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16	16	Technology is the essence of future retail, and is, its DNA. By integrating cloud computing, big data, and AI technology, the company continuously invest to build a leading e-commerce technology platform.
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	19	+[[image:BZUN0.png||height="203" width="612"]]
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19	19	Baozun was founded at Shanghai, China in year 2007. Over the past ten years, Baozun has branches spread all over Hangzhou, Beijing, Hongkong and Taiwan, with overseas offices located in Japan, Korea and the USA.
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60	60	In 2018, 2019 and 2020, net revenues from product sales accounted for 46.7%, 47.0% and 44.1%, respectively, of its net revenues, and net revenues from service accounted for 53.3%, 53.0% and 55.9%, respectively, of its net revenues. Over time, the company work with its brand partners under different combinations of business models to meet their evolving needs and sales objectives. Accordingly, its revenue mix may vary over time.
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	65	+
	66	+[[image:BZUN1.png]]
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	68	+
62	62	== Business Models ==
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64	64	The company believe its brand partners value it for its integrated e-commerce capabilities, dependable services, deep category expertise, market insight and ability to innovate and adapt to the fast-changing e-commerce market. Depending on each brand partner’s specific needs and characteristics of its product category, the company provide solutions to its brand partners under one or a combination of its three business models: distribution model, consignment model and service fee model.
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155	155	The company opened up its Maikefeng platform to third-party sellers to diversify its product offerings and improve operational efficiency in May 2015. Third-party sellers sell products to the consumers through its mobile applications and these sellers may also use its other value-added services, and the company charge such third-party sellers service fees for its other value-added services the company provide upon their request. Upon successful sales at Maikefeng, the company charge commissions from such third-party sellers at a fixed fee rate based on the sales volume. The company monitor third-party sellers’ performance and activities on its Maikefeng platform closely to ensure that they meet its requirements for authentic products and high-quality customer service. In this business model, since Maikefeng is operated as an intermediary platform that facilitates transactions between merchants and consumers, the company generally are not the primary obligor, do not bear the inventory risk, do not have the ability to establish the price or control the related shipping services utilized by third-party sellers.
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	165	+[[image:BZUN2.png]]
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157	157	= Brand Partners & Brand Partner Development and Services =
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159	159	== Brand Partners ==
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240	240	In addition, the company rely on contractual restrictions, such as confidentiality and non-disclosure agreements with its brand partners and employees.
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	254	+[[image:BZUN3.jpg]]
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	257	+= Financial Highlights =
	258	+
	259	+
	260	+**Baozun First Quarter 2021 Unaudited Financial Results**
	261	+
	262	+May 18, 2021;  Baozun Inc. announced its unaudited financial results for the first quarter ended March 31, 2021.{{footnote}}https://ir.baozun.com/news-releases/news-release-details/baozun-announces-first-quarter-2021-unaudited-financial-results{{/footnote}}
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	264	+
	265	+== First Quarter 2021 Financial Highlights ==
	266	+
	267	+* Total net revenues were RMB2,020.5 million (US$1308.4 million), an increase of 32.6% year-over-year.
	268	+* Income from operations was RMB52.9 million (US$8.1 million), an increase of 313.4% year-over-year. Operating margin was 2.6%, compared with 0.8% in the same quarter of last year.
	269	+* Non-GAAP income from operations2 was RMB75.8 million (US$11.6 million), an increase of 105.9% year-over-year. Non-GAAP operating margin was 3.7%, compared with 2.4% in the same quarter of last year.
	270	+* Net income attributable to ordinary shareholders of Baozun Inc. was RMB1.3 million (US$0.2 million), compared with RMB2.2 million in the same quarter of last year.
	271	+* Non-GAAP net income attributable to ordinary shareholders of Baozun Inc.3 was RMB61.2 million (US$9.3 million), an increase of 135.5% year-over-year. Non-GAAP net margin was 3.0%, compared with 1.7% in the same quarter of last year.
	272	+* Basic and diluted net income attributable to ordinary shareholders of Baozun Inc. per American Depository Share (“ADS4”) were RMB0.02 (US$0.00) and RMB0.02 (US$0.00), respectively, compared with RMB0.04 and RMB0.04, respectively, for the same quarter of last year.
	273	+* Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS5 were RMB0.83 (US$0.13) and RMB0.82 (US$0.13), respectively, compared with RMB0.44 and RMB0.44, respectively, for the same period of 2020.
	274	+
	275	+== First Quarter 2021 Operational Highlights ==
	276	+
	277	+* Total Gross Merchandise Volume (“GMV”)6 was RMB13,241.0 million, an increase of 43.8% year-over-year.
