E-commerce service provider Baozun E-commerce has released the latest data, which shows that prudent consumers are restraining large purchases. In the first quarter earnings season for companies in the automotive and real estate industry, we often see this potential theme, because these two are considered the most expensive bulky items the average consumer buys.

Now, Baozun e-commerce data shows that this trend has extended to home appliances and electronic products. In contrast, cheaper products such as FMCG and personal care products are popular today, which shows that people are still willing to spend money on these cheaper everyday items.

Meanwhile, Baozun eCommerce announced a new international expansion strategy. The company hopes to sell its popular tools to e-commerce merchants outside of China. Earlier this year, Baozun e-commerce bought a clothing retailerGapStores in Greater China, a move that will take the company from initial software services (SaaS) The provider became an integrated service provider and retail brand operator.

This strategy of Baozun e-commerce aims to achieve diversified development, which is of certain significance, because, for exampleGapSuch brands can become new customers for Baozun's core e-commerce services. Furthermore, in terms of diversification, Baozun E-commerce published an encouraging report, and the company has made steady progress in reducing its reliance on Alibaba. Alibaba is one of the largest shareholders of Baozun E-commerce, and has also become the company's main source of business through Tmall.

However, after the report was released, weak consumer confidence and the resulting decline in large spending seemed to be the market's biggest concern. Subsequently, Baozun's US stock fell10%However, the stock recovered some of its “lost ground” the next day.

Since this year, Baozun e-commerce stock prices have declined cumulatively27%, more2The peak value set in the month fell by more than half, and China Securities listed overseas generally rose sharply at the time. Even so, the valuation of Baozun e-commerce is still quite high. According to analysts' predictions of its profit this year, its price-earnings ratio is37. This figure is less thanShopifyofthe185, but higher than Saifushi (Salesforce) of32.

Additionally, J.P. Morgan Chase, Morgan Stanley, andSchrodersWait, at least three large institutions are major shareholders of the company and hold5%or more shares. As a result, it's clear that investors haven't given up on Baozun, even though the company's path forward in China is currently difficult.

Baozun e-commerce's revenue in the first quarter was not particularly good; the final result was a year-on-year decline4.9%, to18.9100 million yuan (combined)2.67billion dollars). If you exclude this year2The month only started to increaseGapBrought by business in Greater China1.89Revenue was 100 million yuan, while the company's revenue declined during the quarter14%. Despite this, it's close to the decline in revenue in the fourth quarter of last year20%Compared to that, this has shown an improvement, when consumer confidence was hit hard by the resurgence of the epidemic.

Decline in demand for household appliances and electronics

Baozun e-commerce divides its revenue into two major categories: original e-commerce services and newer product sales. Among these two businesses, core e-commerce services, which accounted for about two-thirds of its revenue, actually performed relatively well this quarter. Revenue in this category has declined6%, to12.2One hundred million yuan, mainly because the company sold loss-making divisions during this period. Excluding this impact, the business's revenue was almost flat.

The company's weak revenue came from product sales, which did not include2The one that only started contributing revenue in the monthGap, Baozun's product sales revenue declined by about30%. The worst sales performance was electronic products, which plummeted year over year67%, to RMB4360Ten thousand yuan. As consumers reduced bulky purchases, sales of household appliances also declined36%, to2.253100 million yuan.

In contrast, the company's FMCG sales increased this quarter25%, sales of beauty and cosmetics have also increased6%.

The company said on an earnings call that4Tsukiwa5Consumer trends will improve in the month of the month, but the company did not provide any details. Furthermore, Baozun's profits were not optimistic, and the company reported operating losses. At the same time, the company also experienced non-generally accepted accounting standards (non-GAAP) Losses. The company lost money under non-GAAP131010,000 yuan, compared to profit for the same period last year120Ten thousand yuan.

Baozun in this year2By month4000Bought for ten thousand dollarsGapGreater China business. Due to intense competition and weakness during the pandemic, the brand's chain of stores has been struggling. At the end of the acquisition,GapThe number of stores dropped to118Home, about2021year3Half of the total number of monthly stores.

Baozun's management revealed that the company plans to start expanding stores again with the goal of opening this year10home stores.

Finally, Baozun bought a lifestyle brandAsia Ltd.It has a minority interest and has opened an online store in Singapore. The brand doesn't seem very big, and opening a store in Singapore doesn't seem like a big move. But both of these events show that Bao Zun wants to get out of China, and Southeast Asia is his first stop.

Chairman of the companyVincent Qiu“This is an important first step in bringing our proven technology to the global market,” it was stated on the conference call. “Our technology is an important foundation for creating businesses in Southeast Asia's growing e-commerce market.”

Overall, Baozun appears to be developing in a positive direction, although some investors question the troubled acquisitionGapThe decision.