Baozun (BZUN) This autumn 2024 Earnings Name Transcript

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Questions & Solutions:

Operator

Women and gents, please do stand by. Thanks. Wendy, you might go forward.

Wendy Solar — Senior Director, Investor Relations and Company Improvement

OK. Thanks, operator, and thanks, all, for ready. Howdy? Howdy, operator.

Operator

Please go forward.

Wendy Solar — Senior Director, Investor Relations and Company Improvement

Are you able to hear us now?

Operator

We will hear you ma’am. Please go forward.

Wendy Solar — Senior Director, Investor Relations and Company Improvement

OK. Thanks. Thanks, operator, and hi there, everybody. Thanks for becoming a member of us at this time.

Our fourth-quarter 2024 earnings launch was distributed earlier earlier than this name and is obtainable on our IR web site at ir.baozun.com in addition to on PR Newswire companies. They’ve additionally posted a PowerPoint presentation that accompanies our feedback to the identical IR web site the place they’re accessible on your obtain. On the decision at this time from Baozun, we’ve Mr. Vincent Qiu, chairman and chief govt officer; Mr.

Junhua Wu, director and chief technique officer; Ms. Catherine Zhu, chief monetary officer; Mr. Arthur Yu, president of Baozun E-commerce; and Mr. Ken Huang, chief monetary officer of Baozun Model Administration.

They are going to all be accessible to reply your questions throughout the Q&A session that follows. Earlier than we start, I wish to remind you that this convention name comprises forward-looking statements throughout the that means of the U.S. Securities Act of 1933 as a mandate, the U.S. Securities Alternate Act of 1934 as amended, and the U.S.

Personal Securities Litigation Reform Act of 1995. These forward-looking statements are primarily based upon administration’s present expectations and present market and working situations and relate to occasions that contain recognized and unknown dangers, uncertainties, and different components, all of that are tough to foretell and plenty of of that are past the corporate’s management, which can trigger the corporate’s precise outcomes to vary materially from these within the forward-looking assertion. For additional data relating to these and different dangers, uncertainties, or components is included within the firm’s filings with the U.S. Securities Alternate and its announcement discover or different doc revealed on the Web site of the Inventory Alternate of Hong Kong Restricted.

All data supplied on this name is as of the date and is predicated on assumptions that the corporate believes to be affordable as of the date, and the corporate doesn’t undertake any obligation to replace any forward-looking statements besides as required beneath relevant regulation. Lastly, please observe that, until in any other case said, all figures talked about throughout this convention name are in RMB. As well as, we might elect to make use of adjusted instead of non-generally accepted accounting ideas or non-GAAP with the intention to cut back oral confusions which will come up from our discussions about monetary associated to the Hole model. It’s now my pleasure to introduce our chairman and chief govt officer, Mr.

Vincent Qiu. Vincent, go forward please.

Vincent Qiu — Chairman and Chief Government Officer

Thanks, Wendy. Hello, everybody, and thanks, all, on your time. I am delighted to report that Baozun continues to execute our three-year transformation plan with sturdy momentum and a constant quarterly enchancment. Within the fourth quarter, Baozun Group achieved a 8% year-over-year income progress.

Our e-commerce division noticed a sustainable substantial 16% enhance in non-GAAP working earnings, whereas BBM narrowed too by 20%. On an annual foundation, we’ve met our annual non-GAAP working revenue breakeven goal supported by optimistic working money circulate and wholesome money steadiness. Baozun e-commerce has resumed annual top-line progress of two years of contraction. To navigate an ever-evolving market, we’ve enhanced our inventive content material capabilities and leveraged our applied sciences to assist model companions to capitalize on platform interconnectivity, information intelligence, and AI-driven efficiencies.

By increasing into rising channels like Douyin, RedNote and WeChat, we achieved a 16% year-over-year enhance in on-line retailer operations income this quarter. Moreover, worth added companies, together with digital advertising and IT options, grew by 15% yr over yr. We consider these strengthening fundamentals place BEC properly for high-quality and sustainable progress. BBM is experiencing accelerated income progress and increasing its retailer footprint.