	278	+* Distribution GMV7 was RMB1,074.2 million, an increase of 37.2% year-over-year.
	279	+* Non-distribution GMV8 was RMB12,166.8 million, an increase of 44.4% year-over-year.
	280	+* Number of brand partners increased to 281 as of March 31, 2021, from 239 as of March 31, 2020.
	281	+* Number of GMV brand partners increased to 272 as of March 31, 2021, from 228 as of March 31, 2020.
	282	+
	283	+Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun, commented, “Baozun is pleased to announce a solid quarter of high-quality growth as the company kick off its medium-term strategic plan. In this new era of e-commerce, where store operations and store management increasingly rely on digital operating platforms and ecosystems, its belief that ‘technology empowers future success’ and its comprehensive infrastructure have consistently enabled it to extend its competitive advantage. Baozun is thrilled that Baozun has made faster-than-expected progress, especially in executing its omni-channel strategy and deepening its penetration into the luxury sector.”
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	286	+“During the quarter, the company refined its strategic priorities around sustainability and established a sustainability committee that reports directly to its board of directors. As the leader and a pioneer in the brand e-commerce service industry in China, the company recognize and embrace its unique and pioneering role, and the company will continue to work on building a sustainable and innovative ecosystem while striving to set new benchmarks for its industry. Meanwhile, the company deepened its investments in talent and look forward to enabling its people to exceed their potential. The company believe Baozun is well on its way to achieving sustainable and profitable long-term growth as a result of the accelerated progress Baozun has made so far this year,” Mr. Qiu concluded.
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	288	+
	289	+Mr. Arthur Yu, Chief Financial Officer of Baozun, commented, “With the acceleration of its omni-channel strategy, together with strong business diversification and efficiency improvements, the company demonstrated the great resilience of its business model. The company delivered a 33% year-over-year rise in total net revenues to RMB2 billion and a more than doubling in non-GAAP income from operations to RMB76 million. More importantly, the company achieved outstanding improvement in operating efficiency, driven by greater fulfillment efficiency, highly effective digital marketing services and the implementation of the latest proprietary technology resulting from its continuous focus on innovation. Meanwhile, during the quarter, the company entered into a few strategic alliances to reinforce and sharpen its value proposition and expand its addressable market. Going forward, the company will continue to innovate to drive organic growth, and selectively explore strategic acquisitions when opportunities arise.”
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	291	+
	292	+== First Quarter 2021 Financial Results ==
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	294	+
	295	+Total net revenues were RMB2,020.5 million (US$308.4 million), an increase of 32.6% from RMB1,523.6 million in the same quarter of last year.
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	298	+Product sales revenue was RMB971.8 million (US$148.3 million), an increase of 38.6% from RMB701.1 million in the same quarter of last year. The increase was primarily attributable to the acquisition of new brand partners and the increased popularity of the Company’s brand partners’ products, and was partially offset by slower growth in personal-care products in the appliances category.
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	301	+Services revenue was RMB1,048.7 million (US$160.1 million), an increase of 27.5% from RMB822.5 million in the same quarter of last year. The increase was primarily attributable to the rapid growth of the Company’s consignment model and service fee model.
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	304	+Total operating expenses were RMB1,967.6 million (US$300.3 million), compared with RMB1,510.8 million in the same quarter of last year.
	305	+
	306	+* Cost of products was RMB822.3 million (US$125.5 million), compared with RMB590.1 million in the same quarter of last year. The increase was primarily due to higher costs associated with the increase in product sales revenue.
	307	+* Fulfillment expenses were RMB508.0 million (US$77.5 million), compared with RMB413.0 million in the same quarter of last year. The increase was primarily due to an increase in GMV contribution from the Company’s distribution and consignment model, an increase in warehouse rental expenses associated with expanded warehouse capacity to address additional growth opportunities, and an increase in customer service expenses as the Company establishes its remote service centers, all of which were partially offset by efficiency improvements.
	308	+* Sales and marketing expenses were RMB470.6 million (US$71.8 million), compared with RMB366.2 million in the same quarter of last year. The increase was in line with GMV growth and the increase in digital marketing services revenue, both of which were partially offset by efficiency improvements.
	309	+* Technology and content expenses were RMB93.0 million (US$14.2 million) compared with RMB95.9 million in the same quarter of last year. The decline was mainly attributable to the Company’s cost control initiatives, efficiency improvements and better prioritization of the Company’s system development pipeline.
