Caroline Dong - Investor Relations Vincent Wenbin Qiu - Chairman of the Board of Directors and Chief Executive Officer Beck Zhaoming Chen - Chief Financial Officer.

Eileen Deng - Deutsche Bank AG Monica Chen - Credit Suisse Binnie Wong - Bank of America Merrill Lynch Nicky Ge - China Renaissance Securities Ryan Roberts - MCM Partners Thomas Chong - BOC International Holdings Limited Tian Hou - T. H. Capital, LLC.

Thank you for standing by and welcome to the Baozun First Quarter 2017 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, May 17, 2017. I would now like to hand the conference over to your first speaker today, Ms. Caroline Dong. Please go ahead, Madam..

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 global newswire services. On the call today from Baozun are Mr. Vincent Qiu, Chairman and Chief Executive 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 terminology 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 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, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding these and other risks, uncertainties and/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 statement 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. Our business continued to generate strong momentum this quarter. The GMV increased by 61% year-over-year to RMB3 billion during the first quarter.

Growth continues to be driven by increases of our existing online store sales, the further expansion of portfolio of brand partners, the expansion and the diversification of value-added services we provide to our brand partners, and of course, the very favorable industry tailwind created by China’s rapidly growing brand e-commerce market.

A number of our brand partners continue to grow steadily increasing to 136 as of March 31, 2017.

As we strengthen our capabilities and expand the area of services offered, I’m confident that we will be able to create new partnerships with existing global brands, seeking either to enter China’s rapidly growing e-commerce market or further strengthen our existing China online presence.

Last week, we held our second Global Brand E-commerce Summit, which again turned out to be a huge success. We had over 500 brands attendees, including both current and the potential brand partners and attendees from more than 30 leading Chinese and international news organizations.

We also welcomed the representatives from many other important parts of Baozun’s family through the many of our investors, strategic partners like Alibaba, and also a wide range of industry experts. The theme of this year’s summit was Bounded but Boundless Omni-Channel.

The summit brought together leading consumer brand e-commerce industry leaders and professionals to discuss the future of the brand e-commerce industry. The era of new retail has created many challenges for brands seeking to provide consumers with the seamless shopping experience.

The summit helped us demonstrate to current and prospective brand partners how effective our consumer-centered solutions are. Leveraging our deep experience in big data analysis and in-depth understanding of consumer behavior, we’re able to further improve our brand partners’ business by comprehensively integrating offline and online business models.

I’d also like to take time to welcome Ms. [Joyce Chow] [ph] to our team here at Baozun. Joyce will act as general manager for our digital marketing group.

She has extensive experience in digital marketing and media services having worked at AeroChina [ph], a global market leader in digital and diversified media solutions and part of the Dentsu Network, leading their digital strategy planning and e-commerce business.

Prior to that, she worked as WPB [ph] Group company’s general manager of digital strategy planning and e-commerce.

I’m very excited to welcome her onboard and have great confidence in that she will make a valuable addition to our team as we expand our portfolio of value added services and migrate our digital marketing services towards an asset-light model, Beck will go over in greater detail later in this call.

With our strategy, now shifting into higher gear, I’m very excited about the possibility set will be created with the expanded scale of our business. We have always taking a long-term and sustainable view of our business, always putting our brand partners first.

We will continue to drive growth momentum and expand the range of services we have on offer, to generate a greater value for our shareholders. With that, I will pass the call over to Beck, who will review our financials..

Thank you, Vincent. Just a few housekeeping items before I go through the numbers. We believe year-over-year comparisons are one of the most useful ways to judge our performance. All percentage changes I’m going to give will be on that basis. Now, let’s start to review the financials. Total GMV during the quarter increased by 61% to RMB3 billion.

Our focus remains on growing our non-distribution business, which saw GMV increase by 83% this quarter. We will continue to optimize our business model mix towards the non-distribution model going forward. Total net revenue increased by 20% to RMB805 million. Breaking down further, product sales revenue rose by 7% to RMB498 million.

We continue to transfer portions of our distribution business towards the non-distribution model, which impacts year-over-year growth of product sales revenue. Services revenue rose by 52% to RMB307 million during the quarter.

We note that this figure excludes part of the cost of purchasing media on behalf of our brand partners, which is the different accounting treatment than in previous quarters. In Q1 2017, we began adjusting how we execute these media purchases, which I will describe in more detail in a moment.

