VIPS Investor Presentation 08 2012

7/30/2019 VIPS Investor Presentation 08 2012

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August 2012

Vipshop Holdings Limited

Investor Presentation


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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

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Massivediscount retailopportunities

Immatureoffline

discount retailinfrastructure

Constantsupply ofexcess

inventory

Total estimated retail sales ofUS$3.3 trillion in 2012(1)

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

Total discount retail was US$15bn in 2011. with a56.8% 11-15E CAGR(3)

Note:(1) Data from Frost & Sullivan report; assuming 1 US$ = 6.378 RMB.(2) Data from BCG report The Worlds Next E -Commerce Superpower.(3) Data from Frost & Sullivan report; assuming 1 US$ = 6.378 RMB.

Hugeconsumerdemand


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Consumers in China are skipping outlet model andgoing directly online for discounted branded products

Online: the future of discount retailing in China

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Note:(1) As October 25th 2011, including 1,869 Marmaxx stores and 374 HomeGoods stores in the US, from 2011Q4 Report(2) As of February 2012, including 1,037 dress-for-less stores and 88 dds DISCOUNTS stores in the US, from February 2012 Company Investor Overview

(3) As of March 2012, from Company Website(4) As of March 2012, from Company factsheet

2,243 stores(1)

1,

125 stores(2)

64 outlets(3)

39 outlets(4)

China's offline discount retail are extremely underdeveloped

ChinaU.S.

LargeOff-priceretailer

Outlets

None


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Chinas e-Commerce market growing rapidly

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Note:(1) Data from Frost & Sullivan report; assuming 1 US$ = 6.378 RMB

China online flash sales (1)China discount retail sales (1)

8.914.7

24.1

38.2

59.0

89.1

2010 2011E 2012E 2013E 2014E 2015E

0.51.3

3.0

5.9

11.1

16.8

2010 2011E 2012E 2013E 2014E 2015E

CAGR: 58.7% CAGR: 104.5%

(US$ in billions)(US$ in billions)

9.9

21.8

41.3

70.2

105.2

155.7

2010 2011E 2012E 2013E 2014E 2015E

CAGR: 73.5%

China B2C e-Commerce sales (1)

(US$ in billions)


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China: A more attractive market opportunity

Broad universe of popular brandsfor mass market

Limited upfront depositMost products can be returned to

suppliers

Need to pay for inventory upfrontProducts can not be returned to

suppliers

Well established online presenceand capabilities

Largely rely on third partyplatforms to build online presence

Marketpositioning

Mostly focused on high-end andluxury markets

China U.S.

Discount / outlet retail channelssaturated for mass market

merchandise

Lack of well-developed discount /

outlet retail channel

Competition from

offline channel

Brands own online

presence

Working capitalrequirement

Broader addressable market

Better business modelResult


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A unique player in Chinas e-Commerce landscape

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Market place

General B2C

Cosmetics

Broad basedPlatforms

Vertical focused players and online retailers

Grocery

Online discount

Shoes/bags3C Apparel

Partner with leading brands by selling their excess inventory at discount prices

Unique business model partnering with brands has no direct competition


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Rapid increase of new activecustomers

Rapid increase of repeatcustomers

Rapid increase of orders placed byrepeat customers

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

Highly engaged and loyal customer base

38

255

1,330

249

725

2009 2010 2011 2Q11 2Q12

14

155

903

312

1,054

38

276

1,491

447

1,462

36.8%

56.2%60.6%

69.8% 72.1%

2009 2010 2011 2Q11 2Q12Repeat customers

Total active customers

Repeat customer as % of total customer

47

804

6,681

1,228

4,256

71

927

7,269

1,363

4,664

66.2%

86.7%91.9% 90.1% 91.3%

2009 2010 2011 2Q11 2Q12Orders placed by repeat customers

Total orders

Orders placed by repeat customers


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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)

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 2010, the number of registered members as of June 30, 2011 and the number of monthly unique visitors in December 2011, according to the Frost & Sullivan Report.

Brand partners growth over time(1)

Product categories

Travel

Accessories

Home goods

SportswearCosmetics

Children

HandbagsFootwear

Apparel

Shoppers are not loyal, but our brand partners are.

