Good morning, and good evening, ladies and gentlemen, and thank you for standing by for Baozun’s Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. As a remainder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call, Ms. Wendy Sun, Investor Relations Director of Baozun. Please proceed, Wendy.

Thank you, operator. Thank you, everyone, and thank you for joining us today. Our second quarter 2020 earnings release was distributed earlier today and is available on our IR website at ir.baozun.com, as well as on Global Newswire services. On the call today from Baozun we have Mr. Vincent Qiu, Chairman and Chief Executive Officer; Mr. Junhua Wu, Chief Growth Officer; and Mr. Robin Lu, Chief Financial Officer. Mr. Qiu will review business operations and company highlights, followed by Mr. Lu, who will discuss financials and guidance. They will all 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 the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking 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 and 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 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. SEC. The company does not undertake any obligation to update any forward-looking statements except as required under applicable law. Finally, please note that unless otherwise stated all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead.

Thank you, Wendy, and thank you all for joining us today. While many sectors in China are still navigating the challenges imposed by COVID-19, we saw strong recovery in e-commerce in the second quarter. Consumers are increasingly adopting e-commerce as a part of their daily lives and are spending more on categories that improve their quality of life. This in turn is creating an even larger opportunity for the retail industry to accelerate online penetration further and we are seeing growing these from our brand partners for creative go-to-market strategies, tactical IT, data analysis and marketing solutions, sophisticated and integrated omni-channel initiatives and the logistic services. We believe the strength of our results reflects our unique ability to create additional value for our brand partners and speaks to the resilience of our business. I am very proud of what our team has accomplished so far in this unique environment in 2020. For the second quarter, our GMV grew by 31% year-over-year and more importantly we saw a solid recovery across various categories. Revenue increased 26% with service revenue leading the way with more than 43% rise year-over-year. We continue to make meaningful progress engaging with new brands and optimizing our category mix with net addition of 11 new brands. These new brands included several luxury brands as well as a few FMCG brands, especially in food and health categories. In addition, as a part of our high quality growth strategy, we focused on optimizing our category mix and ramping up newly added brands alongside our broader service offerings post COVID-19. This helped to improve our blended take rate for the non-distribution model during the quarter. While we are pleased to have facilitated our brand partners even greater success in the second quarter, we also noted the increasing macro and economic…

Thanks Vincent. I'm pleased to report a solid set of results for the second quarter with both a decent recovery in top line growth and more importantly, meaningful margin expansion. We believe the resilience of our financial results is attributable to our strategic deployment over the past few quarters towards high quality growth. As a part of this, while we have continued to pursue a variety of top control initiatives, our focus has been to identify emerging opportunities in new categories and new channels. And we have developed a truly adaptable business model. We are delighted that our continuous high growth has resulted in a very strong bottom line growth. Our non-GAAP operating profit grew by 81% year-over-year and our non-GAAP operating profit margin 8.7% which was a record high for the second quarter since 2015. We believe this represents our solid milestone in terms of delivering our high quality growth strategy. In addition to strong P&L performance, we are also happy to report a significant improvement in our cash flow. As we have communicated on our last earnings call, the postponement of collections had an active impact on working capital in the fourth quarter. However, this was temporary and a direct result of COVID-19. Throughout the second quarter, our accounts receivable collection normalized and in fact for the most part accelerated, especially with the help of our business process management technology. This allowed us to achieve our overall positive free cash flow for the first half of 2020. Lastly, before we go into details of our second quarter financials, I want to highlight our continued efforts to transition to our high quality growth strategy by optimizing our category mix. On one side we accelerated our acquisition of new brands with the strategic goal to strengthen growth momentum and the…

Operator, we are now ready to begin the Q&A session. Thank you.

Thank you. [Operator Instructions] Our first question comes from the line of Alicia Yap from Citigroup. Please go ahead.

Thank you. Good evening, management and thanks for taking my questions. Congrats on the solid results. My question is on the brand strategy. So with the disruptions, from the pandemic this year, how would you categorize the attitudes from brands? Are they care more of selling through the SKU and building to sacrifice on pricing and spend on the promotional dollars? Do you anticipate brands would modify their productions and selling cycle in the future to optimize costs and maybe the margin impact, especially for domestic brands? Do you see more domestic brands are approaching by about June and engaging us to help them on the integrated online-offline strategy and how would that actually translate, this opportunity translate to our financial in the coming quarters? Thank you.

