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This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop’s strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop’s goals and strategies; Vipshop’s future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop’s ability to attract customers and brand partners and further enhance its brand recognition; Vipshop’s expectations regarding demand for and market acceptance of flash sales products and services; competition in the discount retail industry; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop’s registration statement on Form F-1, as amended, filed with the SEC. All information provided in this presentation is as of the date of this presentation, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Vipshop China's Leading Online Discount Retailer for Brands 2 .
6bn in 2012 with a 56.Massive retail opportunities in China Total estimated retail sales of US$3.2301 RMB. 3 .9bn in 2011(1) . Data from BCG report “The World’s Next E-Commerce Superpower”. apparel inventory accounts for approximately 50% of total apparel market(2) No large discount retail chains or branded outlets Total discount retail was US$23. assuming 1 US$ = 6.2% 12-15E CAGR(1) Huge consumer demand Constant supply of excess inventory Immature offline discount retail infrastructure Massive discount retail opportunities Note: (1) (2) Data from Frost & Sullivan report.8 trillion in 2013(1) Total apparel retail sales were US$151.
6 Data from Frost & Sullivan report.0 China Note: (1) (2) US 9.4% 0.5 2012E 2013E 2014E 2015E Discount retail as % of total retail (2011) (1) 1.5 158.0 38.0 2010 2011 2012 2013E 63.0 60.3 2.5% China discount retail sales (1) (US$ in billions) 90.China’s huge market potential in online discount retail and B2C market China’s retail market (1) (US$ in billions) China’s online C2C market (2) (US$ in billions) 192.1 10.7 4.1 2010 2011 2012 2013E 2014E 2015E 2010 28.520.9 2011 59.2301 RMB 2012 2013E 2014E 2015E 4 .2301 RMB iResearch. assuming 1 US$ = 6.1 2.1 2011 23.0 4. assuming 1 US$ = 6.9 101.3 3.8 263.952.808.1 94.6 3.965.1 2010 15.1 232.325.2 2014E 2015E China’s online B2C market (1) (US$ in billions) 216.9 147.356.
241 stores(2) 1. from Tanger Outlet’s company factsheet From Balian Outlets Plaza company website From Beijing Scitech company website 5 .867 Marmaxx stores and 374 HomeGoods stores in the US.J.199 None stores(3) Lack of large off-price retailer in China 67 outlets(4) 38 outlets(5) 3 outlets(6) 3 outlets(7) Underdeveloped offline outlet stores in China Consumers in China have to go online for branded discount products Note: (1) (2) (3) (4) (5) (6) (7) According to Frost and Sullivan report As of 2012 year end. from 2012 T. including 1. 24 square feet per capita(1) Top 20 retailers account for 24% market share(1) China 2 square feet per capita(1) Top 20 retailers account for 7% market share(1) Poor offline retail infrastructure in China Fragmented retail market in China 2.S.Maxx’s company presentation As of February 2013. including 1. from Premium Outlet’s company website As of February 2013.Online: the future of discount retailing in China China's offline discount retail is extremely underdeveloped U.091 dress-for-less stores and 108 dd’s DISCOUNTS stores in the US. from February 2013 Ross’ company investor overview As of February 2013.
China: A more attractive market opportunity U. Most products can be returned to suppliers Conclusion Broader and underpenetrated addressable market Better business model 6 . full price retailers are establishing own outlets Lack of well-developed discount / outlet retail channel Online channels Brands have well established online presence and capabilities Brands have largely rely on third party platforms to build online presence Working capital requirement Need to pay for inventory upfront. China Market positioning Mostly focused on high-end and luxury markets Broad universe of popular brands for mass market Offline channels Discount / outlet retail channels saturated for mass market merchandise. Products can not be returned to suppliers Limited upfront deposit.S.
A unique player in China’s e-Commerce landscape Large scalable platforms Market place General B2C Online discount retailer Partner with popular and well-known brands by selling their excess inventory at discount prices Core competency in merchandising. logistic distribution and customer service 7 .