Throughout the quarter, we generated a 17% year-over-year income enhance. Notably, GAAP offline income has grown for the primary time since our acquisition. In Tier 2 cities, we’ve adopted an asset-light strategy by participating franchise for retailer growth. Strengthened by world and native partnerships, this technique extends our attain throughout the broader China market whereas minimizing growth dangers.

Moreover, Hunter has expanded its presence with new retailer openings in Malaysia and Shanghai. Every launch attracted vital foot visitors and the media consideration, additional elevating Hunter’s model presence and attraction. These collective efforts bolster our confidence in sustaining BBM’s strong top-line momentum. The yr 2025 marks a mix of our strategic transformation and units the stage for future progress.

We’ve strengthened our senior administration crew to drive this subsequent section. My co-founder, Junhua Wu, has taken on a job — a extra hands-on position as chief technique officer of Baozun Group, overseeing each BEC and TIC, whereas Ken Huang continues to excel as CFO of BBM and has now additionally assumed the position of CEO of Hole China. These two excessive achievers deliver power and imaginative and prescient to our management, fostering a extra entrepreneurial and progressive cultures throughout the globe — the group. Now, I’ll hand the decision over to Junhua to share a couple of phrases, adopted by our crew, who will present a deeper dive into our financials and the enterprise efficiency.

Junhua Wu — Director and Chief Progress Officer

Thanks, Vincent, and hi there, everybody. I am excited to share my imaginative and prescient to elevating Baozun e-commerce. As Baozun’s co-founder and director, I am devoted to main with an emphasis on profitability and a sustainable progress. Expertise is the cornerstone of our success.

In at this time’s quickly evolving digital e-commerce panorama, we’re all properly geared up to differentiate ourselves because the driving pressure behind our model associate gross sales engine. Our aggressive edge lies in enduring partnerships, omnichannel experience and value-driven methods that create lasting affect. Execution requires self-discipline and an important crew. By fostering a tradition of possession and entrepreneurship, we empower our groups to take initiative, drive innovation, and make impactful choices.

Baozun’s future is revenue targeted, tech empowered, and buyer centric. I am absolutely dedicated. Now, I will hand the decision over to Catherine to offer monetary updates.

Catherine Zhu — Chief Monetary Officer

Thanks, Junhua, and hi there, everybody. Now, let me present you our fourth quarter and full yr of 2024 monetary leads to extra element. Please flip to Slide quantity 3. Baozun Group’s complete web revenues for the fourth quarter of 2024 elevated by 8% yr over yr to three billion.

Of this, e-commerce income grew 6% to 2.5 billion, whereas model administration income grew 17% to 535 million. Breaking down e-commerce income by enterprise mannequin. Companies income elevated by 9% yr over yr to 1.9 billion for the quarter. This progress was primarily pushed by a 16% enhance in income from on-line retailer operations and a 15% enhance in income from digital advertising and IT options.

In the meantime, BEC product gross sales income decreased by 4% yr over yr to 572 million, primarily because of the comparatively weak efficiency of equipment class as we prioritized profitability over income progress on this class. BBM product gross sales totaled 535 million for the quarter, reflecting a 17% year-over-year progress. This enhance was primarily pushed by the sturdy efficiency of the Hole model with each on-line and offline gross sales reaching wholesome progress. Please flip to Slide quantity 4.

From a profitability perspective, our blended gross margin for product gross sales on the group degree was 30%, whereas gross revenue elevated by 5% to 332 million. Breaking this down by our key enterprise traces. Gross margin for e-commerce product gross sales had been 10.8% for the quarter, in contrast with 12.4% a yr in the past. This lower was primarily resulting from a change in class combine however remained comparatively steady in comparison with the earlier quarter.

