Companies in the GBA | How does Vipshop, without "much presence," manage to quietly make money?

Get ready for this year's "618" sales, when everyone is bombarded with all kinds of discounts, subsidies, advertisements, and live-streaming. The e-commerce arena is bustling, with battles over traffic, channels, and prices, reaching a climax in the competition.

In an obscure corner, a low-key company called Vipshop, outlasted Jumei, Vancl, and Kaola in the field during that period, achieving profitability for 12 consecutive years, to become the biggest winner in the vertical e-commerce field as a discount retailer for brands in China.

What's the secret of Vipshop's success?

In 2008, Vipshop was founded in Guangzhou, China's capital of apparel, positioned as "a website specializing in discounted items". At the time of the financial crisis, China's apparel sector was oversupplied, with many well-known brands suffering significant inventory backlogs. By adopting the model of "brand discount, flash sale and authenticity guarantee", Vipshop swiftly opened up the market, and was listed on the NYSE in three years.

Compared with other e-commerce platforms that offer everything, keeping it niche has always been Vipshop's tag. With simple trading rules, direct stock delivery, fast logistics, and excellent after-sales service, Vipshop has accumulated a group of highly loyal "die-hard fans". The online revenue share of SVIP members once exceeded 45%, with per capita consumption over 8 times that of non-VIP members, leading in the vertical market.

But in fact, Vipshop also tried to build up an integrated e-commerce platform, including establishing "Pinjun Express", expanding in 3C, mother and baby, beauty, and other categories, and even launching into finance and opening brick and mortar stores. Yet these attempts did not make a splash, and even led to a significant loss of customers.

Vipshop's market cap shrank to $3 billion in 2018, with nearly $10 billion wiped off its peak in February. Fortunately, Vipshop knew when to quit. In July 2018, it announced a return to their discount strategy, and ditched the finance and logistics businesses.

Finding the path to revenue growth was challenging, so Vipshop worked on reducing expenses, introducing the "JITX" model, which allows brands to ship directly to customers through Vipshop's designated logistics providers, without having the goods in its own warehouses, thus easing pressure on manpower and turnover.

Once the title sponsor of famous variety shows and TV series, Vipshop has now cut back on marketing and R&D expenses, thus increasing its overall profit margins. But in the "brand discount" field, Vipshop does not "lie flat". In 2015, Vipshop began its attempts at overseas shopping. In July 2019, Vipshop then acquired Shanshan Business for 2.9 billion yuan, taking its outlets from online to offline, and launched the fast-fashion women's clothing brand NOWRAIN in the overseas market, making it a top-tier women's clothing brand on TikTok.

Be it a business expansion, or an overseas strategy, some attempts succeeded, some fell flat, but they all maintained Vipshop's "low-key and cautious" style. The CEO of Vipshop, Shen Ya, once said, "We know more about how to do business than being an internet giant." Holding on to the core customer base and their own niche, may be the key to Vipshop's lasting survival.

出品：南财国际传播中心 21新媒体中心 创意互动中心

策划统筹：于晓娜 丁青云

内容统筹：谭婷 叶映橙

责任编辑：黄欣然

执行统筹：黄欣然 

设计统筹：林军明

视频统筹：白宇航

监制：施诗

英文翻译&配音：李莹亮

海外运营监制: 黄燕淑

海外运营内容统筹: 黄子豪

运营支持：曾静娇

审校：陈晶晶 黄志明