Okay, so this is Junhua Wu. I'll address your first question. So we do see a lot of international brands are setting up different pricing strategies, especially after the COVID-19. So, most of those brands are adjusting their pricing strategy to bid a lower price and to compromise a little bit in terms of their margins to get clear all their on hand inventory, especially for the first quarter, during the COVID-19 they had a lot of issues offline. So more and more offline resources in terms of their marketing spending, also their offline SKU resources will be moved to online. And then we do see they're very clear tone of the whole year. So for all those international brands, leveraging all their existing on hand inventory, and compromising a little bit margin on getting a higher GMV on their part. And we do not see this as a very long term strategy from all those brands. And during the low season like the coming Q3, more and more international brands and they are focused on doing their daily sales without a big campaign, especially on the big ecosystem. So, daily sales also become very important, especially in Q3. But we also foresee in the coming quarter four will be another round of big campaign basis driven. The mindset of consumers are always looking forward to see deeper pricing strategies, especially during the Double 11 and the other campaigns. In terms of all those participants, all those brands of their, thought selling circle of all those existing products and their life cycles, we do see some of the brands, they shrink their full winter assortment planning in the coming quarter three and quarter four. Most of the brands, they also will put, will migrate their spring-summer inventory for the second half of this year. So we don't see this as a long term trend, but only within this year. For domestic brands, I'll leave it to Robin to give you some answers on that part.

Sure. Hi, it's Robin. Let me answer your question about domestic brands. I think that's another great opportunity for Baozun to figure out the growth space. When you recall, as we mentioned in the prepared remarks, we have a joint venture with a domestic, famous domestic brand and they achieved a very good result within a year. And with this joint venture, we just learned how we can translate our experience and our know how to help the domestic brand. On the other hand, I think there is a great opportunity for the domestic brand in two areas. The first one, we work with a little bit more truth and existing domestic brands to help them to go online and you know, to just grow their business as fast as -- as quickly as possible. Another opportunity is, we work with this existing brand, to work with them to incubate some new brands based on their very strong supply chain and very strong technology, so that we can, we can catch about the future branded growth opportunities. So, that's why we set up a new organization called the GBO as mentioned in Vincent's remarks. As a matter of fact, we have over 50% of the our newly introduced brand in the first half of this year, domestic brands and majority of them coming from FMCG category. And we do think, FMCG, just like we mentioned about in the last year about luxury category while the growth area for the future and the FMCG is another area, especially for the domestic brand in the FMCG. So that's why, we have the new organization focused on the domestic brand based on our current experience and however, very good cooperation with us. I can just give you an example, just doing one of the famous, healthy food, domestic brands, just gave me a call, wants to work with Baozun to incubate some new brands based on their supply chains, they will visit us very soon, in the weekend. So that's, I think we do see this -- there is a very good trend and opportunity for us to work with those ambitious companies, so that we can capture future growth. Thank you.

All right, thank you. Our next question comes from the line of Binnie Wong from HSBC. Please go ahead.

Hi, good evening management. Thank you for taking my question. My first question is actually on the Double 11 this year, because we saw Alibaba actually announced that its Double 11 appliance in terms of adding a lot more about like 25,000 brands and then also 500,000 of like small medium enterprises, and also some of their overseas brands are growing in the scale. So, I just wonder, what is any update in terms of our strategy too here? Do you see that we can further adopt more procure having all these users or having all this merchants on board, and what is the mix of kind of like a oversea brands versus like local domestic brands, or any idea will be great? And then separately this is a follow-up on the question, I guess on the answers management just gave out. I find it very interesting that there's a step up in FMCG. Do you actually see the ad budget from this FMCG will be bigger or maybe even as comparable to apparel advertiser. Because in the past we tend to see apparel advertiser has big advertising spending budget, so which is very good as we get more and more of these merchants, how about FMCG? Thank you so much.