Gross margin for BBM was 50.4%, in contrast with 52.9% a yr in the past. The lower was primarily resulting from increased reductions throughout quarterly Hole promotions. Now, turning to bottom-line gadgets, please seek advice from Slide quantity 5. Throughout the quarter, our adjusted revenue from operations totaled 103 million, an enchancment of 28 million or 37% from a yr in the past.

This included an adjusted working revenue of 137 million from e-commerce section, an enchancment of 16%, in contrast with 118 million in the identical interval of final yr. BBM’s adjusted working loss totaled 34 million, an enchancment of 20%, in comparison with 43 million in the identical interval of final yr. Our non-GAAP web revenue attributable to shareholders for the quarter was 46 million, an enchancment of 59% yr over yr from 29 million in the identical interval of final yr. Let’s flip to a fast full-year abstract.

The group complete income was 9.4 billion, a rise of seven% yr over yr, of which e-commerce web revenues had been 8.1 billion, a rise of 6% yr over yr, whereas BBM web revenues had been 1.5 billion, a rise of 16% yr over yr. Our adjusted working revenue totaled 11 million, an enchancment of 34 million, in contrast with adjusted working lack of 24 million in fiscal yr 2023. As well as, we efficiently accomplished our share repurchase program, which was approved by our board in January 2024. As of the final over window buying and selling day of January seventeenth, 2025, we repurchased roughly 5.3 ADS by the over marketplace for $14.7 million.

This represents roughly 9% of our complete shares excellent at first of this system. As of December thirty first, 2024, our money and money equivalents, restricted money, and short-term investments totaled 2.9 billion, in contrast with 3.1 billion a yr in the past. Let me now go the decision over to Arthur to replace you on BEC, our e-commerce enterprise.

Arthur Yu — President, Baozun E-commerce

OK. Thanks, Catherine, and hi there, everybody. Let me share the important thing operational achievements of the fourth quarter and the way we closed the yr. Now, please flip to Slide quantity 6 for operational highlights.

We’re glad to report that BEC maintained its momentum within the fourth quarter, reaching a 6% year-over-year enhance in complete revenues and a 16% enchancment in non-GAAP working revenue. Extra encouraging, our annual e-commerce prime line resumed progress, rising 6%. Our progress continues to be pushed by sturdy model partnerships and class growth. By the tip of 2024, our model portfolio has expanded to over 490, up from roughly 450 a yr in the past.

This contains round 330 model companions in on-line retailer operations, 340 in digital advertising and IT options, and 180 in warehousing and logistics. On Slide quantity 7, we’re happy to collaborate with our model companions on end-to-end options with most participating with us by omnichannel approaches in worth added companies. In retailer operations alone, omnichannel adoption has elevated from 44.7% to 48.8%. Our key classes carried out properly throughout the quarter.

Complete attire service income grew by 27% yr over yr, whereas sportswear elevated by 18%, luxurious returning to progress, and different attire reaching a formidable 62% income enhance. We proceed to optimize our service choices throughout numerous channels to assist model companions develop. We additionally upgraded our enterprise intelligence providing to offer actual time visualized information insights throughout channels, making it simpler for manufacturers to trace efficiency. This quarter, we launched Douyin Enterprise Intelligence, and by the tip of 2024, we had been working with over 30 manufacturers on content-driven retailer stay streaming.

General, Douyin maintained triple-digit progress throughout the quarter, contributing 6% of e-commerce income. In our newest stay streaming occasion for a Spanish quick style model, we hit a peak viewership of 35,000, complete paid views of 5 million, and bought out 100% of the featured merchandise. Our efforts had been acknowledged with the Douyin E-commerce Diamond Model Service Supplier Award, the very best honor on the newest Douyin Commerce Awards in January. On that observe, we strengthened our capabilities in content material creation, influencer collaboration, and data-driven advertising.

In 2024, we’ve executed over 50 model advertising campaigns and 1,000 stay stream periods, with greater than 18,000 KOLs in our established community. These initiatives in RedNote allow model companions to run focused campaigns and enhance their presence available in the market. Consumer satisfaction stays a precedence, and our efforts are paying off. Over the previous three years, our Internet Promoter Rating, NPS, has steadily improved.