And on an apple-to-apple basis, excluding the cost of media procurement from services revenue in both Q1 2017 and the Q1 2016, services revenue during the first quarter of 2017 actually grew by 63% on year-over-year basis.

With regard to the change in the account treatment of media purchases, as Vincent mentioned earlier, we began migrating part of our media services this quarter towards a more asset-light model, which will decrease our inventory risk and increase our working capital efficiency.

Under the previous media services model, we purchased and made a through payment for media inventory first on behalf of our brand partners. Accounting-wise, on the risk model, we recognized the cost of the media purchase and our net commissions as revenue.

The cost of the media will also then be recorded as part of our selling and marketing expenses, truly offsetting the cost of the media that was recorded in revenue. The net result was that only our net commission contributed to operating profit.

Starting this year, we are migrating our media services towards a more asset-light model, which removes media inventory risk from Baozun, without impacting the quality and the values that our digital marketing services bring to our brand partners.

Under this new model, we negotiate with media platform on behalf of our brand partners, as we did previously, but we do not assume inventory risk any longer. When negotiations are complete payments for media inventory is the sole responsibility of our brand partners. Under this new model, we only recognized our net commission as revenue.

We don’t record the cost of the media as either revenue offsetting in the marketing expenses. And please note that this change in account treatment has no impact on our operating profit.

And now, turning back to our other profit and loss items for the quarter, total operating losses - the total operating expenses was RMB790 million, in particular cost of products rose to RMB439 million, primarily due to the increase in the volume of product sales from our core brand e-commerce business.

Fulfillment expenses rose to RMB132 million mainly due to increases in GMV contribution from our consignment business, more orders fulfilled by a premium delivery service providers as a percentage of total orders and warehouse rental expenses.

We have a best-in-class warehousing operation and fulfillment experience in the brand e-commerce industry and we believe top-tier capabilities within fulfillment are key driver of our customer and the brand satisfaction, which is the key factor to sustain our long-term growth.

The sales and marketing expenses rose to RMB163 million, primarily due to an increase in operational staff, and promotional and marketing expenses associated with our online stores.

The technology and content expenses rose to RMB29 million, the increase was primarily due to the increases in technology-focused staff, share-based compensation expenses and the project-based variable technological expenses from brand stores.

In addition, a portion of the share-based compensation expenses were due to a one-off modification during the quarter and we don’t expect this much impact in the following quarters. G&A expenses rose to RMB27 million, the increase was primarily due to increases in administrative staff cost and share-based compensation expenses.

In addition, a portion of the share-based compensation expenses were due to a one-off modification in this quarter and we also don’t expect this much impact in the following quarters.

Non-GAAP income from operations was RMB34 million, a significant 139% increase compared with RMB14 million in the same quarter of last year, while non-GAAP operating margin improved due to 4.2%, compared with 2.1% in the same quarter of last year.

In Q1, net income attributable to Baozun ordinary shareholders rose to RMB11 million, an increase of 157% compared with the same quarter of last year. And basic and diluted net income attributable to ordinary shareholders per ADS were RMB0.20 and RMB0.18 respectively compared to RMB0.09 and RMB0.09 respectively during the same period of last year.

In Q1, non-GAAP net income attributable to Baozun ordinary shareholders rose to RMB29 million, an increase of 104% compared with the same quarter last year.

Basic and diluted non-GAAP net income attributable to Baozun ordinary shareholders per ADS were RMB0.54 and RMB0.50 respectively, compared with basic and diluted non-GAAP net income attributable to Baozun ordinary shareholders per ADS of RMB0.29 and RMB0.27 respectively, for the same period of 2016.

That completes the profit and loss statement for the quarter. As of March 31, 2017, the company had RMB877 million in cash, cash equivalents and the short-term investments, a decrease from RMB957 million as of December 31, 2016 due to investment in the company’s logistics space.

Our business continues to grow sustainably, which increase the confidence in our business and its performance. We reiterate our previous expectation of total GMV during fiscal year 2017 to increase by over 50% on a year-over-year basis.

As we further optimize our business model mix towards the non-distribution model, our [ph] distribution GMV will continue to grow at a faster rate than distribution GMV.

Turning to revenue guidance for the second quarter of 2017, we expect total net revenues to be between RMB870 million and RMB890 million, representing a year-over-year growth rate of approximately 24% to 27%.

