Ladies and gentlemen, thank you for standing by, and welcome to Baozun Quarter two of 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Ms. Caroline Dong. Thank you, Caroline. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. Baozun’s earnings release was distributed earlier today and is available on our IR website at ir.baozun.com as well as on the global newswire services. On the call today from Baozun are Mr. Vincent Qiu, Chairman and Chief Executive Officer; Mr. Junhua Wu, Chief Growth Officer; and Mr. Beck Chen, Chief Financial Officer. Mr. Qiu will review business operations and company highlights, followed by Mr. Chen, who will discuss financials and guidance. They will be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call 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 the terminologies such as will, expect, anticipate, future, intends, plans, beliefs, estimates, targets, 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 or 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 statements as a result of new information, future events or otherwise, except as required under applicable law. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Mr. Qiu, please go ahead.

Thank you, Caroline, and thanks, everyone, for joining our earnings call today. We delivered another strong quarter with total GMV increasing by 69% year-over-year. Growth was driven primarily from our existing online stores and our increasing efficiency as we invest in developing new innovative technologies to create more value for our brand partners. We expanded the number of brand partners we work with to 162 at the end of quarter two, an increase from 140 as of Q2 end of last year. The newly added brands are mainly in the apparel, cosmetics and FMCG categories. As the industry’s undisputed technology leader, we won bids this quarter to build and host the China brand stores for the top two largest global cosmetic groups. In addition, we beat our fierce competition to operate the Tmall store for a leading global skincare brand.. Growth within our cosmetics category is expected to accelerate over the next 12 months. We have a number of leading global brands in our pipeline, which are expected to come onboard in the coming 12 months, including ones in apparel, and sportswear, cosmetics, luxury, kids toys and home furnishing categories. Our ability to rapidly adapt and develop new technology to a changing market environment remains the key to our success. As I have mentioned before, we’re headed in a more technologically focused strategic direction, which we expect will generate a long-term benefits for us to strengthen our position. As a leading brand e-commerce business partner and technology solutions services provider. We’re expecting – expanding the scope of our services through targeted investments in innovation and productization. By enhancing our IT capabilities and expanding the breadth and depth of our technology services, we’re able to create more value for our brand partners and drive future sustainable growth. Teams from our technology…

Thank you, Vincent. We generated a very strong financial results during the quarter with GMV increasing by 6% to 9% year-over-year and the non-distribution GMV, in particular, increasing by 79%. Let’s now go over the numbers. Just a few housekeeping items in advance. We believe year-over-year comparisons are one of the most useful way to judge our performance. All percentage and changes I’m going to give will be on that basis. Firstly, let’s start to review the financials. Total GMV during the quarter increased by 69% to RMB 6.1 billion. Our focus remains on growing our non-distribution business, which saw GMV increased by 79% during the quarter. Total net revenues increased by 13% to RMB 1.2 billion. Product sales revenue increased by 14% to RMB 577 million. The increase was primarily attributable to the increase in product sales revenue resulting from the increased popularity of brand partners’ products and our increasingly effective marketing and promotional campaigns, which were partially offset by the transition of the leading electronics brand partner’s business from distribution model to the consignment model in September 2017. Services revenue increased by 52% to RMB 582 million during the quarter. The increase was primarily attributable to the rapid growth of our consignment model and service fee model and, in particular, growth in sales from existing brand partners and the addition of new brand partners in the apparel category. The total operating expenses were RMB 1.1 billion. In particular, cost of products increased to RMB 464 million, primarily due to higher costs associated with an increase in product sales revenue, which was partially offset by the transition of the leading electronics brand partner’s business from distribution model to consignment model in September 2017 and improved the margins from product sales. Product sales margin improved significantly from 12.7% to 19.5%…

Thank you. [Operator Instructions] Your first question comes from Eileen Deng from Deutsche Bank. Your line is now open. Please go ahead.

Thank you, management, for taking my question. I have two questions. The first one is regarding the product sales in the second quarter. We see the strong growth on a year-on-year basis. So just wondering what’s the underlying reason to drive such growth? And how should we forecast trend in the second-half? And the second question is regarding our guidance. The second-half service revenue 50% growth and the second-half GMV guidance of RMB 20 million, between these two, what is the implied non-distribution GMV growth for the second-half? Thank you.

