VIPS 2Q13 Post Earnings Presentation

7/29/2019 VIPS 2Q13 Post Earnings Presentation

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August 2013

Vipshop Holdings Limited

Investor Presentation


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1

Disclaimer

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-lookingstatements 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 Vipshops 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

Vipshops beliefs and expectations, are forward-looking statements. Forward-looking statements involveinherent 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: Vipshops goals

and strategies; Vipshops future business development, results of operations and financial condition; the

expected growth of the online discount retail market in China; Vipshops ability to attract customers and

brand partners and further enhance its brand recognition; Vipshops 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 relatedto any of the foregoing. Further information regarding these and other risks is included in Vipshops

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.


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China's Leading Online DiscountRetailer for Brands

Vipshop


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No large discount retail chains or branded outlets

Massive retail opportunities in China

3

Massivediscount retailopportunities

Immatureoffline

discount retailinfrastructure

Constantsupply ofexcess

inventory

Total estimated retail sales ofUS$3.8 trillion in 2013(1)

Total apparel retail sales were US$151.9bn in 2011(1) ;

apparel inventory accounts for approximately 50%oftotal apparel market(2)

Total discount retail was US$23.6bn in 2012 with a56.2% 12-15E CAGR(1)

Note:(1) Data from Frost & Sullivan report; assuming 1 US$ = 6.2301 RMB.(2) Data from BCG report The Worlds Next E -Commerce Superpower.

Hugeconsumerdemand


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Chinas huge market potential in onlinediscount retail and B2C market

Note:(1) Data from Frost & Sullivan report, assuming 1 US$ = 6.2301 RMB

(2) iResearch, assuming 1 US$ = 6.2301 RMB

2,520.0

2,952.13,325.3

3,808.3

4,356.6

4,965.0

2010 2011 2012 2013E 2014E 2015E

Chinas retail market (1)

Discount retail as % of total retail

(2011)(1)

0.5%

1.4%

China US

63.994.1

147.1192.7

232.8263.2

2010 2011 2012 2013E 2014E 2015E

(US$ in billions)

Chinas online C2C market (2)

Chinas online B2C market (1)

China discount retail sales (1)

(US$ in billions)

(US$ in billions)

(US$ in billions)

10.1 28.959.5

101.1

158.9

216.5

2010 2011 2012E 2013E 2014E 2015E

9.1 15.123.6

38.0

60.0

90.0

2010 2011 2012 2013E 2014E 2015E


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Online: the future of discount retailing in China

Top 20 retailers accountfor24% market share(1)

Consumers in China have to go onlinefor branded discount products

5

Note:(1) According to Frost and Sullivan report(2) As of 2012 year end, including 1,867 Marmaxx stores and 374 HomeGoods stores in the US, from 2012 T .J.Maxxs company presentation(3) As of February 2013, including 1,091 dress-for- less stores and 108 dds DISCOUNTS stores in the US, from February 2013 Ross company investor overview

(4) As of February 2013, from Premium Outlets company website(5) As of February 2013, from Tanger Outlets company factsheet (6) From Balian Outlets Plaza company website(7) From Beijing Scitech company website

2,241 stores(2) 1,199 stores(3)

67 outlets(4) 38outlets(5)

China's offline discount retail is extremely underdeveloped

ChinaU.S.

None

Top 20 retailers accountfor7% market share(1)

24 square feet per capita(1) 2 square feet per capita(1)

3 outlets(6) 3outlets(7)

Poor offline retail infrastructurein China

Fragmented retail market inChina

Lack of large off-price retailer inChina

Underdeveloped offline outletstores in China


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China: A more attractive market opportunity

Market positioning

Brands have well establishedonline presence and capabilities

Need to pay for inventory upfront;Products can not be returned to

suppliers

Mostly focused on high-end andluxury markets

U.S.

Discount / outlet retail channelssaturated for mass marketmerchandise; full price retailers are

establishing own outlets

Broad universe of popular brandsfor mass market

Limited upfront deposit;Most products can be returned to

suppliers

Brands have largely rely on thirdparty platforms to build online

presence

China

Lack of well-developed discount /outlet retail channel

Offline channels

Online channels

Working capitalrequirement

Broader and underpenetrated addressable market

Better business modelConclusion


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A unique player in Chinas e-Commerce landscape

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Online discount retailerMarket place General B2C

Partner with popular and well-known brands by selling their excess inventory at discount prices

Core competency in merchandising, logistic distribution and customer service

Large scalable platforms


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Rapid increase of new activecustomers

Rapid increase of repeatcustomers

High and stable rate of orders fromrepeat customers

( in thousands) ( in thousands)( in thousands)