Again, due to the continued strategic shift in our business model mix to optimize our margin profile, our non-distribution model will continue to grow at a more rapid pace than overall net revenues.

The same is true for services revenue, which will grow at a more rapid pace than total net revenues and will increasingly contribute more to net revenues on a year-over-year basis. Our profitability that will be improved continuously, due to the migration of our media services towards a more asset-light model as I previously described.

If we look at services revenue on apples-to-apples basis excluding the cost of media procurement from services revenue in the same period of last year, the growth rate of services revenue is even more higher. Before I conclude the prepared remarks, I’d like to spend a few more minutes on the company’s prospects and strategies.

In the Annual Chairman’s Letter, we have released to the public in April, we shared with our investors the company’s key business developments in 2016 and our strategies and the prospects for the coming years.

Over the next three years, we plan to underpin our growth in four key ways; first, through deeper services and enhanced focus on our core verticals, we plan to extend our value proposition and offerings to our brand partners; second, through global expansion by fulfilling the demand of our brand partners internationally; third, through human resources, as we plan to continue strengthening our team to sustain the company’s long-term growth, and last but not least through the fostering of our creative and entrepreneur culture.

We will keep investing the technology and innovation, which will be our key competitive strength and a growth driver over the long-term. We encourage our investors to read through the letter and share the same view with us on our plans for sustainable long-term growth. This concludes our prepared remarks.

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

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And your first question will be from Eileen Deng with Deutsche Bank..

Thank you, management, for taking my questions. Congratulations on the results. First of all, I wanted to ask whether management can comment on the same brand sales growth for the quarter, and also what is the client concentration is trending. And we know that three new customers have been added this quarter.

Any color on that, and which business model are they? The trends are - how are the trends compared to the existing customers? And also, if we compare the service revenue versus the overall GMV, the take-rate is like flat sequentially. Is it due to the seasonality or any other reasons behind that? Thank you..

Okay. So thanks for the question, Eileen. Let me address the question one by one. So first thing is, for the same-store sales growth for the first quarter it’s about 50% on a year-over-year basis. And generally, we think the concentration is not so high compared to the past.

And we will keep to watch on that, because it’s only the first quarter, so if we look at full-year basis, we expect the concentration on top-tier brands will be further down. And in terms of new brands, it’s mainly in apparel, big apparel categories, men’s apparel and the women’s apparel, footwear as well.

So overall, I think the term - commercial terms for new brands is better than the existing brands. So which means that in the long run we can see that for the same category brands, our overall take-rate will be improved.

And in terms of the revenue against the total GMV amount, basically in Q4 our opinion this is more, like you say, are more apparel products and the ad percentage of the total GMV apparel is much bigger in Q4. And in Q1, in this quarter, we think electronics category is standing very good.

So if we look at each categories, the general mix of take-rate is flat or improved a lot. But electronics is contributing more to the total GMV so that’s why overall you don’t see the big improvement in the take-rate of the company. But category-wise, I think it’s good..

Thank you, very helpful..

Thank you. And we take our next question from Monica Chen with Credit Suisse..

Good morning, management. Congratulations on very strong quarter. I have two questions here. Number one is regarding the fulfillment and warehousing. So we see some of our e-commerce peers, they established separate entity and opened up their warehousing and fulfillment capacity to the external clients in order to increase the scale and lower cost.

I think we have been talking about this before, about open our logistics services to the non- Baozun clients. So just want to follow-up how is the progress here and what do we see as our competitive strength against the peers? And then I have a follow-up question. Thank you..

Thank you for the question. Yes, when - previously Baozun’s warehousing and logistic arm just served internal clients. Starting from last year we start to serve the potential brands separately by our warehousing team.

Right now, we have a very good progress on that, because not only we can have more business on warehouse and logistics, but also if you’d give us a chance to work with the brands, firstly just provide one single services, logistics [ph], and then we can provide more and more, add more and more services into the client.

So in this case, this new potential client will be also Baozun clients, non-Baozun clients. So we are seeing very good result here. And we will continue to do so. And also, not only for the brand partners, but also several other partners like Sanyo also - we also partner with Sanyo and they provide services to their clients.

So generally two directions, one is the single consumer brand, others is about the platforms like Sanyo is also our potential partners. Yes..

Okay. Thank you. I have a follow-up question. So we see our non-distribution GMV contribution has reached 80% in this quarter. So - and I also think management mentioned we will continue to grow the consignment model faster than distribution model.

