Secoo Holding LimitedSECONASDAQ

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AI Earnings SummaryQ3 2020

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Earnings Call Transcripts

Q3 2020Earnings Conference Call

Dec 28, 2020

Operator: Hello, ladies and gentlemen, thank you for standing by for Secoo Holdings Limited's Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Ms. Jingbo Ma, Board Secretary of the company. Please go ahead, Jingbo.

Jingbo Ma: Hello, everyone, and welcome to the Third Quarter 2020 Earnings Conference Call of Secoo Holding Limited. The company's results were issued via newswire services earlier today and have been posted online. You can download the earnings press release and sign up to the company's e-mail alerts by visiting the IR section of our website at ir.secoo.com. Mr. Richard Li, our Founder, Chairman and the Chief Executive Officer; and Mr. Shaojun Chen, our Chief Financial Officer, will start the call with the prepared remarks, followed by a question-and-answer session.

Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today.

Further information regarding these and other risks and uncertainties is included in the company's registration statement on Form F-1 and Form 20-F as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Please also note Secoo's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Secoo's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to our Chairman and CEO, Mr. Richard Li. Please go ahead.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] Hello, everyone, and thank you for joining us today.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] We are pleased to have maintained robust operational growth in the third quarter of 2020, highlighted by GMV increase of 12.5% year-over-year to RMB 4.12 billion. Supported by our exceptional technological capabilities in AI, big data, and cloud services as well as our well-established high-end supply chain system across the globe, we find ourselves uniquely positioned to capture the booming e-retailing market opportunities stemming from the rising adoption of online shopping in the aftermath of pandemic.

As a go-to luxury e-commerce platform in China, we are not just facilitating the digital transformations for domestic and foreign brands, but also providing numerous reliable online shopping options for a growing number of Chinese consumers who are pursuing lifestyles that feature an array of high-end goods and premium services. In particular, our ongoing efforts to place strategic focus on key brands not only allows us to generate universal brand awareness in the luxury e-commerce space, but increases the average spending per customer.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] Since the beginning of the third quarter, we continued our efforts to roll out a series of online shopping festivals, including Secoo Anniversary Sales Festival on July 7, the Chinese Valentine's Day Campaign in August and the outlets offerings promotional campaign in September. These festivals featured personalized and efficient AI-driven marketing approaches alongside our technological innovations and upscale fashion content initiatives, which also focusing on operations of key brands. All these efforts have contributed to the loyalty of our existing customers and motivated them to purchase repeatedly on our platform, effectively boosting the GMV in the third quarter.

In addition, Secoo maintained momentum in the Chinese traditional e-commerce promotion event Double-11, shored up by presales of top-selling or the highly sought-after products, heightened efforts to host elite brand day campaigns, and the offering of one-on-one services to our VIP customers.

During the event, the GMV from presales of top-selling or highly sought-after products increased by 40% year-over-year. Meanwhile, through Brand Day campaigns, Chanel and Hermes, each grew their sales more than 100% year-over-year, while sales for Burberry, Dior and Moncler grew over 30% each.

Meanwhile, we built on our intelligence-empowered pricing strategy and advanced customer services to propel customers with higher spending power to place orders and increase average transaction value per order.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] Furthermore, we have been constantly striving to expand and elevate our relationships with brands while bolstering our core platform capabilities in the high-end fashion space. Since the third quarter of this year, we have established the 'direct cooperation with a total of 181 new brands such as Kweichow Moutai and Gianvito Rossi. Furthermore, we continued to strengthen relations with top brands through various collaborations, such as Brand Day events co-hosted by Secoo and our brands. These events helped these brands expand their online retail market rapidly, especially benefiting from Secoo's massive high-end customer base, reputable brand presence, advanced technology capabilities and diverse traffic support. For example, our official brand partner, Roger Vivier, maintained a satisfying online sales performance with a high average spending per customer in its Secoo flagship store, where in-season collections are available for purchase. The strong demand of Secoo's high-end customers augmented sales of Roger Vivier in the third quarter, resulting in a 109% year-on-year increase in GMV.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] In September, Secoo formed a direct cooperation with Kweichow Moutai, China's most prestigious liquor brand, making the highly sought-after the 53-degree Moutai Flying Fairy available on Secoo. This collaboration with respective advantages from Kweichow Moutai and Secoo will not only extend Kweichow Moutai's traditional sales and marketing channels to integrated online and offline platform, but also provide a premium purchase channel to meet the premium demands from Moutai fans.