Within the newest Nielsen survey launched this month, our NPS reached to eight.53 in 2024, up from 8.23 final yr. Our key accounts additionally present sturdy loyalty with a 95% renewal price. Value optimization is one other focus. Our regional service facilities proceed to ramp up, and as of finish of 2024, roughly 2,700 of our employees had been positioned in these facilities.

We additionally continued to combine AI into our service system. Throughout the latest Double 11, we deployed our S-Whiz AI assistant for customer support, and the suggestions was extremely optimistic. S-Whiz cuts response instances by 13% whereas enhancing buyer satisfaction and conversion charges. As BEC completes the primary section of its transformation initiated in 2023 and returned to a path of progress, I consider that is the appropriate time for me to go the baton to Junhua and pursue a profession alternative exterior of Baozun.

It has been an unbelievable journey, and I am deeply grateful for the help and collaboration I’ve acquired from everybody over the previous 5 years at Baozun. I’ve full confidence that Baozun will proceed to thrive and attain new heights within the years to come back. Now, I’ll go to Ken for an replace on BBM.

Ken Huang — Chief Monetary Officer, Baozun Model Administration

Thanks, crew, and thanks, all. Please flip to Slide quantity 8 for extra insights into BBM’s progress by This autumn. I am proud to report that we sustained a powerful momentum by This autumn 2024, delivering a 17% year-over-year gross sales progress, making one in every of our strongest performances lately. This progress was pushed by continued growth throughout each on-line and offline channels.

Identical-store gross sales elevated for the second consecutive quarter regardless of a challenged macroeconomic surroundings. Importantly, offline revenues continued to optimistic progress for the primary time since our acquisition, demonstrating the affect of retailer optimization and enhanced in-store experiences. Within the second half of 2024, we opened 40 new shops, together with 16 in This autumn, which carried out strongly in new Tier 1 and Tier 2 cities equivalent to Changsha and Zhuhai. We leveraged their strategic associate mannequin to develop in rising cities, securing premium retail areas and additional strengthening our aggressive edge.

The unit economics of those new shops are extremely promising, pushed by sturdy productiveness and wholesome store-level margins. By the tip of 2024, we managed 152 Hole shops throughout numerous cities, and the full retailer footage is again on our progress trajectory. Whereas we opened new shops all year long, we additionally strategically closed underperforming areas to optimize our offline community, making 2024 a yr of structural upgrades. Wanting forward, we plan to speed up our growth by prioritizing excessive visitors areas that maximize gross sales potential.

In 2025, we intention to open roughly 50 new shops, leading to a web enhance of 40 shops after accounting for strategic closures. We proceed to strengthen Hole’s model DNA and reinforce our iconic classes. By our shut collaboration with Hole Inc.’s World merchandising crew, we’ve refined the product localization whereas preserving the model core identification. Shifting ahead, we’re prioritizing design enhancements, provide chain refinements, and the deliberate product planning to boost our choices and margin efficiency.

We’re additionally aligning advertising methods extra carefully with tradition developments and native collaborations to deepen client engagement. Our latest partnership with Forbidden Metropolis stands out as one of the vital profitable IP collaborations up to now three years, highlighting the ability of well-executed model storytelling. Our key strategic pillars for 2025 embody channels. First channels develop throughout procuring malls, retailers, and the sturdy on-line platforms, whereas guaranteeing a balanced and sustainable retail combine.

Second, merchandising. Strengthen product segmentation and planning to offer steady high-quality choices that resonate with our customers. Third, advertising. Enhanced model storytelling by culture-driven engagement, leisure, and strategic collaborations.

In abstract, BBM’s partnership with Hole Inc. bolstered by our localized strategy and operational excellence continues to drive tangible outcomes. With a transparent highway map, we’re properly positioned to take care of our sturdy momentum and capitalize on new alternatives. In 2025, we try for double-digit top-line progress whereas constantly enhancing operational effectivity and profitability.