Okay, Binnie, yes this is Junhua Wu. So let me answer the first question related to the Double 11. And, yes, sure, and let Robin address the second question for you. So although TIMO hasn't released all the details about their gameplay in the coming Double 11, but we do know there is a very structural TIMO Double 11 campaign. The strategy is to pull ahead all their warm up stage and a pre-sale stage than before. So, we prepared, you know, starting to prepare all those TIMO Double 11 campaign with the brands earlier, especially for all those fashion brands and all those kind of the luxury brands especially. So in August, in this month, we have been working with a lot of brands to get prepared with their resources in terms of marketing dollars, in terms of their assortment planning for the coming Double 11. And especially under the overall situation and environment about post COVID-19, more and more brands, they bet on a lot of stakes on the coming Double 11, especially in the fashion category. So if you're talking about the gameplay and the game rules for this coming Double 11, we can say that, so there will be more interactive with consumers happening, there will be more outside more traffic coming into that ecosystem. And they will go ahead all their pre-stage, like warm-up stage or pre-ordered stage like two weeks ahead of net last year. So which means that all those brands have an earlier chance to harvest their pre-sale orders or active card one orders than last year before. So this is also a very clear strategy from that ecosystem indicates that they want to make sure that in terms of the observation based on each consumers pocket money. So the TIMO is trying to just get hold of pocket money earlier than last year. So in that COVID that strategy, so Baozun will be prepared for that too. That's my first question. So Robin get the second.

Sure. Let me take the second question. About working with small size of brands, especially the local brands, I think, as we mentioned before, we have a BOC and, GBO, organization. We are well prepared to work with this brand. And as a matter of fact, we started to work with several emerging brands already, and we think we have a great opportunity to work with them. The reason for that is we have a very strong proposition, the operations and the know how about how to work with that and how to help this brand to grow very fast. So that's a -- yes we are very active to join this kind of game to work with local brands, it's actually like a medium or even smaller size brand. And regarding FMCG advertisement, I think it's very hard to say, to compare between the apparel industry or FMCG. As we may stand, FMCG is a big investor in the traditional channel before and just about a year or so ago, they just converted their advertisement spending or marketing spending from the traditional channel to online. And the now, they are kind of diverse, trying to diversify their spending, from Timo only across channels, which we can help them to work with in Douyin, and even Kuaishou. And we have a very tight working relationship with both Douyin and Kuaishou and really help them to do everything for that and on the other hand, we want to work with this brand in a very small size, so that we can help them to grow in the market expanding operations, even the logistics and the IT services, so that, you know, help them to go to the omni-channel is another competitiveness of Baozun based on our system. Yes, I think that's -- that's the answer to your question.

Thank you so much. That’s very helpful.

Thank you. Our next question comes from the line of Tian Hou from TH Capital. Please go ahead.

Yes, good evening management. I have two questions. The first one is regarding the category mix. So in the opening remarks, so you just mentioned about high quality growth and category mix. So I wonder what are the top categories today and versus a year ago? So that's the number one question. Number two, regarding the competition, so what we saw today, Alibaba themselves set up an operational center to help merchants to do better operation on Alibaba. And so they're doing that in-house right now. And I wonder if that becomes some kind of pressure to you? So that is the second question. So I would like management to give us some color in the competition front. Thank you.

Hi, sure. It is Robin. Let me answer your first question, thinking how can, go to the next question. Before I give you some color about category mix, I want to explain again about what our high quality growth strategy is. I mean, of course with -- that's really based on our judgment about our industry. We think there are classifieds to two phases that, in the phase one, that's driven by the, growth of the industry and, store operations oriented and the focus, and in the phase two, we would think about, there are more detailed or more penetrated service in the different service areas and also the technology is the key in the phase two. Regarding the category mix, we need to figure out the profitability about the GMV quality. That's why there is like a -- what we call the optimization of our brand portfolio, something like this. So, based on this judgment we quarters ago, we just have the strategy about high quality of growth as there are different paths. Number one, we think we need to optimize our brand portfolio, and in some certain categories, we need to give up more brands, so that we can get like a certain level of the profitability in the, other categories. And the number two, we need to adapt our organization, our technology and our structure to be very good and to be very elastic to the change of the environment of the market. So, I think this quarter, we gave you the very positive result about how we, what we do, or what we have been doing, constantly to optimize our cost structure and optimize our categories. So, I think that's kind like what we call high quality growth. In the end, we want to drive up our, operating margins and our bottom-line financial growth. So we are still in the process, but I think by the end of this year we will finish up the optimization of the portfolio. And by the way, I think with this fear of the COVID-19 impact, and also with the completion of our optimization, our growth -- top line growth will return to 30% year-over-year for the next year. About the category mix, I think, when you look at our apparel category, that includes sportswear, luxury, men's and women's category. I think the highest growth rates happened in the luxury categories. And as I mentioned in the last question, we think the FMCG will be the next one to have very high growth rate. But of course in the sportswear is a very stable, very healthy growth rate every quarters in the past and the in the future as we are expecting. And also we are growing up some other categories in the next like cosmetics, something like this. Thank you.