Okay. Thanks for the question, Eileeen. So let me take the two questions. For question one about the product sales growth, the underlying reason basically is better than our expectation, because we removed, we changed the business model for the leading electronics. So there’s a gap we need to fill in this year. But the actual sales for this midyear campaign is better than our expectation when we gave the guidance early in May. So basically, we have seen a change and the sales is more concentrated in our operating – operated brands. And we are operating their only flagship store on Tmall and JD, and also we are operating the only official branded stores. So these flagship stores are gathering more traffic and attention from the Chinese consumers. So that’s why basically, – that’s why the growth rate for the product sales is higher than our expectation. And for the second-half, there’s still that factor in Q3, because we changed the business model for the leading electronics in September last year. So there is still two-month effect from – in July and August. But for Q4, we think the product sales revenue will be accelerating. The growth rate for the product sales revenue will accelerate in Q4 with the year-end campaign. And about the question – the number two question for the guidance. So basically, we – we based the guidance on the actual results for the first-half of this year and also our forecast during the midyear for the second-half of this year. So with a very healthy same-store sales growth and a handful of new brands onboard, we think we can achieve this target to deliver a very good result.

Thank you.

Thank you, Eileen. Your next question comes from Monica Chen from Credit Suisse. Your line is now open. Please go ahead.

Good morning, management – sorry for using management, thank you for taking my question. I also have two questions here. So first one, can management provide the update on the current same-store sales growth for our major categories like apparel, 3C products and home appliance? And what is like the trend likely for next year? And then my question is, can management actually provide more color on the collaboration with the cosmetics brands, as Vincent just mentioned. So what is this cosmetic brand? And how do they actually think about the omni-channel strategy? Are they currently more focused on Tmall, or are they actually considering to move more towards the official site and the Mini Program? And what kind of services can we provide to them? Thank you.

Okay. Thanks for your question. I will take the first question about the growth landscape for the category. So basically, for the first-half of this year, our same-store sales growth rate for existing store is 50% on a year-over-year basis, 5-0, 50% on a year-over-year basis. And basically for apparel, in electronics and even appliances, they are growing in a very promising speed, especially like those – we have some very long time operating brand in appliances categories. But in first-half of this year, they’re growing very, very fast, even accelerating compared to last year. So it’s very good. But for apparel, it’s always our big – apparel and sportswear, they’re always our biggest category of contributing over 50%, at least, over 50% of our total GMV amount for the past – I think, for the past two to three years. So yes, this is the outlook for the same-store sales growth.

Okay. And Monica, this is Junhua from Baozun. So let me give you some color regarding your second question. So the cooperation with the two leading cosmetic and beauty category all over the world, we just signed a contract with them for an omni-channel service. So in terms of the channel selection, we serve them on – the majority part is Tmall, also their JD channel and also their independent channel, independent brand store, their [indiscernible] website and, of course, based on WeChat Mini Program product portfolio is going to have some Mini Program WeChat stores. And the service scope we work with those leading cosmetics group are supporting our end-to-end one-stop solution, also including our IT integration and IT innovation and our store operations, our customer service, our digital marketing and, of course, with our warehousing and procurement services. So these kind of the partnership with those leading group cosmetics to us can bring a very – a decent GMV growth in future and, of course, in long-term can help Baozun to just build up a cosmetics category.

Thank you.

Thank you. Your next question comes from Alicia Yap from Citigroup. Your line is now open. Please go ahead.

Hi, good evening, Vincent, Beck and Caroline. Thanks for taking my questions and congrats on the solid results. I’ve a two quick questions. Number one is on the broader pictures outlook for the second-half, given the decelerated online retail sales reported by the MPS data, as well as the noises from the trade war, I wonder if you can give some color? Have you seen any impact from the consumer sentiment that would be affecting the same-store sales in the last 1.5 months for the third quarter? And then any potential impact or decision from new brands signing up affected by the trade war? Then second question is quickly on the guidance. So for your second-half the GMV over $20 billion guidance, is that already including the new cosmetic brands that you just signed up and also brands that you are expecting to sign onboard. Thank you.