76

411

1,075

2,174

2009 2010 2011 1H12

2009 - 1H12Increased by 28x


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Operational expertise


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Relationshipwith brands

Understandingof consumers

Businessintelligence

system

188 merchandisingstaff

Excellent merchandising

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Brandselection

Salesmanagement

capability

Consumerinsights

Customizedmarketing

Sales eventsoptimization

Over 3,400brands

Repeatbrand

partners

1

2

3


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Differentiated logistics system

Extra process 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.

Customized and more complicated logistics and warehousing system

Sales process

No. of SKUs handled

Relatively fast

Much more

Relatively slow

Relatively few


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Highly customized and seamlessly integratedIT system for flash sales

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Support huge traffic spikes

Customized ERP system

Warehouse management

system

CRM system

Time

Traffic

12am 10am 12pm 12am


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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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Eric ShenCo-Founder, Chairman, CEO

18+ years experience in consumer

electronic products distributionPreviously Chairman of GuangzhouNEM Import and Export Co., Ltd.EMBA from Cheung Kong GraduateSchool of Business

Arthur Hong

Co-Founder, Vice Chairman

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

Donghao Yang

Chief Financial Officer12+ years experience in financePreviously CFO of SynutraInternational Inc (NASDAQ:SYUT) and Tyson Foods (NYSE:TSN) Greater ChinaMBA from the Harvard BusinessSchool

Alex JiangChief Operating Officer

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

Maggie Hung

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

Yizhi Tang

VP, Logistics10+ years experience in logisticsindustryPreviously logistics departmenthead of Tesco in northernChina, and Senior Director oflogistics department ofDangdang.com (NYSE: DANG)Masters degree from Sun Yat-SenUniversity

Xian Feng Cai

GM, Shanghai Branch19+ years experience in retailindustryPreviously GM of IGA DistributionPTY LTDBachelors degree from Universityof Melbourne

Visionary management team with strongexecution

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


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Financial highlights


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Phenomenal growth

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Net revenues

(US$ in millions)

Total orders

(in thousands)

71

927

7,269

1,363

4,664

2009 2010 2011 2Q11 2Q12

1,205.6%

684.1%

242.3%

2.8

32.6

227.1

40.6

135.3

2009 2010 2011 2Q11 2Q12

1,061.6%

597.1%

233.5%


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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 (>400 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

4.9

7.4

10.0

21.0 21.4

29.6

17.0%

18.3%19.0%

20.0%

21.2%21.8%

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

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

8.4

11.4

19.4

16.8

20.5

20.9% 20.7% 21.7%18.4%

16.6% 15.1%

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

Fulfilment expenses (non-GAAP) Fulfilment as % of net revenue

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

6.6

5.7% 5.7%

8.7%

6.2% 5.8%4.9%

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

Marketing expenses (non-GAAP) Marketing as % of net revenue

1.0

2.9 3.74.2 3.9 4.3

3.6%

7.2% 7.1%

4.0% 3.9% 3.2%

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

G&A expenses (non-GAAP) G&A as % net revenue


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Net margin (Non-GAAP) (1)

Net margin improvement

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)

-14.6% -17.6% -20.6%

-10.6%-6.4% -3.1%

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

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


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(in thousands)March 31, 2012 June 30, 2012

Cash and cash equivalents $98,473 $115,555

Current Assets 188,603 191,079

Total Assets 197,767 200,232

Current Liabilities 123,288 127,553

Total Liabilities 123,288 127,553

Total Stockholders Equity 74,479 72,679

Current Ratio 1.5 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

Increase brand partners and sales per brand

Expand product category

Exclusivity with brand partners

Further expand into mobile and connected devices

Extend partnership with social networking platforms such asWeibo and Renren

Geographical expansion

Product expansion

Channel expansion


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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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Warehouse capacity expansion strategy (1)

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Note:(1) Sizes include bothwarehouse and office space

Current warehouses Lease Planned warehouse Build + Lease

Total size: 117,810 sq.m.

Beijing

Size: 24,220 sq.m.

North China

Kunshan

Size: 34,484 sq.m.

East China

Chengdu

Size: 23,980 sq.m.

West China

Foshan

Size: 35,126 sq.m.

South China

Shanghai

Chengdu

Guangzhou

Lease

Build

Total size: 400,000 sq.m. by 2013

BeijingBeijing

Enhanced fulfillment capabilitiesReduced fulfillment expensesImproved delivery times to customers

Expand warehouse capacityLocalize warehouse capacity & delivery

partnerships


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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 Investor Presentation 08 2012