So about this 80%, how many rooms, further rooms do we see to further increase that percentage? Do we have like a target or ideal level of the non-distribution contribution? And how does this improvement translate into better margin for our business? Thank you..

Let me address the question, Monica, thank you. So we expect that the total non-distribution business will be stably growing very fast, at the same growth rate of Q1 this year, full-year basis.

And we are very confident for the growth of - even for the growth of the second half of this year, because we have great potential to adding new big brands things - the second half of this year. And we believe the overall mix, because we have introduced new brands onboard, and new brands usually sharing even better commercial terms with us.

So we think it’s a good pattern for us to maintain and even give you more surprises..

Thank you. Very helpful..

Thank you. We take our next question from Binnie Wong with Merrill Lynch..

Hi, good morning, management. Thank you for taking my question and congrats on a solid quarter. My question is on - in terms of the gross profit dollar, you recall you said that this should be one of our key metrics, right. But it seems this quarter that was actually fallen behind GMV growth, right.

And then if we look at our full-year GMV target of over 50%, would that be largely driven by which type of categories, say, apparel, electronics, can you share some color on that? And secondly, is that - in terms of the omni-marketing solutions we heard in the e-commerce summit, if we think about the long-term implications to our company, how should that help us in terms of the partnership with the brands, the take-rate any color, that would be very helpful? Thank you..

Let me address the first question, and Vincent will answer the second question, Binnie. Thank you. So overall just as I mentioned in the prepared remarks earlier, we have different accounting treatment for our services revenue in relation to the media buying services.

So previously, we just prepay and purchased media inventories on behalf - purchase the media inventories first on behalf of the brand partners. And if we look at current treatment, because we migrate our services towards asset-light model, so by this we just book the net commissions in our total net revenues.

We don’t book the cost of purchasing media either in our services revenues or selling, in the marketing expenses.

So on an apple-to-apple basis, excluding the cost of the media, which was recorded in the revenue before, and our actually services revenue during the first quarter of 2017 grew by 63% on a year-over-year basis, and our gross profit is growing by 55% on a year-over-year basis. And so, that’s why I’d like to call this item during the prepared remarks.

So I think it’s - this is how we address your question..

Okay..

Okay. Let me explain something about your second question. I think for the long-term implication of digital marketing capability for the industry and our company, there are three things which are quite important. First one is that, we have to have this online retail capability to give us the retail data.

That is the foundation of - so we can do, integrate digital marketing better than before. So retail capabilities and data is the first thing, which has already been accomplished in the past several years along with the development of the e-com.

And then today, I think the industry just works to embrace the integrated sales and marketing solution, enable a better omni-channel and omni-marketing offering to their clients. That’s the second thing, digital marketing capabilities.

And third one is that, someone - we will have the capability through technology integrate all these sections and digital marketing activities together. So we also believe that there is a - this kind of migration will be heavily driven by technology. So that is three things.

Baozun’s goal is to the just to provide the integrated digital marketing and sales solution for the client through technology. So this will make the whole thing much more advanced and intelligent than before. In return, this can add value to the clients, industry and Baozun. Thank you..

Thank you, management. That’s very clear. Thank you..

Thank you. And we take our next question from Nicky Ge with China Renaissance..

Good morning, management. Thank you for taking my questions. I have two questions here. Number one is housekeeping question.

I just want to know, could you share with us the 2017 and 2018 brand pipeline, and if you can break it by category that would be very helpful? And the second question is regarding our SaaS platform, just want to know whether we have update on this e-commerce solutions platform, and when are we planning to launch it? And when are we expecting revenue contribution from this platform? Thanks..

Excuse me, Nicky, so your second question is about the SaaS platform?.

Yes.

Well, we are doing the IT service center finalization [ph], right? Just want to know do we have update on that thing?.

Okay. Okay, so in terms of the first question, let me address the first question - first, and then Vincent will follow with the second question. So for this year and next year, our major pipeline concentration were towards apparel, sportswear, electronics and cosmetics. So these are always our major categories.

And we’re still seeing a lot of - a great potential in fashion related categories. And in the long run, I think for these categories brands, usually right now [except for that China] [ph] most of the other categories we are doing by non-distribution model, and even best is the consignment model.