Thank you, Alicia for the question. Let me take the second question first and I’ll pass the third question to Vincent about the broader picture. So for the guidance of the RMB 28 billion, we have given during the press release basically, it’s based on our forecasting prudence method.

Okay. About the impact from the trade war, actually, on our daily base contact with the brand partners, it’s not a very hot topic yet. I think, it’s mainly, because we’re doing this brand e-commerce, especially the global brand e-commerce in China. So it’s not, it doesn’t have a lot of relationships with the cross border or trading things. So actually, I think the impact will not be obvious. So I think the cross-border business can be more effective. But we’re – the portion of our cross-border business in Baozun is very limited and mainly it’s just import, not export. So actually, I think, the impact could be neutral and in some extent even positive. So we’re not worrying about the trade war impact. We’re still expanding our capability to serve more on brands and in more service modules.

What about the sentiments on the consumer domestically?

I think the passion for the consumers in China to turning towards a more branded products and also more authentic channels is growing. So we actually, luckily, we’re not seeing any very negative impacts from that. We’re quite optimistic for the coming second-half and also the coming years of the brand e-commerce, especially global brands e-commerce business in China.

Okay, great. Thank you.

Thank you. The next question comes from Joyce Ju from Merrill Lynch. Your line is now open, please go ahead. Apologies, it seems that Joyce has disconnected. We’ll go on to the next participant that will be Chen Bi from CICC. Your line is now open. Please go ahead.

Hi, management, thank you for taking my question. I have also have two questions here. The first I just have a follow-up on the overall industry trend besides we see that overall online retail market decelerate currently. We also see some industry slowdown trend like the overall smartphone shipment. So could management share with us some color like if Baozun has seen any related impacts on your business so far?. And if we should notice any impacts going forward, I think, in the second-half of this year or in the 2019? That’s my first question. I have a follow-up.

Okay. So generally, our sales is tied into the earning consumer. So basically, it’s in line with the overall industry trends in the smartphone categories. And – but for smartphone, usually, the big peak season is in the second-half of each year usually September and October when those big smartphone players when they launch the new series of products, it’s usually a big sale complying – accounting with the 11-11 campaign, so we’re going to see for the second-half of this year. So – but we’re operating those top-tier brands, so we believe that we should be able to riding the wave.

Okay. Thank you, Beck. And my second question is about your innovation center. So we see continuous investment for Baozun to recruit related talents in technology or develop some products in innovation center. So just wondering if there are any products in innovation center that already you could monetized or ready for monetization at this stage. And could management share with us the timeline or your plan that we could expect innovation products the center – innovation centers products that come into the market and generate some material revenue going forward? Thank you.

Yes, we’re investing – we keep investing into the innovation center and we’re expecting them to be delivering more values to our brand partners in two ways. The first way is that the technical and innovation center will deliver a bunch of tools and also platforms to enable our operating team to deliver a better efficiency to the existing brand e-commerce business. So in this case, the result is not a – how to say, is not through selling of the product. It’s just through the higher efficiency of our services provided to our client. So this is the first way we’re realized the return of the investment for the innovation center. The second way is that, we’re – in some stage, they’re selling their services software and solutions to the existing brands and lots of potential brands. So what generates sales revenue directly. So that that’s the two ways. For the selling of the software products there are two major directions. One direction is about application-related products. The second one is the data-related product lines. So for the first one, today, we already utilizing several of the products to deliver the official website solutions for client. For example, recently signed brands, when we construct the branded official stores, we’re using the new generation of the software delivered by the Innovation Center. For the data-related product line, we are having very good results now. We’re in the trial operations stage with several of the brands and we are seeing very good feedback. So in this direction, we will keep investing, tracking the results, deliver – let more and more of brands use the system, trying to realize revenue and also profit in the future, keep doing so. So we are quite confident for the results of the innovation investments.

Thank you. That’s very helpful.

Thank you. Your next question comes from Nicky Ge from China Renaissance. Your line is now open. Please go ahead.

Hi, Vincent, Beck, Caroline, congrats on a strong quarter. I have two questions here. My first question is about our investment forecast in the future. Could Vincent or Beck share more insights on what is the, like key areas you’re going to invest in, in the near future? And the second question is about the margin guidance for the second-half of this year across quarters. Thank you.