2% 4.1% 3.9% 75.1% 63.269 4.490 21.256 927 804 7.681 1.664 725 903 276 255 155 2010 2011 2012 2Q12 2Q13 2010 2011 2012 2Q12 2Q13 2010 2011 2012 2Q12 2Q13 New active customers Repeat customers Total active customers Repeat customer as % of total customer Orders placed by repeat customers Total orders Orders placed by repeat customers 8 .0% 86.9% 93.110 3.625 2.6% 56.054 4.457 2.3% 91.020 10.619 11.491 1.Highly engaged and loyal customer base Rapid increase of new active customers ( in thousands) Rapid increase of repeat customers ( in thousands) High and stable rate of orders from repeat customers ( in thousands) 72.312 60.919 20.7% 91.3% 92.330 1.149 1.462 6.488 1.
557 2. according to the Frost & Sullivan Report. which includes primarily brand owners. 9 . 2012 and the number of monthly unique visitors in December 2012. (2) As measured by total revenues in 2011. the number of registered members as of December 31.7x 3. and to a lesser extent. brand distributors and resellers.760 Clear industry leader(2) Fast inventory monetization Minimal brand dilution One-stop solution for brands Professional team with deep brand knowledge 1.Preferred discount channel for popular brands Brand partners growth over time(1) 2010 –1H13 growth by 8.075 411 Product categories Apparel Handbags Sportswear Footwear 2010 2011 2012 1H13 Cosmetics Accessories Home goods Children Shoppers are loyal and so are our brand partners Substantially all of our brand partners have returned to pursue additional sales opportunities with us Note: (1) Number of our brand partners is a cumulative number since 2009.
Operational expertise 10 .
Excellent merchandising Relationship with brands Brand selection 1 Over 300 Specialized Merchandising Staff Sales management capability 2 Understanding of consumers Consumer insights Over 6.000 brands 3 Business intelligence system Customized marketing Deepening brand partnership Sales events optimization 11 .
Flash sale requires differentiated logistics system Additional capabilities on top of traditional B2C e-Commerce (1) Flash sale Traditional B2C e-Commerce Long Slow Moderate Small Small Sales cycle Short Fast Large Large Large Sales process No. 12 . of SKUs handled Volume of throughput Reverse logistics Snapshot of our warehouses Vipshop has successfully established customized and sophisticated logistics and warehouse systems to cater to flash sale needs Note: (1) Comparison on per same-size warehouse basis.
Highly customized and seamlessly integrated IT system for flash sales Traffic Support huge traffic spikes during peak hours 12am 10am Time 12pm 12am Expanding and cross-regional warehouse management system CRM system Data platform and BI Merchant platform 13 .
High entry barriers 1 2 Economies of scale First Mover Advantage 3 Business model Vipshop is well positioned in China’s online discount retail market 4 Operational expertise 14 .
Shanghai Branch 19+ years experience in retail industry Previously GM of IGA Distribution PTY LTD Bachelor’s degree from University of Melbourne Xiaohui Ma VP. Online Marketing 10+ years experience in marketing and media Previously editor-in-chief of SINA Bachelor’s degree from Communication University of China 15 . and Senior Director of logistics department of Dangdang. Daniel Kao Chief Technology Officer 16 + years experience with leading e-commerce and Internet companies in the US and China Previously director of site operation and quality engineering at eBay Inc Bachelor’s degree in computer science from Iowa State University Maggie Hung Senior VP. EMBA from Cheung Kong Graduate School of Business Arthur Xiaobo Hong Co-Founder. CEO 18+ years experience in consumer electronic products distribution Previously Chairman of Guangzhou NEM Import and Export Co. Vice Chairman. COO 12+ years experience in consumer electronic products distribution Previously Chairman of Societe Europe Pacifique Distribution Donghao Yang Chief Financial Officer 12+ years experience in finance Previously CFO of Synutra International Inc (NASDAQ: SYUT) and Tyson Foods (NYSE: TSN) Greater China MBA from the Harvard Business School Mr. Merchandising 20+ years experience in merchandise retail Previously VP of Grand Pacific Mall and GM of Grand Ocean Department Store in Nanjing Bachelor’s degree from Ling Tung University Yizhi Tang Senior VP.. Ltd.com (NYSE: DANG) Master’s degree from Sun Yat-Sen University Alex Jiang Senior VP.com (NYSE: DANG) and Founder / Director of E-elephant Consulting Company Limited Bachelor’s degree from Chongqing Business School Xian Feng Cai VP & GM. Chairman. Logistics 10+ years experience in logistics industry Previously logistics department head of Tesco in northern China. Business Intelligence & Customer Relationship Management (CRM) 20+ years of experience in China’s retail sector Previously VP of Dangdang.Visionary management team with strong execution Eric Ya Shen Co-Founder.