Thank you.

All right, so let me address your second question related to the Alibaba in-house operation a potential, so called competitor, competition with Baozun operating. So actually, I believe that you've got some news lately. So from the internet that you heard Alibaba has founded an Operation Center in the Jinhua City to cover the Zhejiang province operations. So this is part of their, Alibaba, they call the Spring Thunder project. In Chinese they call that Chūnjì Léi [ph]. So actually, this project has launched in the beginning of this year, tend to cover all those small medium brands or entities in Taobao, and also on TIMO. So this is not, overlapping with Baozun’s existing addressable market. So, they tend to just set up an operations center to provide a fundamental basic technology and operating system to let all those small and medium brands or entities to run their own business. A lot of their entities are like metal factories [ph] like traditional manufacturers and they have capabilities to just manufacture all those brands selling to a Tier III, from Tier III to Tier six cities. So, this is all their Chūnjì Léi project all about doing. So, we do not see this is kind of the competition with Baozun’s operating consider our addressable market is focused on international leading and domestic leading brands.

Thank you. That’s pretty clear.

Thank you. Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question. Thomas?

Hi, [indiscernible] [00:03:00] question, can I ask about – strategies online streaming, online [indiscernible] as we see the strong GMV [indiscernible] you come online as strong as the industry?

Hi Thomas, your sound is not very clear as we heard about the live streaming, is that correct?

Yes.

Okay, let me try, let Junhua try to answer this question based on what we heard about. Okay?

I – that was not very clear to me. So let me give you some color on the live stream part is, your question is related to that part. So, live streaming is one of the approaches of our digital marketing. So, it's actually it's one way to just, just like we're getting the traffic from, like KOL or the other kind of celebrities and in-store, a live streaming. So, if you're talking about the live streaming, and the digital marketing, basically we will categorize them into two sections. One is live streaming with KOLs or celebrities. The second one is live streaming from an in-store operations, like the brand itself or their offline store of their in-store associates something like that. So the opportunities or the outlook of the live streaming is really helping. This is a new initiative to helping get more traffic, especially new consumers to the store. So we have the ROI and we have all the script design. Baozun is providing a very comprehensive services for helping our brand partners if they want to engage with different kind of way of live streaming. So this is really helping us to get new customers. But if you're talking about the outlook in the future, how do we just categorize all those different parts. We believe that the brand will be engaged with their in store live streaming heavier because the cost is relatively lower, and they will engage with a KOL or celebrity's live stream like several times a year, consider this is relatively at higher cost, but each way for Baozun and the brands will be, and together to estimate the return of and that of each approaches in the live streaming. I don't know if I addressed your question or not.

Yes, let me let me add something, based on our -- what I heard about questions. I think we have a very, very clear position about live streaming. Number one, we are representing the brand, we are onset brand, the better and we work with KOL or even the in-store, live streaming companies together and to identify what kind of SKUs is better for the live streaming business. And the number two, we already engaged in the live streaming operations into the daily operations basis across the stores. And number three, we are setting up some strategic, agreements with typical KOL and the typical in-store live streaming companies. So that we can increase these kind of new channels, to be working with them and also, we do see with the past a cooperation we do see our strong value proposition about outstanding the brands and provide more supply chain and then some IT support for them, also including some logistics support for these companies. So, we have -- we are in the -- we are not going to be a company, but we work with them very closely with different value positioning and I think that's a very good big model opportunity to be working with them.

Thank you.

Thank you. Our next question comes from the line of Joyce Ju from Bank of America. Please go ahead.

