Vipshop has received positive feedback from major suppliers for the colocation initiative; helping to reduce warehouse costs and save reverse logistics costs for its suppliers. Vipshop has secured more land for self-built warehouses at favorable land costs offered by local government. In addition, currently ~50% of Vipshop's orders are fulfilled in-house (i.e., VIPS and its invested affliates) and this percentage is expected to reach 70% by end 2015. As order volume ramps up and order density becomes higher, Vipshop may seek to
take controlling stakes in these delivery companies in which it currently has minority interests.
In 2015, Vipshop will continue to focus on its core discount flash sales business market, since its current market share is still at low- to mid-single-digit level. The company currently covers 80% of the existing apparel companies in China and will seek to increase SKUs / sales per brand. Vipshop is confident in its competitive position in its core discount flash sales and doesn't think increasing flash
sales focus from bigger competitors will be a large threat in view pf the highly flexible operational / warehousing system required for apparel flash sales.
The company remained cautious about cross-border eCommerce, believing there are policy-level uncertainties among the regulators. In terms of M&A activities, the company is considering bolt-on acquisitions in mobile commerce verticals such as the mother & baby category.