That concludes our ready remarks. Thanks. Operator, we are actually prepared to start the Q&A session.

Operator

Thanks. We’ll now start the question-and-answer session. [Operator instructions] Right now, we are going to pause momentarily to assemble our roster. The primary query we’ve is from Alicia Yap of Citigroup.

Please go forward.

Alicia Yap — Analyst

Good night, administration. Thanks for taking my query. My query is expounded to client consumption sentiment. Has administration noticed any enchancment in client consumption sentiment over the previous two months, particularly with the supportive measures from authorities and promotional actions throughout the Worldwide Girls’s Day? What’s administration expectation for 2025 progress, and what are the important thing drivers? And the way ought to we view the advantages Baozun may seize from smartphone buying and selling subsidy? And my second query is expounded to Hole China.

Can administration replace us on Hole China’s same-store gross sales progress and efficiency of different manufacturers beneath BBM? And my final query is for Mr. Wu. Together with your return to firm not too long ago, what are your key initiatives and prime priorities for Baozun? And can there be any significant change of strategic course for the corporate within the coming months? Thanks.

Junhua Wu — Director and Chief Progress Officer

OK. Thanks for the query. That is Junhua. So, let me deal with your first query and your final query.

So, your first query is concerning the consumption sentiment over the previous two months. So, our observations throughout the previous Queen’s Day was superb. So, we drove a fairly first rate progress by way of our income, and loads of manufacturers have achieved their increased targets Y over Y. Throughout previous two months, we see loads of classes is rising quickly, for instance, like the house equipment class and the smartphone enterprise think about we’ve a help from the federal government subsidiary help.

So, in these two classes, our companies lies in driving our conversion price and enhance the appropriate cash effectivity — capital effectivity into our distribution mannequin and our companies mannequin. So, we expect the next momentum of the consumption sentiment sooner or later. So, the third query is what’s my working priorities once I simply — again to the frontline. So, my day-to-day focus lies in two areas.

The primary is backside line oriented. So, I will simply optimize our current crew construction and implement our wage construction and the motivation program. And likewise, I will concentrate on day-to-day monetary administration associated to the enterprise, together with just like the AR and AP and the way will we leverage our capital in the appropriate means. Additionally, beneath our distribution mannequin, I will optimize the phrases we work with our companions and enroll extra high-quality revenue-based distribution enterprise and attempt to simply launch loads of some form of low effectivity form of the enterprise by way of a district mannequin and repair mannequin.

For the top-line focus, I will lay my emphasis on same-store progress by wanting right into a deeper dive into our day-to-day operations and likewise driving extra initiatives on the omnichannel, form of harmonized with one another like Douyin, Tencent Sensible Retail, and RedNote. Additionally, driving advertising functionality is the important thing on this yr. And we additionally need to leverage loads of AI initiatives by way of driving our prime line and enhance our bottom-line effectivity. So, for enterprise improvement, we’ve our new technique for this yr.

We will share extra afterward once we are assembly these form of questions. And we additionally need to optimize our enterprise construction by way of our DC mannequin and consignment mannequin. That’s my reply. Yeah.

Ken Huang — Chief Monetary Officer, Baozun Model Administration

That is Ken. To your second query about BBM, I believe our gross sales progress is coming from each same-store progress and likewise our new growth of shops. For a similar retailer Hole, we had a low single-digit same-store progress in This autumn 2024 and for Hunter as a result of Hunter is comparatively small by way of the share gross sales income contribution to the full BBM gross sales quantity. Nevertheless it grows very quickly, and same-store progress price is over 100% final yr.

And for the brand new retailer growth, I believe we additionally see superb development in our new openings, particularly in This autumn in new Tier 1 cities and Tier 2 cities. Our gross sales per sq. meters is ranked over a lot of our rivals. And for Hunter, we opened our first retailer in Shanghai. And now, we are going to speed up our growth in Tier 1 cities, together with Shanghai, Beijing, Shenzhen, and a few new Tier 1 cities equivalent to Hangzhou.