Yes, this is Vincent. The first questions for the investment forecast, actually, we have – every year we have a very, how to say, comprehensive budget planning and forecasting. So for the Innovation Centers, as just mentioned, we are – we have – we are having two major directions for the productization. First one is about the tools we delivered for our operational and the marketing team to let them have better operating efficiency for some more capability to serve the brands. The second one will be, we call this data-related product line, means that we’ll put big data in the AI initiatives to the investments. So they are the two major directions. For the investments, it’s mainly for the talent occurring in some of the infrastructure or hardware and software investments. So I think we are quite confident that the investments can have a very positive return step-by-step.

Okay. About the second question, the margin outlook. And for the future, the margin is good. And we do think that for the second-half of this year, our product sales margin could still grow very significantly compared to the same period of last year, because we – because of the factors we have been talking about just now. So, yes, much more significantly increased compared to last year.

Thank you, Beck. Thank you, Vincent.

Thank you. Your next question comes from Amy Wong from HSBC. Your line is now open. Please go ahead.

Hi, good afternoon, management. Thank you for taking my question. Just want to have – can I have a question to Vincent and Junhua first on the strategy. Just wanted to see like basically, as management are continuing investing in the technologies and our marketing here, when do you expect to see a translation in the expansion of take rate? And then whether we are going to charge more to the brand partners, or is it that more we are just focusing on maintaining a stable take rate and then using those upgrade in our technologies and marketing?. So this is and to increase our – expand our client base. Is that management – which direction is management strategy with our upgrade, but in the matter of, I guess, monetization to translate into higher take rate? And then second question is, I recall earlier, we had had these software launches on the NEBULA Plus. I just want to see any update on that, because that can help shorten the lead time and resources for more standardized process. How do you see the adoption rate so far? And do you see that actually help us diversify into a broader set of brands? Mainly we can get into more medium, smaller brand partners, because we offer just more standardized procedures and – that’s my second question on the strategy? And then my last question is a follow-up question on margin trend to Beck. We noticed that the tech expense as a percentage of sales were up to 5.6% and thus continue to be doubling the level we see in last year. So this is on a continued rising trend. We recall management have been mentioning that this would be an investment year. And so how we comfortable with our longer-term margin trajectory with the continued investment in tech expense? Should we expect this to continue in the second-half and going forward? Thank you.

Okay. I’ll take the first question. It’s a very, very complicated question.

Sorry [indiscernible] thank you. Thank you, management.

No problem.

No problem. problem. Actually, we keep investing in technologies and other aspects of innovation in Baozun. And we believe this can give us a very positive return from time to time. So talking about the results we’re expecting from the investments, this, of course, take rate is one thing. But the other things, like efficiency, I mean lowering the cost and also giving us the better perspective when we’re talking to potential brands, give us more possibility to deliver value, more value to the brands. So generally, the investments lead to different benefits for us. So for take rate, I think right now the existing brands, I think, the take rate is quite stable. And definitely, we’re getting a better take rate from the newly onboard brands. So in this case, the general, the total take rate will be mixed for the existing and also new brands. So when we talk to the brands, why we can have a better take rate, because we are delivering better services, more valuable services, majorly based on investment we made yesterday and today. And also, for the other benefit that we can see is that we believe that the top technology and also innovations can automatically lower the down the cost, uplift the efficiency in the future. And also in the – in a sense of delivering better value for the brands, of course, we believe software solutions and also innovations can make us much more competitive. So for – of course, today, I think not only we are serving the traditionally bigger and famous international brands, of course, we are also targeting the – a broader base of our client. So actually, we are talking to, of course, leading local brands, and also we’re trying to deliver more solutions to the small and medium business as well. We will have all the – we just want to have more capabilities not only to serve international bigger brands, but also the local and the small, medium key brands as well. Thank you.

So about the long-term margin outlook, basically, the investments in innovations and technologies will have some pressure on short-term margin. Maybe it will still grow but not grow so significantly compared to if we do not have such kinds of investments. But for the long run, we think the investment is the key way for us to keep our competitiveness and also to lift out our long-term bottom line in the future.