Financial highlights 16 .
1 204.6 2010 2011 2012 2Q12 2Q13 2010 2011 2012 2Q12 2Q13 17 .1% 7.919 692.7% 201.664 597.7% 351.3 927 32.1 135.020 159.3% 11.269 4.Phenomenal growth Total orders (in thousands) Total net revenues (US$ in millions) 21.5% 136.3 684.1% 227.
3% 22.0% 18.0 21.0 4.4 10.8% 22.Steady margin expansion Quarterly gross profit and gross margin (US$ in millions ) 17.6 21.7 72.9 7.6 68.3% 19.4 34.5% 82.9% 23.0% 21.2% 21.0% 20.8 1Q11 2Q11 3Q11 4Q11 1Q12 Gross profit 2Q12 3Q12 4Q12 1Q13 2Q13 Gross margin Strong and defensible margins: • Brands often sign exclusive deals to minimize brand dilution (>800 exclusive brands) • Brands only liquidating excess inventory (limited quantity = inability to price shop) • Brands want to efficiently monetize excess inventory and have little price sensitivity 18 .4% 23.8 29.
5% 12.6 19.4 6.3 37.0 8.1% 42.7% 21.8 21.4% 16.7% 18.6% 15.Continuous investment in logistics infrastructure to drive long term growth Fulfilment expenses (Non-GAAP) 1 (US$ in millions) 20.9% 12.1% 13.4 11.6 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Fulfilment expenses (non-GAAP) Note: (1) Fulfilment as % of total net revenues All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses 19 .1% 37.5 16.4 20.6 12.9% 20.
4 13.0 12.2% 2.2% 4.7% 5.3 4.7 2.8 4.6 3.Tremendous operating leverage and historically low marketing expenses Marketing expenses (Non-GAAP) (US$ in millions) (1) General and administrative expenses (Non-GAAP) (US$ in millions) (1) 8.6 2.7 4.2% 2.3 1.7% 4.9% 3.0% 3.2% 4.7% 6.5% 7.6 4.9 6.9% 2.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 G&A expenses (non-GAAP) G&A as % total net revenues 6.3% 15.0 8.9 6.0 5.7% 5.9% 4.3% 2.1% 4.2 3.8% 7.6 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Marketing expenses (non-GAAP) Marketing as % of total net revenues Note: (1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses 20 .9 1.2% 5.5 7.3 3.1% 4.6% 7.
6% (4.4% 0.2) (7.6% -20.8 8.6 Net income/loss (non-GAAP) Net margin (non-GAAP) Note: (1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses 21 .4% 11.8) (11.Net margin improvement Net margin (Non-GAAP) (US$ in millions) (1) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 2.2) -10.1% -6.5) 0.9% 2Q13 3.2) (6.0 -3.4% (4.1 9.7% 1Q13 2.6% (10.6% -17.1) -14.
334 82.570 381.265 356.334 316.583 1.052 1.265 196.2 June 30.Balance Sheet Highlights (in $ thousands) Cash and Cash Equivalents and Held-to-Maturity Securities Current Assets Total Assets Current Liabilities Total Liabilities Total Stockholder’s Equity Current Ratio December 31.952 398.530 533.917 316.712 552. 2012 210. 2013 (Unaudited) 384.317 356.5 22 .
Growth strategies 23 .
Southwestern and Central China 24 . better fulfillment service. purchase per order Expand warehouse capacities to accommodate increasing customer demand Geographical expansion Greater penetration in additional cities Greater penetration in Northern. Eastern. increase sales per brand.Our future growth strategy Enlarge customer base Leverage social media and word-of-mouth to achieve better marketing ROI. attract more customers and strengthen the Vipshop brand Improve shopping experience Recommendation/personalization. improve customer care programs. better customer retention and repeat purchase rate Enhance the quantity and quality of offers Better brand portfolio.
Major profitability drivers 1 Gross margin Stronger negotiation power Better pricing Distribution centers build out 2 Fulfillment expense Capacity utilization ramp up Profitability 3 Marketing expense Word-of-mouth ROI maximization Increased Operating leverage 4 G&A expense Cost control 25 .
Key investment highlights 1 Strong industry growth fundamentals 2 Market leadership position 3 Highly engaged and loyal customer base 4 Superior operational expertise 5 Strong management team 26 .
Thank you! 27 .
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