That is all from me.

Operator

The subsequent query we’ve is from Chris [Inaudible] of Huatai Securities. Please go forward.

Unknown speaker — — Analyst

Hello, administration. Thanks for taking my query. Congratulations on the strong end result this quarter. And I’ve two questions for the administration.

The primary is concerning the competitors. As we see extra adjustments in service provider coverage from e-commerce platforms like Douyin to chop fee charges for a number of classes, how ought to we anticipate the potential affect to Baozun’s fundamentals from the altering aggressive panorama in e-commerce sector? And second query is concerning the consumption restoration developments. So, with extra consumption stimulus insurance policies roll out, how ought to we take a look at the consumption restoration development in 2025? And will administration share extra shade on the expansion outlook for Baozun’s key classes? That is my two questions. Thanks.

Junhua Wu — Director and Chief Progress Officer

OK, thanks. I consider these two questions are for me. I am Junhua. So, the primary query is about Douyin.

So, everyone knows that the GMV progress price on Douyin is competitively increased than the GMV progress price on the opposite platforms. However from our perspective, so like Tmall and JD, they’re nonetheless the most important GMV platform, so think about the transaction. However Douyin, they reduce off our commissions primarily based on the GMV progress. In our classes, particularly within the style attire and the luxurious class, so we see a really first rate progress in these classes.

And we’re additionally profit in these form of the fee price helps principally from the entire panorama. So, we are attempting to simply develop our companies and drive extra our current companions onto Douyin platform. And we additionally will harmonize the Douyin visitors into the Tmall and the opposite JD type platform to leverage our omnichannel technique to make it possible for the content material and all these totally different form of the wealthy content material initiatives on Douyin might be profit from the all form of vary of the transactions on Tmall and JD. That is the primary query.

For the consumption and the general expectation on 2025, I consider we’re serving over 400 totally different manufacturers. And every model, they’ve a special technique wanting into their expectation in 2025. Among the manufacturers, they’re nonetheless sustaining a high-growth technique. A few of them, they’re enjoying a really totally different sport position.

So, loads of our model companions in sure classes, they’re focusing themselves within the product improvement and design. They usually plan to simply optimize their gross sales on this yr, late this yr, or possibly early subsequent yr. So, primarily based on our portfolio of the classes, so we can not offer you a really unified development by way of the consumption expectation of 2025. However we preserve a really excessive expectation and a really optimized outlook to 2025 by way of our GMV progress, income, and operation revenue.

Thanks.

Unknown speaker — — Analyst

Thanks, administration.

Operator

[Operator instructions] The subsequent query we’ve is from [Inaudible] of CITIC Group. Please go forward.

Unknown speaker — — Analyst

Good night, administration. Thanks for taking my query. My first query is that JD.com has actively invested within the clothes class for the reason that finish of 2024, and this development is anticipated to proceed in 2025. So, what is the Baozun technique on this channel? And my second query is that how does the corporate view the rights of AI instruments equivalent to DeepSeek? And what are the principle utility eventualities within the enterprise aspect? Is there any quantitative information accessible for sharing? Thanks.

Junhua Wu — Director and Chief Progress Officer

OK. Thanks for the query. The primary query is concerning the style attire class quickly progress on JD.com. So, Baozun, we’re omnichannel targeted.

So, we served JD a very long time in the past. A whole lot of our model companions has already put their enterprise on Tmall and JD and the opposite platforms. So, the very first thing is we will — and sorry. Vogue attire can be a really sturdy class of Baozun.

So, we’re undoubtedly going to assist our current purchasers shifting their enterprise onto JD.com, particularly within the style attire classes. And we’re additionally going to leverage our experience within the style attire classes to drive extra enterprise and extra new purchasers onto JD to profit all their progress development. So, sure, the JD.com of their attire and sweetness class, their govt administration crew has already been newly appointed to another person. So, we’re going to undoubtedly work collectively very carefully with their administration crew to make it possible for we are able to additionally implement a really sturdy progress on JD.com sooner or later.