Okay. Thank you. Thank you, management, for answering the questions. It’s very helpful. Thank you.

Thank you. Your next question comes from [Joyce Ju] [ph] from Bank of America Merrill Lynch. Your line is now open. Please go ahead.

Good evening, management. Thanks for taking my questions and also congrats on the strong result this quarter. I have two questions. My first question is regarding the take rate trends for the second-half and going forward. We know, this quarter – actually, we have a lot of new brands signing in, especially like cosmetics. Traditionally, they have quite decent margins and they’re like across all the consumer products and also apparels. So I want to get an idea like for the second-half or for next year, shall we expect a further upward trend for the blended take rate? Could you just give us more colors from the category mix perspective? My second question is a more broad picture questions. We want to better understand management’s main strategic focus at this stage of development of Baozun. Is there anything in terms of like management’s attention focus and the rest of this you can prioritize like different aspects? And also, anything management see as a biggest risk for the business? Thank you very much.

Thanks for the question, Joyce. I’ll answer the first question about the take rate for the second-half and in the long-term. So basically, for the first-half, actually, starting from Q3 last year, we have some take rate pressure. The electronics category is increasing very fast, and also we have some different accounting treatment for the marketing revenues, gross versus net, so it brings a lot of pressure on take rate. And just like we said in the previous calls that the take rates will be slightly stable this year and slightly upward later this year. And also for next year – the next few years, we shall be able to achieve higher take rate with our businesses, because we – first thing is we have more leverage – we have more scale – scalabilities on the business and also we have more value-added services and tools delivered to the brand. So this is the foundation and the cornerstone for us to charge more through the business generated by us. And you’re already seeing the change about the gross margin increase – significant increase starting from Q4 last year. So we backed the gross margin from product sales revenue will still keep you increased for second-half of this year on a year-over-year basis significantly and also keeps you increased next year. And about the category mix still apparel, electronics and appliances, the three largest –the three categories are the three largest categories in our business currently. And for next year, we expect that cosmetics could be the fourth largest category in the overall businesses. So we believe that in the long-term the cosmetics category growth will also have to lift up the overall corporate profitability.

Okay. Joyce, for your second question, actually, the major theme of strategy for Baozun this year, there are two aspects: one is upgrade; and the second one is create. In Chinese, we call this [Foreign Language] So for upgrade actually means that we’re now just want to upgrading all the Baozun capabilities in services, operational efficiency, profit-making, all these kind of daily operation-related things. We are doing a quite good job, I think, for this first-half. For create, it means the technology and also the innovations on these kind of directions, also we are quite optimistic looking forward. Just as one more years ago – 1.5 years ago, when we just had the vision the sales and the marketing can be connected together, and then we had the initiative to develop our digital marketing capability. So after 1.5 years, you can see that there we have achieved a lot for this kind of services. So we call this kind of initiative create. We successfully create a very successful capability in business for Baozun’s digital marketing, so we can serve the brands better. So our attention will be on these two aspects majorly. And also, to make that happen, we need to acquire and retain more and more better talent. So that is also a daily focus for the management attention. Yes. so that is about the major attentions from the top management. So I think. I hope this answer your question.

Yes, I’m wondering like for the risks – potential risks, if there any like anything or any concerns like management have like in terms of like, broad-picture macro or company-specific wise? Anything you think like could potentially threaten Baozun’s growth or like give some pressure?

Yes. I think, for preventing us from, how do I say, [indiscernible] of the potential change in the market, we actually take the omni-channel view of the business. It means that we just want – we not only serve the major channels today, including the platforms – existing platforms and official web store. We also have a team called the emerging market and industry team. They will be focused on the development of the brand, the e-commerce directions. So in this case, we can work with the potential emerging markets and changing of the market to make sure we’ll have a better position. So that’s why today we’re working quite well with the existing social commerce channels, including Xiaohongshu and also Mini Programs. So that is about the prevention of the risks. And also I think majorly the challenge will be first thing the change – maybe the changing of the markets [Foreign Language] Yes the form of the marketing and also the talents when need to fulfill the requirements. So I think that is challenge I mentioned this. We’re working on that closely, yes.

