So this is something Baozun is very uniquely positioned to provide. For domestic brands, given they are close to China, some of the operations, they normally do in-house. But they come to Baozun asking for help on the value-added service such as the digital marketing, the warehouse management and technology. So with the China e-commerce ecosystem becoming more and more to specialized in each of the services, we believe, we have opportunity in both international and domestic brands.
Operator: Our next question comes from Sophie Huang with CMBI. Please go ahead.
Sophie Huang: Thanks for taking my question I have two questions here. Number one is regarding the Hangzhou location aggregation. So what is the rationale of location and position? And how do we look at the business synergy in the last Baozun’s E-Commerce segment and the financial impact from this deal? And the second question is regarding our last June E-Commerce update. We have made progress in the ecosystem for brands. So can you help us to understand the ROI difference between Douyin channel and the Tmall channel and how to improve it? I remember you mentioned that 3 brands performed well in Douyin ecosystem and what about other categories?
Vincent Qiu: We believe the overall trend for the e-commerce in China will have more social and content based e-commerce. So that’s the trend we see. And based on that we think the capability to produce high quality live streaming and content is a must to have in the upcoming years. So based on that rationale, we searched the market, we want to find the best match between Douyin capability and also the service provider we are looking for. So we found location, which is an innovative and very solid business with a very deep experience and know how to run the live streaming in both the Tmall and store in platforms. And also after our initial working with location. So a well-run business weighs a healthy profit margin and a talented core team.
So we believe the combination between Baozun location, we’ll be able to utilize the good system and infrastructure of Baozun, the very deep relationship and ominichannel relationship Baozun has with brands and also the locations, high quality live streaming operations capability and also their combo facility. We think combining those 2 we’ll be able to make us one of the best creative content and live streaming service providers in China. And we think this capability will help us to provide the value added service for our high end brands. The second question about ROI, we think the ROI for both the Douyin channel and Tmall channel is currently under, are currently under the prices. So that’s because for the both the Douyin and Tmall, we need to know in terms of how to define a successful strategy to improve ROI.
So if we think from the brand perspective how to differentiate the merchandising strategy, how to attract the traffic, how to do the digital marketing in those 2 different platforms will determining how good a ROI is about. So that’s why we think offering a good capability and working closely with the brands we’ll be able to improve ROI for both brands. So in those 2 platforms you will be able to improve ROI if you do very good operations.
Operator: Our next question comes from Colin Chan with Citi Securities.
Unidentified Analyst: I have 2 questions about BBM. The first question is about Gap. It has been around 3 quarters after the acquisition of Gap China and looking back on the past quarters, what operation results are beyond your expectations and what are below your expectations? And the second question is also about Gap. How to evaluate the improvement of Gap results and what are the key metrics to follow other than the gross profit margin? And when we’re talking about to maintain the price of Gap, but in China, especially in this year, people are talking about the consumption downgrade, so what’s your observation when you are doing this kind of improvements of Gap?
Sandrine Zerbib: So first, after three quarters, not exactly three quarters because actually we took over in the 1st February. We can say that most of the operational results exceed our expectations, particularly when all the indicators that point to better attraction of the brand, which means primarily obviously gross margin that we discussed earlier, which has increased much more significantly than we even expected. But also the inventory turnover that has been also a very, very strong improvement. At the same time, by saying this, I’m showing you some metrics that we consider as very important. The inventory turnover, the same-store sales growth, the conversion rates, these are all metrics that we look very carefully asked because at the end of the day this indicates if the brand is attractive for a consumer or not.
If a consumer comes to a shop and buy a brand only because it’s discounted, it’s actually not a good sign. So from the beginning we’ve been extremely attentive to these metrics because this is actually how to get back on track to be a positive brand, a brand that attracts consumers. And on all these matters, we are actually quite satisfied. And it’s usually beyond expectation. Now where, it’s a little bit slower is on the online part of the business, where obviously it takes longer time to achieve this with consumers, although more so as we used to be, Gap used to be very much a Tmall online business, and we saw as mentioned by the [Technical Difficulty] factor for our online business. So that’s to answer the first part of your question. Now answering the second part of your question, obviously we do pay attention to our top line, but our top line, we prefer to look at it primarily in same-store sales and same channel sales to see the progress.
