Baozun Releases 2015 Chairman Letter

SHANGHAI, China, April 11, 2016 (GLOBE NEWSWIRE) --

Dear Shareholders:

I would like to take this opportunity on behalf of everyone at Baozun to thank you all for your support over the past year.

On May 21, 2015, we took Baozun public on NASDAQ, which was a significant milestone for us. Our team was very proud of the IPO and we are also very mindful of the fact that this means even greater commitment and responsibility to our brand partners, employees and shareholders. We intend to keep learning, growing and improving as we strive to live up to our corporate motto – A Superior Baozun.

I’d like to start by discussing three aspects at the core of our corporate strategy.

China’s brand e-commerce is continuing to grow rapidly and has enormous potential.

Online retail in China has grown rapidly over the past 10 years. According to market data, in 2015, China’s online retail market accounted for RMB3.8 trillion (about USD580 billion), or around 12% of all Chinese retail sales; by 2017, the size of China’s online retail sector is expected to surpass those of the U.S. and Europe combined.

Brand e-commerce – connecting brands and consumers through official online stores and authorized marketplace stores – has been growing even faster and more consistently than the overall e-commerce market in China. In 2014, the latest year for which domestic data is available, brand e-commerce grew by 79.3% versus 45.8% for the entire e-commerce market.

From what we have observed, there are two drivers for brand e-commerce: increasing attention paid by brands to e-commerce, and enthusiasm of shoppers for access to sophisticated products, including the world’s foremost brands, that e-commerce can provide.

With regard to the first driver, brands face a challenging and highly fragmented retail market in China due to the high costs of offline channel penetration. We have witnessed brands increasingly adopting e-commerce as their key retail strategy in China in order to bypass the challenging offline retail landscape and take advantage of the tremendous e-commerce opportunities. Brand e-commerce gives brands greater command of the transaction lifecycle and makes it possible to build brands more effectively through official or authorized online stores rather than traditional offline channels. As a result, we believe brand e-commerce will be an increasingly important part of the strategy of brands operating in China.

The second driver, which is fundamentally an expression of rising consumer aspirations, is equally important. Once Chinese consumers have met their basic needs, they become more selective and discriminating in the products and services they purchase. This leads to increased interest in brand shopping. As we work with many of the world’s leading brands, we are benefiting from this consistent and growing shift towards branded products and services within the Chinese consumer space. We believe brand e-commerce has tremendous potential to achieve vertical depth by category as well as horizontal penetration across channels. With the rise of “omni-channel” shopping, success for brands is predicated on reaching consumers on whatever device or platform they choose.

As China’s economic model matures, GDP growth may be slower than in the previous decades of high-speed growth, but the urban middle class has expanded, and along with it, consumer spending will keep growing at a steady rate. We foresee rapid growth of brand e-commerce over the next few decades, as a large share of consumption shifts to the “post-90s generation”. These post-90s consumers tend to be even more aspirational than prior generations, and tend to have more financial security, consumption power and confidence in the future. At the same time, across rural areas and in third- and fourth-tier cities and towns, mobile shopping is booming. Like their counterparts in China’s major urban centers, our research indicates that shoppers are increasingly turning to e-commerce to access their favorite brands as they are also less likely to have access to branded offline stores.

Why is Baozun China’s leading brand e-commerce company?

Since our founding in 2007, we have invested in the future of brand e-commerce based on a clear vision of its potential in China’s vast domestic retail market. Pursuing our corporate philosophy of “From Brands, to Consumers,” we have responded to the needs of our brand partners by building omni-channel shopping strategies and helping them to expand geographically.

With brand partners who are new to e-commerce in China, we help them set up both official “branded” online stores as well as flagship stores in China’s leading e-commerce marketplaces, leveraging our IT infrastructure, logistics footprint and deep experience to launch their online retail presence quickly and at a low cost. This helps our brand partners succeed in the “first round” of e-commerce – the retail transaction stage.

As a strategic partner, we then offer these partners solutions in omni-channel, digital marketing, Customer Relationship Management (CRM), data warehousing and analytics and regional expansion within Asia, making the best use of our experience and knowledge of the brand e-commerce industry.

We have emerged as a leader in the brand e-commerce industry through our tight focus on the brand e-commerce space. Our competitive advantage is based on:

  • Profound understanding of brands: Our understanding of the needs of our brand partners is based on years of working with leading brands before we even founded the company. Leveraging our extensive depth of knowledge in retail strategy, operations, systems and supply chains, we can deliver a multitude of solutions to our brand partners.
  • Flexibility and speed of delivery: Brand e-commerce is consumer facing, which means that it needs to be able to change quickly and efficiently with changes in consumer behavior and demand. The brand-oriented solutions we provide emphasize speed of deployment and flexibility, and are based on our powerful IT customization capabilities and deep understanding of this sector. We believe that brands benefit from working with e-commerce partners in order to meet the changing needs of the marketplace, and that our services are important to their success in brand e-commerce.
  • Investing in the future: We are constantly exploring and anticipating the future requirements of brand partners within all the nodes of the brand e-commerce value chain. We develop strategic plans on their behalf, to add value and in order to serve them over the long-term with a high degree of reliability and predictability.

Our goal: To extend our lead as the most respected brand e-commerce company in China by continually helping our brand partners achieve consistently greater success in brand e-commerce.

The future of brand e-commerce in China is full of possibilities and we believe that we will be the one to realize them through working closely with our brand partners. We plan to lead the industry by establishing our next generation brand e-commerce ecosystem in which innovations based on data analysis and CRM play key roles to generate more value to brands and consumers.

Our business is based on innovation and an entrepreneurial spirit, and we strive to foster an open, positive atmosphere in which our employees are rewarded for their achievements. Our people are always the key to our success. We have established a three-year plan to strive to become the best employer in the brand e-commerce industry in China, by providing competitive career growth opportunities to our employees. With this plan, we believe that we can better retain and attract more talented team members to help us realize our goal.

Looking ahead, we see tremendous opportunities in the emergence of brand e-commerce in China. We will work closely with our brand partners to develop best practices for the industry, and provide our brand partners with the next generation of tools and strategies, while providing opportunities for personal development for our employees and bringing greater returns to our shareholders.

Thanks again for your support and confidence in the future of our company. We hope we can count on you in the future.

Vincent Wenbin Qiu
Chairman and Chief Executive Officer
Baozun Inc.

Safe Harbor Statements

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in 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," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

For more information, please visit http://ir.baozun.com

CONTACT: For investor and media inquiries, please contact:

Baozun Inc.
Ms. Caroline Dong
ir@baozun.com

Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

Source:Baozun Inc.