Vip.com is a leading online discount retailer for brands in China and their total active customers grew by 6% year-on-year to 29.8 million in Q2 2018. 85% of customers were regular customers and approximately 96% of orders were placed by them, according to its unaudited financial results for Q2 2018. In 2019, there are more than 30 million active users.
VIP 2018 Highlights
- In 2018, Vipshop generated US$19.47bn in GMV from 60.5 million active customers who altogether placed 437.4 million orders. Total net revenue reached US$12.3bn.
- Vipshop’s total active customers grew by 6% year-on-year to 29.8 million in Q2 2018. 85% of customers were repeating customers and approximately 96% of orders were placed by repeat customers, according to its unaudited financial results for Q2 2018.
- Total orders for the full year of 2018 increased by 25% year over year to 335.0 million from 335.0 million in the prior year.
- Gross profit for the full year of 2018 increased by 20% year over year to RMB18 billion from RMB16.3 billion in the prior year.
- Net income attributable to Vipshop’s shareholders for the full year of 2017 was RMB1.9 billion (US$299.7 million), as compared with RMB2.0 billion in the prior year.
- Non-GAAP net income attributable to Vipshop’s shareholders for the full year of 2017 was RMB3.0 billion (US$457.3 million), as compared with RMB2.9 billion in the prior year.
- On January 25, 2018, Vipshop announced that it has become a sponsor and the exclusive Chinese e-commerce partner for London Fashion Week, one of the most influential fashion events worldwide. Through this sponsorship and partnership, Vipshop aims to introduce more trendy and authentic British brands to Chinese consumers via its powerful platform.
Sustainable growth in 2019
According to Vipshop’s official report, Vipshop’s total net revenue for the second quarter of 2019 increased by 9.7% year over year to RMB22.7 billion (US$3.3 billion) from RMB20.7 billion in the prior-year period, primarily driven by the growth in the increasing number of total active customers.
How fast is Vipshop growing?
Vipshop (VIP.com), an NYSE-listed company, is China’s leading online discount retailer for brands considered as the largest flash sale website. Vipshop’s growth in the number of “active” customers, meaning those who made at least one purchase during the period, also slowed. In the fourth quarter of 2017, Vipshop reported that its active customer number rose 11% annually to 57.8 million for the full year.
Like JD, Vipshop mostly uses an in-house logistics network instead of relying on third-party delivery services like Alibaba. That’s why Vipshop and JD consistently report lower operating margins than Alibaba.
Vipshop runs a B2C (business-to-consumer) Online marketplace that sells apparel, accessories, and other products through ongoing flash sales. It controls only about 2% of China’s e-commerce market, which puts it’s in a distant fifth place behind Alibaba, JD.com, Pinduoduo, and Suning.
JD.com and Tencent co-invested $863 million in Vipshop last year to counter Alibaba. That investment gave Tencent a 7% stake and boosted JD’s existing stake from 2.5% to 5.5%. Vipshop launched about 400 million “mini-programs” on WeChat(the top messaging app in China). It also bundled VIP membership packages with Tencent Video subscriptions.
What kind of products are sold on Vipshop and VIP International?
Vipshop still holds a fairly small market share at 4.3%, as Tmall and JD dominate the domestic and general E-Commerce market. VIP International, on the other hand, accounts for a bit more than 15% of the cross border E-Commerce market, just behind Kaola and Tmall Global.
As shown on Vipshop’s website, they mostly work with international and competitive brands in the beauty, cosmetics, apparel, and clothes.
Vipshop is not very suitable for small and medium-sized companies. Vip.com works a lot with big brands. Some notable brands that work with Vipshop include Calvin Klein, Armani, and Tommy Hilfiger, etc.
Vipshop: a Taobao Competitor?
Vipshop also targets consumers in China’s lower-tier cities. While Alibaba, which has a market cap of $256 billion, dominates China’s e-commerce landscape with its marketplace that connects buyers and sellers, Vipshop has carved itself a small, but profitable, niche.
Vipshop, which has a market cap of $11.5 billion, is the undisputed leader in ‘flash sales’, where it sells branded goods, which mainly include clothing and cosmetics, at a steep discount to what they are sold for at brick and mortar stores.
The e-commerce industry in China is booming, and it’s much more common to sell luxury goods via online channels in China than in the West. Because of this, many international luxury brands have partnered with Chinese e-commerce companies over the years to sell their wares, and Vipshop offers international luxury brands an interesting alternative to the country’s leading players.
Vipshop provides services that help brands manage their sales like WeChat mini-program stores and official Chinese websites.
A good example of this is Fendi. Vipshop created a pop-up store via mini-program for the Italian luxury brand to promote its “FF Reloaded” collection in May.
Another brand, Salvatore Ferragamo, had its Chinese website run by Vipshop. Over the past ten years, Vipshop appears to have amassed a young, highly engaged, and loyal customer base that’s deeply concerned with fashion and luxury.
China’s e-commerce market is full of potential but there are also challenges. The most difficult thing is that foreign brands don’t speak Chinese, and don’t know this different market. Chinese people and Western customers have different mindsets.
If you want to enter this giant market to try your chance, but you don’t know how it works all those e-commerce platforms and Chinese e-shopping marketing, you can contact us, GMA, a professional Chinese marketing agency. We can help you succeed.