The second is concerning the AI initiatives and what sort of the device are benefiting our enterprise. So, speaking about AI, principally, we’re specializing in AI driving our effectivity for the underside line and likewise AI attempting to regulate rising our top-line progress. So, for the underside line, we developed loads of AI instruments like good customer support instruments to serving to our customer support agent to leveraging our current knowledge-based database and likewise serving to them to drive extra effectivity on discovering merchandise. For the product administration and digital asset administration, we’ve already carried out some system for our current purchasers and our distribution enterprise fashions to creating positive that we are able to utilizing lesser folks utilizing AI know-how to assist us effectively to drive loads of automation by way of the digital property creation and the administration and the information assortment, and many others.

And for additionally our firm inside administration like monetary division and our HR division, we’re additionally going to leverage some AI agent know-how to extend our, for instance, like our monetary reconciliation interval, one thing like that. So, by way of the income prime line, we are attempting to develop some instruments, possibly like on RedNote, we’re serving to them to drive loads of totally different form of promotions and likewise driving a smart move on focusing on the appropriate client. It is serving to our driving the appropriate prime line and likewise matching the appropriate merchandise. So, we’re on our means chasing the newest know-how.

Expertise can be the important thing of Baozun. We’ve loads of know-how engineers. So, we consider we’re very promising sooner or later leveraging AI know-how for our enterprise. Thanks.

Unknown speaker — — Analyst

Thanks. That is very clear. And will you please additionally comply with up on RedNote plans as properly? And — yeah, yeah. That is my third query.

Thanks.

Junhua Wu — Director and Chief Progress Officer

OK. So, let me put your query on the panorama of buyer journey. So, we’re leveraging RedNote additionally speaking concerning the buyer journey. So, once we are focusing on a brand new buyer, we have to think about their buyer journey like the place is the chance and the place is the model consciousness or product consciousness of RedNote, and the way will we drive the curiosity of our buyer, how will we simply push them to buy the product, and the way will we preserve the loyalty of the patron for this product or the model.

So, RedNote, presently, is within the very entrance line of driving the chance. So, we aren’t straight selling a particular SKU or product on RedNote as a result of it isn’t the best way to driving enterprise on RedNote. We’re driving loads of content material, ensuring that we are able to arrange the emotion linkage earlier than making transactions. Allow them to know that, for instance, within the style attire class, how will we do the day by day setup? How will we costume up for high-quality dine? And the way will we simply make it possible for we are able to use very excessive know-how for our product to extend their lifecycle standing and their — form of their life high quality? And the way do we actually simply assist them to know what is the stylish know-how or one thing like that? So, we are able to drive loads of content material by utilizing our AI know-how by utilizing our KOL and KOC to ship loads of feeds on RedNote.

After which we drive the eye to a sure model or to sure merchandise. After which we convert them, ensuring that they’re after which give them loads of causes with the transaction deal to make the primary buy after which repeat. After which we drive them again on constantly offering loads of content material on RedNote, create a really wholesome circle. Yeah, that is my reply.

Thanks.

Unknown speaker — — Analyst

Thanks.

Operator

Thanks. Right now, we’ve no additional questions. And I wish to hand over again to administration for any closing remarks.

Wendy Solar — Senior Director, Investor Relations and Company Improvement

Thanks, operator. On behalf of the Baozun administration crew, we wish to thanks all on your participation in at this time’s name. In case you require any additional data, be happy to succeed in out to us. Thanks for becoming a member of us once more.

This concludes the decision.

Operator

[Operator signoff]

Length: 0 minutes

Name individuals:

Wendy Solar — Senior Director, Investor Relations and Company Improvement

Vincent Qiu — Chairman and Chief Government Officer

Junhua Wu — Director and Chief Progress Officer

Catherine Zhu — Chief Monetary Officer

Arthur Yu — President, Baozun E-commerce

Ken Huang — Chief Monetary Officer, Baozun Model Administration

Alicia Yap — Analyst

Unknown speaker — — Analyst

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