And for electronics, we will decide on whether or not it’s like a favorable products and popular products by the Chinese consumers. So right now, recently for some new brands in electronics we are doing non-distribution model. So this is the general guideline for pipeline of the next two years..

Okay. Yes. Thanks for the question. About second one, yes, we have a plan to implement a cloud-based SaaS platform to provide our technologies through the potential in existing clients.

Because one thing is that the brand official sites is somehow is quite - the barrier is quite high and clients need to put a lot of investments to setup their brand official stores.

So, of course, if we can provide a cloud-based SaaS platform for them, including the front-end, I mean the web front applications plus the supply chain solutions together, then this can enable them to setup the official web store quickly, in much lower cost, so that is a benefit of this solution.

And also I think some of the investors know that the potential of these services to the industry, so we do as well. Right now we are in the planning - product planning stage, so we hope that in the near future, we can share with you with a clear roadmap of that. But the potential, we all believe that the potential is huge. Thank you..

Thanks a lot. It’s very helpful..

Yes. For more color, we expect - our internal players [ph] to expect to launch the - or finish product finalization [ph] of this platform by September this year. And this will be very unique in Chinese market, and we don’t think there is enough competitions here..

Okay, great. Thanks. Thanks a lot..

Thank you. And we take our next question from Ryan Roberts with MCM Partners..

Good evening, management. Thank you for taking my questions, and also congratulations on a solid set of results, very encouraging. My question actually is kind of a follow-up on previous question on GMV growth kind of for the year.

Just wondering, if you can kind of give us some more color, I think, you earlier mentioned, you reiterated your 50%, at least 50% growth for the year. And also, you said that, you look to see non-distribution GMV growth kind of continue at the Q1 pace, which was pretty significant.

I’m wondering, if you can kind of give us maybe a tighter range again from - at least 50% seems like extrapolating those numbers, now it’s a bit higher.

I’m wondering, if you can kind of give us maybe bit of a tighter range, and also tell us, is that deepening sales with existing brand partners or alternatively is that adding our new brand partners on? I think our target for the year was about 20, I’m just kind of curious you can give us a bit more color on that..

Okay. So thanks for the question, Ryan. So the first thing, I’d like to mention is, we value quality of the quantity, when it comes to new partnership with brand partners. So we expect this year and the next year we can onboard some more new brands with more potential to generate higher GMV compared to past year. This is the first thing.

And the second thing is for our total GMV calculation - the GMV accounted brands, we expect, we could provide more services to them into deepening our value-added services to our brand, and also for us to generate much more revenue.

Just like we mentioned during early prepared remarks, we have on board new general manager of digital marketing team, who is Joyce. And we expect Joyce will lead the team to be providing better and more value added services just like Shopcat more value added services to the brand and to bring the returns to customers as well.

And also in terms of the total GMV growth of this year, we have gave the general guidance earlier this year of about 50% on a year-over-year basis. And we think it’s a conservative trend, but Ryan, now we don’t want to rise up.

And for the non-distribution, GMV growth rate, I think for the next three quarters of this year, it could be maintained, at least maintain the 80% year-over-year growth at least. It could be higher if we can on board more - higher GMV contribution brands in the second half of this year..

Got you. Thanks, guy. That’s very helpful. And if I can ask just one real small quick follow-up on that, is any of the GMV growth, the kind of incremental GMV growth, any of that coming overseas yet? Are we still in the early stages of that or perhaps are we seeing kind of some momentum on that front as well? And that’s all for me..

Okay. So like we mentioned earlier, our same-store sales growth for the first quarter is about 50%, considering we already have a large GMV base for last year. I think it’s very promising number for the company as well in the following months [ph].

And even for some 10-year store - I think for some 10-year store, the earliest store for us can generate like 40% plus year-over-year growth rate in the first quarter. And also, the margin improvement is by 200 to 300 basis points for the same brand on a year-over-year basis, so which means that the market is very good.

And we have seen more and more demand from the Chinese consumers to consume branded product in authentic way. So I think this is a great tailwind of the market for us. And we believe for the next few years, the momentum will keep still..

Got you. Thank you very much. I appreciate the additional detail there. Thank you..

Thank you. And we take our next question from Thomas Chong with Bank of China International..

Hi, good morning, Vincent, Beck and Caroline. Thanks for taking my questions. I have two quick questions. The first question is about the total headcounts in the first quarter and our expectation by the end of 2017. And my second question is about Shopdog and Shopcat.