Good evening management. Thanks for taking my question. My first question is actually related to the category growth. I know, you guys actually mentioned, like FMCG categories, like, have a lot of new additions to our new brand pipeline. So could you actually give us a sense like, how big GMV contribution and what's the rough growth rate, take rate and also the operating profit level for this particular category it seems will be our new growth driver for the next probably like couple of years? And also, I mean, we have a sense like among different big categories like apparel, FMCG, electronics and also probably home appliances. Could you give a rough sense like which ones have the highest growth? Which ones have the highest, like, take rate? Which one have better operating leverage, just on like order, just give some order of like different like categories? And also I have a small follow-up is on the housekeeping question just for what's our actually [indiscernible] for our existing brands for this quarter? Thank you. Thanks, nothing so, but just growth for the existing brands like for this quarter? Thank you.

Sure, about the same-store sales growth is the 49% in Q2. I answered this question first. And then about the categories, I think I need to give you more explanation about our outlook in Q3. As we mentioned in the remarks, we are switching away some of the brands in the 3C because we have seen a very low take rate areas and then we don’t want to do that anymore. And, that has some impact on the GMV outlook temporarily. But we have a very strong pipeline in FMCG and luxury brands, which can replace them step-by-step. Of course in the luxury, we should ask that because some of the luxury supply chain is outside China, and they need some time to ramp up and they still had some delay about the luxury brands opening stores in TIMO and other platforms, but I think that will be ramping up and finish up before the end of this year. And about the FMCG's in the most of them is domestic areas, I think the -- if you say the year-on-year project that will, both categories will be 100 -- more than 100% year-over-year growth. And just now I mentioned about our largest category SKU in the apparel which include the sportswear, luxury, men's and women's category. Sportswear is very healthy growth rate as no change as before, very stable and very healthy. And for the luxury is over 100% year-over-year growth. And the men's and women's it’s new category recovered since 6/18, and we hope they can get back by the Double 11. We do see a lot of positive signs about Double 11. We think, this third quarter is a very strong seasonality, the cost of six between in between 6/18 and Double 11, especially under the environment of the COVID-19. So, that's kind of like very special, very specific time as Q3 and we make use of this time to do lots of adjustments, so that we can have a better growth rate for the Q4 and the next year. Thank you.

Got it, Robin may I have a small follow-up? I actually -- just for the 3Q outlook, I mean we get a sense like the slowing down of the GMV, we understand it’s because of less promotions from the brand and also people have already a lot of consumption assumption in the second quarter. But just curious which particular category will see the biggest like impact. Like in the third quarter i.e. like, the deceleration. The growth rates decelerate materially from second quarter to third quarter, yes, I mean is this apparel or it’s like FMCG?

Yes, I think, I mean for the -- in the category, 3C category or electric category, with so called electronics category is still very weak, heavier because our, optimization this category. And, I think you may recall, we -- last quarter, a year ago, the quarter a year ago, we have a very high base about this category and we are also balance of the year, in Q2, we had a decline in that category. I think that is similar in Q3. I think that's a big impact on about our GMV. However, it's -- it's very healthy for us to pursue high quality growth, because we are trying to adjust the GMV, so that we can have more profitable GMV come comes through to our portfolio.

Got it. Thanks a lot.

Thank you. Our next question comes from the line of Charlie Chen from China Renaissance. Please go ahead.

Hi, management. Thanks for taking my question. I have a follow-up question on the quality growth strategy, which you mentioned a few times previously. It seems that the margins wrote out really nicely this quarter. So I would like to get a bit more color on how this strategy works? For example, are you simply giving more services or selling more products to clients that are willing to pay you more, give you better terms or better take rates or you're actually selling more products or services to clients that generates better margins or returns to the firm? So I think the follow-up question would be, is there any particular services or products that have better margin or return across all? Can you give us a few examples on that? Thank you.