Highly engaged and loyal customer base

255

1,330

3,312

725

1,488

2010 2011 2012 2Q12 2Q13

New active customers

804

6,681

20,457

4,256

10,149

927

7,269

21,919

4,664

11,020

86.7%91.9% 93.3% 91.3% 92.1%

2010 2011 2012 2Q12 2Q13

Orders placed by repeat customers

Total orders

Orders placed by repeat customers

155

903

2,625

1,054

2,619

276

1,491

4,110

1,462

3,490

56.2%60.6%

63.9%

72.1%75.0%

2010 2011 2012 2Q12 2Q13

Repeat customers

Total active customers

Repeat customer as % of total customer


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Preferred discount channel for popular brands

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One-stop solution for brands

Professional team with deep brandknowledge

Fast inventory monetization

Minimal brand dilution

Clear industry leader(2)Brand partners growth over time(1)

411

1,075

2,760

3,557

2010 2011 2012 1H13

20101H13growth by 8.7x

Product categories

Children

Cosmetics

Home goods

FootwearSportswear

AccessoriesHandbags

Apparel

9

Note:(1) Number of our brand partners is a cumulative number since 2009, which includes primarily brand owners, and to a lesser extent, brand distributors and resellers.(2) As measured by total revenues in 2011, the number of registered members as of December 31, 2012 and the number of monthly unique visitors in December 2012, according to the Frost & SullivanReport.

Shoppers are loyal and so are our brand partnersSubstantially all of our brand partners have returned to pursue additional sales opportunities with us


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Operational expertise


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Relationshipwith brands

Understandingof consumers

Businessintelligence

system

Over 300Specialized

MerchandisingStaff

Excellent merchandising

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Brandselection

Salesmanagement

capability

Consumerinsights

Customizedmarketing

Sales eventsoptimization

Over 6,000brands

Deepeningbrand

partnership

1

2

3


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Flash sale requires differentiated logisticssystem

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Additional capabilities on top of traditional B2C e-Commerce (1)

Sales cycle Short Long

Traditional B2C e-Commerce

Volume of throughput Large Small

Note:(1) Comparison on per same-size warehouse basis.

Vipshop has successfully established customized and sophisticated logistics and warehousesystems to cater to flash sale needs

Sales process

No. of SKUs handled

Fast

Large

Slow

Moderate

Reverse logistics Large Small

Snapshot of our warehouses

Flash sale


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Highly customized and seamlessly integratedIT system for flash sales

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Support huge traffic spikes during peak hours

CRM system

Expanding and cross-regional warehousemanagement system

Data platform and BI

Time

Traffi

c

12am 10am 12pm 12am

Merchant platform


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High entry barriers

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First Mover Advantage

Business model

Operational expertise

Economies of scale1

2

3

4

Vipshop is well

positioned inChinas onlinediscount retail

market


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Visionary management team with strongexecution

Donghao YangChief Financial Officer

12+ years experience in financePreviously CFO of SynutraInternational Inc (NASDAQ:SYUT) and Tyson Foods (NYSE:TSN) Greater ChinaMBA from the Harvard BusinessSchool

Maggie Hung

Senior VP, Merchandising20+ years experience inmerchandise retailPreviously VP of Grand PacificMall and GM of Grand OceanDepartment Store in NanjingBachelors degree from Ling TungUniversity

Yizhi Tang

Senior VP, Logistics10+ years experience in logisticsindustryPreviously logistics departmenthead of Tesco in northern China,and Senior Director of logisticsdepartment of Dangdang.com(NYSE: DANG)Masters degree from Sun Yat-SenUniversity

Eric Ya ShenCo-Founder, Chairman, CEO

18+ years experience in consumerelectronic products distributionPreviously Chairman of GuangzhouNEM Import and Export Co., Ltd.EMBA from Cheung Kong GraduateSchool of Business

Xian Feng CaiVP & GM, Shanghai Branch

19+ years experience in retailindustryPreviously GM of IGA DistributionPTY LTDBachelors degree from Universityof Melbourne

Mr. Daniel Kao

Chief Technology Officer

16 + years experience with leadinge-commerce and Internetcompanies in the US and ChinaPreviously director of site operationand quality engineering at eBay IncBachelors degree in computerscience from Iowa State University

Arthur Xiaobo HongCo-Founder, Vice Chairman, COO

12+ years experience inconsumer electronic productsdistributionPreviously Chairman of SocieteEurope Pacifique Distribution

Alex JiangSenior VP, Business Intelligence &

Customer Relationship Management

(CRM)