Furthermore, in December, Secoo and Kweichow Moutai co-hosted an offline Moutai promotion event in Beijing, which featured a theme of looking for the best liquor in China, to attract and gather this legendary brand's loyal fans, along with VIP Secoo members.

This event showcased a sampling of different series of Kweichow Moutai liquor to allow participants to enjoy the legend and distinct culture along with this famous Chinese liquor brand and experienced Moutai's brand image mission and values of inspiring a better, high-quality life through distillation.

Since 2018, Secoo has been expanding its high-end product portfolios to beverages and liquors and created a broad range of high-end liquor product offerings including Chinese liquors, red wines, imported alcohols, cocktails. Hosting Moutai Flying Fairy on our platform is a very significant supplement to our elite liquor product offerings.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] This quarter we stepped up our efforts for the live streaming of the luxury retail, fully leveraging Secoo's extensive experience in the luxurious industry along with its supply chain advantages. We also deepened our cooperation with the most popular social networking platforms, such as Douyin and Kuaishou, to forge our own live streaming ecosystem to support the luxurious consumption.

In December, live streaming production base for luxurious goods was established at Secoo's Beijing headquarters and led to Secoo becoming partner of choices for the live streaming selling luxury goods. Through the live streaming base, we facilitated the daily broadcast session of MCN agencies and broadcasters officially recommended by Douyin and Kuaishou, as well as live streaming hosted by mid-tier and most popular KOLs, including a single live streaming event that generated almost RMB 10 million of GMV.

At Douyin platform, Secoo has been running live streaming selling activities through 8 accounts so far. Also, since September, the company began to expand its live streaming sales operations from pre-owned luxury goods to a wider range of product categories.

We also explored cooperation with top KOLs at Douyin such as Luo Yonghao, in our live streaming events. It is worth noting that Secoo offering a sample library of more than 1,000 luxury products for live streaming sessions, providing KOLs from Kuaishou and Douyin with a wide selection of merchandise, and this library rolls out new products on a rolling basis per week and per month.

Meanwhile, our efforts to build Secoo's luxury and fashion content marketing strategy across a full spectrum of online channels, including Douyin, Kuaishou, Tencent's Video account is paid off with a growing fan base.

Specifically, we have created a number of promotional videos and each was able to attract over a million views, a strong indicator of support for our live streaming sales and brand promotions. So far, 92.6% of active users of the Secoo app have watched our live streaming sessions, and these users exhibit strong willingness to buy, and solid purchasing power.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] Looking ahead, Secoo will continue to enrich content, optimize forms and enhance services quality of its live streaming business. Given our core competency in supply chains, key brands relations, AI-powered technology advancement and customer engagement capacities, Secoo aims to strengthen its strategy to build a go-to luxury platform and benefit global partners by reaching more high-end Chinese consumers. Secoo will bring more luxury and high-quality global goods to its platform to meet the growing demand for upscale products in the domestic market, seizing new opportunities as it harnesses the massive potential of China's high-end e-commerce industry.

In order to create the targeted shopping platform for luxurious consumers, Secoo expects to leverage its live streaming production base for luxury e-commerce to attract more broadcasters to participate as well as increase user traffic, which will finally allow luxurious shoppers to enjoy high-quality, high-end products and premium shopping services, even staying at home.

In addition, Secoo will continue to invest in building a sophisticated value chain spanning product selection, merchandising operations, customer services and aftersales services. These efforts will enable Secoo to provide most valuable, standardized services for consumers, broadcasters, brand partners and live streaming platforms, while increasing efficiency and provide empowerment to the entire luxury e-commerce sector.

Li Rixue: [Foreign Language]

Jingbo Ma: [Interpreted] With that, I will now turn the call over to our CFO, Mr. Shaojun Chen, who will discuss our key operating metrics and financial results.