Sure. It’s Robin, let me answer this question. Just now I -- we try to watch the high quality growth strategy as we understand. I mean regarding Q2, I think that's a really good reflection, what we do and how we worked very hard in the past quarter, and delivered this kind of result. I think that's multiple factors. Number one, regarding the topline revenue, we do add up the services. For example, we have very -- we had very stable and very good performance in our logistics service in Q1 during the COVID-19, and after Q1 more and more brands coming to us to list their demand about consignment model, which you can see our consignment model revenue, really drive-up our service revenue and of course the pure service revenue also have a very decent growth. And the number two about distribution, we are very precautious to optimize our distribution portfolio because for us we think there is, for example, there is a baby formula brand and how very [indiscernible] topping their market price. And those two [indiscernible] the gross margin, precautiously we just discontinued this service, and switched inventory back to the brand and [indiscernible] the distributor. And we just try to protect our gross margin. There is some challenge in the market, but we can always, very precautiously to solve the problems. And that's number one. I think number two, we have very good development in the technology and both the brands need our technology to integrate offline, online to offline, which contributes more to our service revenues. And also, internally we utilize a vast system, as Vincent mentioned about, we just, automated and improved our efficiency for our process, really gave us a lot of space to do the cost reduction initiatives, and to adapt our business model to this back changing environment. I think after the past quarters, past few quarters endeavor, you do see our leverage or efficiency improvement in the different initiatives. And number three, I think we finished up very advanced technology platform, which is called DOP, it is called Digital Operating Platform and we just, we don't need to spend very high growth on the technology to keep our very competitive position and technology really for this kind of stable investment in technology and give us more space about margin improvement. So, these kind of like multiple factors do contribute to our high quality growth and delivered result in 2Q.

Thank you, Robin, very clear. I just have a one other very quick follow-up question on the pipeline of new brands under acquisition for the rest of year can you give us some color on that? Thank you.

Yes, we have some -- I think we have a very strong pipeline. Just now I said, based on our setup timetable about the adjustment and optimization of a brand portfolio and more importantly based on our very strong pipeline, we are expecting 30% revenue year-over-year growth for the next year. So that's really based on the strong pipeline. And then meanwhile, I think we can keep the OPM, I mean operating profit margin expansion momentum, just as this year for the next year. Thank you.

Thank you.

Our next question comes from the line of John Choi from Daiwa. Please go ahead.

Thanks management for taking my question. This is Robin asking on behalf of John Choi. Is it the right way to expect 3Q to have a slower growth because of the seasonality and as we eliminate some of the brands, but we will see better margins as those brands will be taken out and expect a GMV and revenue to see a strong reacceleration in 4Q? And also, could management comment on the improvement in the take rate this quarter? And is it mainly because of the GMV ramp up from the brands that we acquired in the second half of 2019? And would that GMV ramp up will be able to offset some of the weak seasonality in 3Q? Thank you.

Yes, I think that's for my question. Yes, I mean, roughly to answer your question is yes. And for the 3Q, I think this is a very classic year. Internally we are doing some optimizations. And actually there are in between the two big promotions 6/18 and the Double 11, it's kind of like typical seasonality, but we see the strong growth seasonality impact in this year. And about the take rate, I think we are getting back from, based on the calculation we are back-in-back to 10.4% our service take rate. And I think that's mainly because, we have more service brands coming in for the last year and also we are ramping up the service, especially, for example for the IT, revenue and the logistics revenue coming up for the -- for the new brands and contribute to our improved take rate.

All right, thank you. Our final question for today comes from Sally Chan from CLSA. Please go ahead.

Hello, good evening management. Thank you for taking my question. I have two questions. One is, we saw the services take rate had quite a notable increase of like 0.6 percentage point on a year-on-year basis. So just wondering if management could share more color on the drivers behind, like how much of that was driven by category mix and then how much of it sort of, was driven by the new brands revenue contribution? And then my second question -- sorry and then how to look at the take rate for the rest of the year may be? And then the second question is actually on our mini program strategy in WeChat. So just wondering if there's any update there and then, what's our strategy like going forward? Some thoughts on that will be very helpful. Thank you.

Yes, about take rate, I think you can send as a half driven by the category mix and the half driven by the new brand introduction. And about mini program, I think we are very proud of the recent progress in the mini program. Starting by the, IT support and the store operations, we started to provide digital marketing services in the mini program. And, most importantly, after one and a half year, for the business unit of the mini program, it has been breakeven, in the breakeven position in Q2, I think is a milestone for them to work very progressively in the future. And also, we have a very strong relationship with the brands and in the branding e-commerce side in the mini program sector. So that's we are - we thinking that -- very hopeful to grow this business very quickly. Thank you.

Great. Thank you. Thank you, Robin.

Thank you. I'll now turn the call back to management team for the closing remarks.

Thank you, operator. In closing, on behalf of the Baozun management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us today. This concludes the call.

Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you for participating. You may all disconnect.