20+ years of experience in Chinasretail sectorPreviously VP of Dangdang.com(NYSE: DANG) and Founder / Directorof E-elephant Consulting CompanyLimitedBachelors degree from Chongqing

Business School

Xiaohui MaVP, Online Marketing

10+ years experience in marketingand mediaPreviously editor-in-chief of SINABachelors degree fromCommunication University of China


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Financial highlights


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Phenomenal growth

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Total net revenues

(US$ in millions)

Total orders

(in thousands)

927

7,269

21,919

4,664

11,020

2010 2011 2012 2Q12 2Q13

684.1%

201.5%

136.3%

32.6

227.1

692.1

135.3

351.3

2010 2011 2012 2Q12 2Q13

597.1%

204.7%

159.7%


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Steady margin expansion

Quarterly gross profit and gross margin

(US$ in millions )

Strong and defensible margins: Brands often sign exclusive deals to minimize brand dilution (>800exclusive brands) Brands only liquidating excess inventory (limited quantity = inability to price shop) Brands want to efficiently monetize excess inventory and have little price sensitivity

4.9 7.410.0

21.0 21.4

29.634.8

68.772.8

82.6

17.0%18.3%

19.0%20.0%

21.2%21.8% 22.3%

22.9% 23.4% 23.5%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Gross profit Gross margin

C i i i l i i


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Continuous investment in logisticsinfrastructure to drive long term growth

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(US$ in millions)

Fulfilment expenses (Non-GAAP) 1

Note:

(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses

6.0

8.411.4

19.416.8

20.5 21.6

37.3 37.6

42.6

20.9% 20.7%21.7%

18.4%16.6%

15.1%13.9% 12.5%

12.1% 12.1%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Fulfilment expenses (non-GAAP) Fulfilment as % of total net revenues

T d ti l d


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Tremendous operating leverage andhistorically low marketing expenses

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Note:(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses

(US$ in millions)

General and administrative expenses (Non-GAAP) (1)

(US$ in millions)

Marketing expenses (Non-GAAP) (1)

1.72.3

4.6

6.65.8

6.67.3

12.4

13.0

15.0

5.7% 5.7%

8.7%

6.2% 5.8%4.9% 4.7% 4.1% 4.2% 4.3%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Marketing expenses (non-GAAP)

Marketing as % of total net revenues

1.0

2.93.7 4.2 3.9

4.3 4.6

6.57.0

8.9

3.6%

7.2% 7.1%

4.0% 3.9%3.2% 2.9%

2.2% 2.3% 2.5%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

G&A expenses (non-GAAP)

G&A as % total net revenues


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Note:(1) All numbers are shown on a non-GAAP basis and excludes the impact from share-based compensation expenses

(4.2)

(7.1)

(10.8) (11.2)

(6.5)

(4.2)

0.6

8.19.0

11.8

-14.6%

-17.6%

-20.6%

-10.6%

-6.4%

-3.1%

0.4%

2.7% 2.9%3.4%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13

Net income/loss (non-GAAP) Net margin (non-GAAP)

Net margin (Non-GAAP) (1)

(US$ in millions)

Net margin improvement


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(in $ thousands) December 31, 2012June 30, 2013(Unaudited)

Cash and Cash Equivalents and Held-to-MaturitySecurities

210,570 384,530

Current Assets 381,952 533,712

Total Assets 398,917 552,317

Current Liabilities 316,334 356,265

Total Liabilities 316,334 356,265

Total Stockholders Equity 82,583 196,052

Current Ratio 1.2 1.5

Balance Sheet Highlights


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Growth strategies


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Our future growth strategy

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Expand warehouse capacities to accommodate increasingcustomer demand

Greater penetration in additional cities

Greater penetration in Northern, Eastern, Southwestern andCentral China

Geographical expansion

Leverage social media and word-of-mouth to achieve better

marketing ROI, attract more customers and strengthen theVipshop brand

Recommendation/personalization, better fulfillment service,improve customer care programs, better customer retentionand repeat purchase rate

Better brand portfolio, increase sales per brand, purchase perorder

Enlarge customer base

Improve shoppingexperience

Enhance the quantity andquality of offers


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Major profitability drivers

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Word-of-mouth ROI maximization

Cost control

IncreasedOperating leverage

Stronger negotiationpower

Better pricing

Gross margin

Fulfillmentexpense

Marketingexpense

G&Aexpense

Distribution centersbuild out Capacity utilization ramp up

Profitability

1

2

3

4


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Key investment highlights

Market leadership position

Strong industry growth fundamentals1

Highly engaged and loyal customer base

Superior operational expertise

2

3

4

Strong management team5


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Thank you!

Documents

VIPS 2Q13 Post Earnings Presentation