	310	+* General and administrative expenses were RMB79.6 million (US$12.2 million), an increase of 59.5% compared with RMB49.9 million in the same quarter of last year. The increase was primarily due to a rise in staff costs for the Company’s investment in talent recruitment, especially for its growing omni-channel services, and the modification of compensation packages to retain and attract the best talents in the industry, an increase in professional fees related to the Company’s recent M&A activities, and an increase in rental expenses for the Company’s new headquarters, all of which were partially offset by cost control initiatives.
	311	+
	312	+Income from operations was RMB52.9 million (US$8.1 million), an increase of 313.4% compared with RMB12.8 million in the same quarter of last year. Operating margin was 2.6%, compared with 0.8% in the same quarter of last year.
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	315	+Non-GAAP income from operations was RMB75.8 million (US$11.6 million), an increase of 105.9% compared with RMB36.8 million in the same quarter of last year. Non-GAAP operating margin was 3.7%, compared with 2.4% in the same quarter of last year.
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	317	+
	318	+Net income attributable to ordinary shareholders of Baozun Inc. was RMB1.3 million (US$0.2 million), compared with RMB2.2 million in the same quarter of last year. The Company recorded an unrealized investment loss of RMB37.4 million related to the stock price fluctuation of iClick Interactive Asia Group Limited, on the Company’s minority investment during the first quarter of 2021. Basic and diluted net income attributable to ordinary shareholders of Baozun Inc. per ADS were RMB0.02 (US$0.00) and RMB0.02 (US$0.00), respectively, compared with RMB0.04 and RMB0.04, respectively, in the same quarter of last year.
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	320	+
	321	+Non-GAAP net income attributable to ordinary shareholders of Baozun Inc. was RMB61.2 million (US$9.3 million), an increase of 135.5% compared with RMB26.0 million in the same quarter of last year. Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS were RMB0.83 (US$0.13) and RMB0.82 (US$0.13), respectively, compared with RMB0.44 and RMB0.44, respectively, in the same quarter of last year.
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	324	+As of March 31, 2021, the Company had RMB4,461.3 million (US$680.9 million) in cash, cash equivalents and short-term investments, compared with RMB5,028.5 million as of December 31, 2020.
	325	+
	326	+
	327	+= Recent developments =
	328	+
	329	+**Baozun Acquires eFashion China to Extend its Reach in Branded Fashion Sector** {{footnote}}https://ir.baozun.com/news-releases/news-release-details/baozun-acquires-efashion-china-extend-its-reach-branded-fashion{{/footnote}}
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	331	+
	332	+June 28, 2021; Baozun Inc.  the leading brand e-commerce service partner that helps brands execute their e-commerce strategies in China, announced today that it has signed a definitive agreement to acquire 100% equity interest in Shanghai Yi Shang Network Information Co Ltd (“eFashion China”), a leading provider of e-commerce solutions for fashion brands in China, in an all-cash transaction. The acquisition is subject to the satisfaction of customary closing conditions and is expected to be completed in the third quarter of 2021.
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	335	+Founded in 2008 and headquartered in Shanghai, eFashion China is an e-commerce solution provider that is focused on bringing international fashion brands to China. It provides brands with one-stop e-commerce solutions, including brand consulting, store operation, digital marketing, IT solutions and customer service. It has established itself as one of the key players in China’s branded apparel e-commerce space. It currently serves many well-known international brands, including international premium fashion, sportswear, and luxury brands.
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	338	+This acquisition is an additional step in the execution of Baozun’s three-to-five-year medium-term strategic plan to drive future growth. It positions Baozun strongly to further penetrate the apparel category and reinforce its leadership. After the acquisition, eFashion China will serve as a sub-brand of Baozun and the companies will combine their comprehensive advantages to capture the growth potential of promising brands.
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	341	+Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun commented, “Baozun is pleased to welcome eFashion China’s team into the Baozun family. Baozun is excited about this acquisition as both Baozun and eFashion China share an ambition and commitment to bring global fashion brands to the fast-growing China e-commerce market. eFashion China brings a strong understanding of apparel brands, efficient cost structure, and impressive track record of high service quality. The company believe its combined strengths will deliver unique added value to its brand partners of various stages of growth and sizes.”
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	344	+Mr. Johnson Zhang, Co-Founder and Chief Executive Officer of eFashion China, added, “The company made a strategic decision to join Baozun to tap into its broad network and substantial resources to best serve its clients by providing them with a broader range of service options. Baozun is known for its leading technology, integrated ecosystem, omni-channel capabilities, and innovative solutions. Baozun’s deep expertise in these fields will significantly empower its service capabilities. The company believe this combination of highly complementary capabilities will make Baozun-eFashion China an even stronger partner of choice for established and emerging global fashion brands.”
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243	243	= References =
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245	245	{{putFootnotes/}}