間加入我們。我們期待下個季度與您交談。

Ladies and gentlemen, that does conclude the conference for today. Thank you for participating. You may all disconnect now.

女士們、先生們，今天的會議到此結束。感謝您的參與。你們現在可以斷開連接了。