Sure. Thanks a lot.

Thank you. Your next question comes from Tian Hou from T.H Capital. Your line is now open please go ahead.

Yes. Good evening, management. My questions related to your distribution GMV. In the past several quarters, and the company emphasized you want to de-emphasize distribution model and shift from distribution model to a non-distribution model. However, if I look at the 2Q rapid GMV and the revenue composition, I feel like the distribution model grow actually faster than expected or than guided. So I wonder what happened there? And what’s going to happen in the future in the business direction-wise? Thank you.

Okay. Thank you for the question, Tian Hou. So basically, yes, you’re right. So we just wanted to emphasize on distribution generally, especially for newly onboard brands. Usually, we just encourage to adopt the non-distribution business model with – by partnering with those brands. But for existing brand partners if we’re not able to transitioning the business model from distribution model to other businesses models, we will still stick to distribution model and for our team and other company. We’ll try our best to deliver the good results like the same-store sales growth rate for the existing distribution of partners. So this is our – this is like our mission to do that. So that’s why for the remaining distributional partner, we will keep to grow the benefits. And basically, this is why that – why for – in the Q2 and getting stores, especially like those big brands, long-term operating history, big brands in appliances categories, they are growing faster and they’re growing very healthier in line with actually higher than the market average. So basically, we’ll keep to do that for our existing distributional GMV. And for the future outlook, and we still have some direct factor in Q3, because we’re transitioning the then largest distributional partners in Q3 last year. So we had some comparison change. But for Q4, we did not have any historical figures in the comparative figures. So the distribution in GMV will really reflect our same-store sales growth rate for those mainly in distributional partners, which is higher than the growth rate for product sales revenue in first half of this year.

Okay. Thank you. It’s clear. Thank you.

Your final question comes from Billy Leung from Haitong International. Your line is now open. Please go ahead.

Hi, thanks for taking my question and congrats on the solid quarter. I just have two quick questions. The first one is – if – I’m sorry if I missed this. But about the mini app category, I was just wondering if the management can tell us what kind of categories or industries or what kind of brands are actually showing interest on the mini apps services? Are these mostly our traditional longtime clients, or are they sort of relatively new clients which are showing interest in the mini apps services? That’s my first question. The second question is more for Beck. It’s to do with the free cash flow. So I realize that for this quarter, we’ve entered into another negative free cash flow. So was there any timing issues with receivables, or is this just a seasonal thing? Thank you.

Okay. So this is Junhua from Baozun. So let me answer your first question. So regarding the Mini Program-based application, so the industry and category characterize more towards the fashion, apparel and cosmetics. And in terms of the brand, according to our current differentiation, so it’s more like a luxury brand. It’s having a lot of Mini Program-based engagement with your end consumers. But of course, with the – in the cosmetics category, it’s towards the luxury, their luxury division. It’s more providing a lot of new touch points and engagement based on that Mini Program protocol. So the WeChat Mini Program store is having a lot of different kind of forms. Number one is like they provide a pop-up store to supporting the luxury brands in fashion apparel category and the cosmetics category to launch their new arrival products and launch their limited categories and limited editions. Number two form is their private in-store, so more and more luxury brands realize that having the independent brand store based on WeChat and combined with their WeChat official account is very efficiency – engaging their consumers. So they open a permanent store listing all your products for selling online with their end consumers. So that’s basically my answer to your question.

Okay, so Billy, for the same question, basically, we have investment in CapEx items, especially for – and abilities of logistics. So we keep using new spaces in Chengdu, Wuxi, Suzhou for the first-half of this year. So we need to do a lot of leasehold decoration and improvement. So basically, this is all those facility CapEx and cash outflow to – negatively impacted free cash flow. But in the long run, we will keep to invest, and we will get benefits and also leverage in next year or in – even in this year, later this year in the peak season of this year.

Thank you for that.

Thank you. There are currently no more questions in queue. I’d like to hand the conference back to our speaker today, Caroline. Please continue.

Thank you, operator. In closing, on behalf of the entire Baozun management team, we’d like to thank you for your interest and the participation in today’s call. If you require any further information or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for your participation. You may all now disconnect.