FAST NEWS: Baozun’s Profit Plunges as Alibaba Reliance Eases

The latest: E-commerce software as a service (SaaS) provider Baozun Inc. (BZUN.US; 9991.HK) said its revenue fell 1.8% year-on-year in the first quarter to 1.98 billion yuan ($294 million), while its non-GAAP operating profit fell 93.8% to 4.7 million yuan, according to its latest results published on Thursday.

Looking up: The company’s gross merchandise value (GMV) for the period reached 17 billion yuan, an increase of 28.4%, mainly benefiting from an 86.1% jump in GMV for its service fee model.

Take Note: Electronics and appliance sales slowed as the company optimized its distribution business, resulting in a 29.9% decrease in product sales revenue to 680 million yuan for the quarter.

Digging Deeper: Headquartered in Shanghai, Baozun listed in New York in 2015 and made a secondary listing in Hong Kong in September 2020. The company has long partnered with e-commerce giant Alibaba (BABA.US; 9988.HK) to provide products and services related to information technology, store operations and warehousing, and has generated about 70% to 80% of its GMV from Alibaba’s popular Tmall platform. However, Baozun has been eager to lower its dependence on Alibaba through diversification to show that it can survive on its own. That campaign is starting to show results. In the first quarter of this year, Tmall’s share of Baozun’s GMV dropped to 60%, down significantly from 68.1% in the same period last year.

Market Reaction: Baozun’s shares surged 25.5% in New York on Thursday, driven partly by a rally for U.S.-listed Chinese stocks. Its Hong Kong shares also soared 28.7% to HK$24.50 at the midday break on Friday. But they still trade at the lower end of their 52-week range.

Translation by Jony Ho

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