Can management give us some color about the merchants adoption as well as the areas that we can further improve to strengthen the monetization? Thanks..

Okay. So thank you for the question, Thomas. So in terms of the first question, the total headcount is close to 2,900 at the end of April 30 - April 30 of this last month. So generally we think as long as we grow the businesses much we will hire more people and hire more talent to help generate the businesses and contribute more.

And the second thing is, right now we are in progressing and in plan of some technology plans to replace some of the people work in the near future, which remains that in the near future maybe we don’t need more people for more businesses. But we believe we still need high quality people as much as possible to help the business to generate.

So not everything will be done by robot, but portion of the things will be done by robot in the near future. And in terms of the Shopdog and Shopcat, so this is like assistant tool kit, so for the Shopcat, we just launched our self-developed omni-marketing tool, Shopcat, during our second brand e-commerce summit last week.

So our Shopcat will note its every average step of consumer behavior, when they are shopping. And this is based on big data that includes media content, membership and omni-channel shopping data.

So leverage on that, Shopcat can provide brands with integrated marketing solutions to deliver better marketing results, which means that for us we can have more ways and methodologies to charge our revenues well. And in terms of the Shopdog, this is integrated system to integrate our online businesses with offline businesses.

So like we said in the previous earnings call, we have started to implement the Shopdog with several international brand across the China in the offline stores. And this year we have started pilot projects with the leading sportswear brand in the offline store to prepare for the mid-year e-commerce shopping festival.

And we believe the results will be good. And if the results is good, we will rollout [prepared to] [ph] over hundreds of the stores in the offline store before [the BOE 11] [ph] campaign. And in this way we believe, the very big thing is overall efficiencies will be greatly improved for consumers, for brands and for Baozun as well.

And in this - when you get - you achieve the efficiencies, I think for every party of the system will get their - will share the benefit as well. So this is an integrated tool kit. And we believe as long as it is more integrated to the open stores of those brands, for Baozun’s opinion it’s growth will be stronger in the future..

Thank you..

Thank you. And our next question comes from Tian Hou with T. H. Capital..

Good morning, management. Congratulations on the quarter. Couple of questions. One is for the number for brand partners. And in Q1, we had a pretty significant increase from 116 to 136. And I wonder what’s the pipeline for our brand partners.

And also for the brand partners, is your focus on multinational companies or domestic partners? And also, you’re putting more efforts, are you putting more efforts on apparels or 3C categories? So that’s the number one question for the brand partner. I would also like to know your allocation or composition of your guidance.

Now, what percentage of your top-line guidance comes from the non-distribution GMV and the distribution GMV? And what take-rate should we expect for your GMV guidance in 2Q? That’s the two questions. Thank you..

Okay. So, thank you for the question, Tian Hou. So let me address the question one by one. So for the first question, for the brand partners, we are mainly targeting the brand partners in - actually in global companies categories, not multinational or domestic.

So if a Chinese company, we say - if a Chinese is a global company, it could be our brand partner for the moment. And if it’s a truly local Chinese company, maybe it’s not our current portfolio, but could be in the future. So our focus will be still growing in the global industry.

And we think for the global brand, they have higher - right now have the high demands from the consumers. So we think our priority is in that. And for the pipeline, like we said before, it’s generally - it’s we value the quality over the quantity over the long term.

So as long as we have the quality brands, the brand and Baozun can enjoy a long-term growth in the long run. So we expect our brand partners will grow steadily year-over-year, quarter-over-quarter. And right now, the pipeline is mainly concentrated in fashion and tech related category. So fashion means, apparel, sportswear and the cosmetics.

And tech means, mainly means 3C related brands like smartphones as well. And for the second question about the guidance, so up till now we still maintain the GMV guidance. For year 2017, we know that it may be prudent, but we don’t want to raise that. So 50% is our guidance up to now.

And in terms of the non-distribution model, it will be growing, like we said before, like 80%-plus for the next few quarters as well. So services revenue as we expected could be still growing much faster than the product sales revenue.

And the service revenue will contribute - will account for more in percentage of the total net revenues, which implies that greatly improve the higher gross margin and operating margin of the P&L..

Thank you..

Thank you. And as we have no further questions, at this time I would like to turn the call back over to Ms. Caroline Dong for any additional and closing remarks..

Okay. Thank you, operator. We are now ready to close this earnings conference call. Thank you for joining us..

Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect..